Is D2C doomed?
Direct-to-consumer (D2C) ecommerce was one of the hottest trends of 2020 and 2021. A pandemic-fuelled boom in online shopping triggered an influx of funding for D2C startups, particularly at early-stage. A year on, as people are back in physical stores, and a cost of living crisis is sweeping many of the world’s richest countries, and the market looks quite different.
Since 2021, combined enterprise value for public D2C startups has taken a steep 66% fall. While it’s not been an easy time for many public tech companies, by comparison, publicly traded Fintech startups have fallen 35%, Transportation 27% and Health 10% in the same time frame.
And investors don’t seem to be too rosy about the future either. In Q3 2022, combined venture capital funding for D2C startups was at its lowest level since 2017.
Direct to consumer startups are adapting quickly. Either by semi-abandoning their D2C DNA by engaging in retail partnerships, or by seeking greater brand and community differentiation in the hunt for rapid a path to profitability. As always the best will survive, the flight to quality is underway.
Speaking of which, you can discover 700+ D2C startups on Dealroom.
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