The Direct to Consumer Pop?
Over the past 3 years, the Consumer Services industry has seen impressive funding rounds and growth, not the least driven by the Direct-to-Consumer trend. Fast-growing and Instagramable startups(such as Outdoor Voices and Away) leveraged their influences, aesthetics and achieved brand name recognition.
However, behind the growing influence are concerns of an overfunding bubble. Looking at the funding trends of recent years, Consumer Services dwarf other industries.
Fast funding rounds also fueled the growth of online advertisements. The ads are increasingly seen as the “digital rent” for many direct to consumer businesses. With the customer acquisition cost high and supply chain fragmented, many brands are struggling to profit even before the pandemic outbreak.
Now with the additional supply chain disruption brought on by Covid and demand halted by social distancing measures and unemployment, one has to wonder, will this turn the tide in the VC funding trends we have seen so far?
Indeed, with the pandemic outbreak, many investors have demanded capital disciplines. Many of the assumptions for DTC growth are being challenged. Is this the end of a funding boom and a sector rotation?
Speak soon,
Whitney
For more information on private company financials, visit PrivCo
