Despite a drawdown in venture capital spending, the livestream shopping platform Whatnot — popular for sports cards, rare toys and other collectibles — has raised $260 million in fresh funding.
Grant LaFontaine has been into collecting since he was was seven years old, when he started selling Pokémon cards on eBay. In his twenties, he and his friend Logan Head got into finding and selling cool sneakers. But he felt like the online interfaces on eBay and other sites were clunky and boring, and the safety features were lacking.
In 2019, he left his job at Facebook to start Whatnot with Head, hoping to offer collectors the chance to buy and sell baseball cards, rare toys, comic books and other coveted items in a live, interactive online setting where they could chat with each other and score new items for their collections.
“We had this hypothesis that a new generation of collectors were entering the market,” said LaFontaine, 34, Whatnot’s CEO. “And we thought this generation, which grew up on an iPhone, was not going to be happy with the existing players because a lot of them hadn’t evolved.”
The three-year-old company has been growing quickly, and just raised another $260 million in a Series D round led by CapitalG (Alphabet’s investing arm) and DST Global, with participation from Andreesen Horowitz, YC Continuity and Bond. That brings its valuation to $3.7 billion, more than double the $1.5 billion it was valued at last year. The round took just seven days to come together, despite the market downtown and a pullback in venture capital funding.
“The growth here is almost in a class by itself. There are fast-growth companies and then there’s Whatnot,” said Laela Sturdy, a general partner at CapitalG. “They also have a strong, durable business model, which positions them well.”
The company has emerged as the largest U.S. startup focused on livestream shopping, which is the term used to describe a modern-day take on QVC-style broadcasts in which a seller showcases items that are available for purchase to a live, online audience. The format has exploded in popularity in China in recent years. A slew of startups like Whatnot, ShopShops and TalkShopLive, as well as tech giants like Amazon and Facebook, are now pouring resources into testing whether there’s an appetite among U.S. shoppers.
LaFontaine said he had no idea of the Chinese phenomenon when they started the business. When he and Head were raising the seed round and investors started asking them about it, he just nodded — then went home and did his homework.
The company, which started out as a struggling marketplace for Funko Pop toys and had to temporarily relocate to Phoenix because it couldn’t raise any money, now offers livestream shopping sessions in more than 70 categories, including sneakers, watches, vintage fashion and rare coins. The average livestream lasts two to three hours, with some sellers moving thousands of products during that time.
“I think livestream shopping is the closest you can get to the in-person retail experience,” said LaFontaine. “You can actually talk to someone, you can see objects as they are. It’s more fun.”
Whatnot has been the fastest-growing marketplace in the nation for the past two years, according to the Marketplace 100 list assembled by Andreesen Horowitz. Last year, sales grew by over 20 times. While the company would not disclose financials, it said it takes an 8% cut on sales and is not profitable.
It has managed to attract a devoted community of buyers and sellers who spend both time and money on the platform, according to Sturdy.
“The data is closer to social media levels of engagement, in terms of amount of time spent on the platform and daily active usage,” she said. “At the same time, it has very strong commerce metrics, in terms of conversion to buying and repeat buying.”
In an effort to foster trust and safety on the platform, individuals have to complete an extensive application before they can sell on Whatnot. The company likes to see people who have prior experience, such as owning a comic book store or being a known social media influencer in the space. It also asks for information about where the seller gets their supply from. Whatnot approves about 30% of applications, said LaFontaine, with new sellers completing a training before they can launch on the site. Its sellers range from hobbyists to professionals, with the biggest outfits on the platform operated by 20 to 30 people.
Whatnot, similar to eBay, started in collectibles but sees room to go into all types of merchandise, with plans to expand into electronics and wine, beer and liquor. It also wants to build out additional features that make the app more social. It recently introduced direct messages, for instance. And while other companies are doing layoffs or implementing hiring freezes, it plans to hire another 100 or so employees by the end of the year, bringing its headcount over 300.
Most days, LaFontaine works out of his home office in Los Angeles, where Funko Pop toys and other prized collectibles adorn the bookshelf behind him. The office, just a 15-minute walk from his house, is still fully remote.