Benchmark Wins Deal for Live-Shopping App Popshop at $100 Million Valuation
By Kate Clark and Alex Heath

Silicon Valley’s top venture capital funds have faced off again for an equity stake in a nascent social media app. This time it’s Popshop Live, a livestreaming app that enables individuals and businesses to sell products such as comic books and DIY crafts directly to customers.

The Los Angeles–based startup has raised Series A funding at a pre-money valuation of approximately $100 million. Benchmark beat out rivals including Andreessen Horowitz and Lightspeed Venture Partners to lead the round, according to people familiar with the talks. To help secure the deal, Matt Cohler, a general partner at Benchmark who stepped back from investing in 2018, is joining the startup’s board of directors.

THE TAKEAWAY 
Several of Silicon Valley’s top funds battled for an early stake in Popshop Live. Similar to highly successful Chinese apps, the startup hosts live-streams where businesses sell their products.

Cohler’s clout likely helped Benchmark win the lead investor spot. An early Facebook executive, Cohler is known for his role on the board of Uber along with early investments in Instagram, Asana, and Dropbox. In May, Benchmark lost to Andreessen Horowitz for a chance to invest in the buzzy audio social media app Clubhouse.

Record levels of VC funding have led to steep competition among investors for startups offering services that are in high demand during the pandemic shutdowns. To secure early investments, venture capitalists have offered founder-friendly terms, such as nine-figure valuations, and tried other means of persuasion.

To lobby their case to Popshop founder Danielle Li, for example, at least one firm offered to charter a jet to fly her to the San Francisco Bay Area to discuss the deal, say two people familiar with the negotiations.

Lightspeed is participating in the financing, according to a person familiar with the matter. It’s possible other investors may still join the round. Li declined to comment. Representatives for Benchmark and Andreessen Horowitz didn’t comment.

QVC for Gen Z

Driving interest in Popshop is the growing market for livestreaming shopping apps, which investors think could turn out to be the equivalent of TV channel QVC for young, mobile-first shoppers. Live-shopping platforms in China, where that kind of social commerce has taken off, are on pace to pull in $125 billion in sales in 2020, up from $63 billion last year, according to Coresight Research.

Startups like Popshop are betting the trend will skyrocket outside of China, too. Founded by CEO Danielle Li in 2018, Popshop raised a total of $4.5 million prior to its Series A, including a $3 million seed round led by Floodgate and Abstract Ventures that closed in April. According to Li’s LinkedIn, previously she founded an entity called Williamsburg Lab.

Popshop is available to download in Apple’s App Store, and an Android version is expected later this year, according to its website. In private beta until July of this year, the app has so far garnered 202,000 downloads with an estimated 3,200 daily users, according to mobile app research firm Apptopia.

Competitive Threats

As it uses the new capital to grow, Popshop faces increased competition from the biggest players in tech. Facebook, in particular, has prioritized adding more commerce features, letting merchants sell goods directly in its main app and on Instagram. In August it started letting users list products for sale in their Facebook live broadcasts and is testing the same functionality in Instagram.

Google-owned YouTube is also testing video-shopping features, letting some of its creators track the products featured in their videos, Bloomberg reported in October. In July, Amazon added the ability for merchants to stream live video on its site with shoppable links to their products.

Short-video app TikTok could also become more of a shopping destination, mirroring the approach of its sibling app in China, Douyin, which lets users buy products they see in videos without leaving the app, said Rick Watson, a consultant who advises companies on their e-commerce strategies. He said Western tech companies have yet to prioritize live shopping as much as their Asian counterparts: “The solutions haven’t been that great.”

Alibaba-owned Taobao Live, a livestreaming tool used by retailers to sell directly to shoppers, and Pinduoduo, an e-commerce business with a built-in live-shopping feature called Duoduo Livestreaming, have seen a surge in usage during the pandemic. Taobao Live processed $7.5 billion in transactions in the first 30 minutes of a presale campaign for the annual Singles Day shopping promotion, according to Chinese media reports.

The U.S. live-shopping market is far behind at an estimated worth of some $5 billion, according to Coresight. As is the case for other e-commerce services, however, demand for Popshop’s marketplace has likely risen during the pandemic.

One Popshop sale for an online retailer with a storefront on Melrose Avenue in Los Angeles “was equivalent to a really great regular Saturday both online and offline combined,” Floodgate co-founder Ann Miura-Ko, a Popshop investor and board member, told The Information in May.

Merchants can apply to be sellers on Popshop and go live on the app once admitted. Popshop takes a cut of transactions in the app and then helps merchants track their orders and facilitate shipping.

Typically, a merchant advertises that it is live within the app, asking shoppers to attend its sessions every Wednesday at 8 p.m., for example. Sellers featured on the app include 3DRetro, which sells collectibles from around the world; Midtown Comics, a comic-book store based in New York; and clothing brand All For Ramon.