The Retail Super Bowl is upon us: Black Friday through Cyber Monday is here.
And 2025 is expected to be record-breaking: The National Retail Federation anticipates that, for the first time, U.S. holiday spending will cross $1 trillion. Now, a seeming contradiction—funding for e-commerce startups is at a low.
In 2021, global e-commerce-related startup funding peaked (along with so much else) and reached more than $94 billion, according to Crunchbase. Fast-forward to 2025. That number has come crashing down, lingering around $7.3 billion. (For context, in 2020, e-commerce-related startup funding came in around $31 billion.)
So, what’s going on here? I spoke to Indy Gupta, general partner at VMG Partners, as we headed into Thanksgiving. First thing you need to understand, said Gupta, is that the 2021 boom was buoyed by the peaks of the ZIRP era, but at the center of it all was a bet on real behavioral shifts spurred by COVID-19, some of which have stuck (like curbside pickup and increased comfort with more inventive forms of online shopping and food delivery), but many of which haven’t.
“As it turns out, as human beings, we all really enjoy experiential retail,” said Gupta. “When you walk into any sort of retail location, mall or otherwise, that’s doing well today, they have a lot of pop-up shops and fun arcades… So, I think some of that explains the pullback.”
