Ecommerce Startups Accounted for Only 13% of Total VC Investments in 2023, Twice Less than a Decade Ago

The global ecommerce market continues seeing double-digit revenue growth, following a drop and then a significant slowdown during 2022 and 2023. The entire sector is expected to gross over $4.1 trillion in 2024, almost $600 billion more than last year. By 2026, this figure is likely to jump over $5.3 trillion. But despite the record revenue and double-digit growth, investors’ appetite for ecommerce startups continues colling down. According to data presented by Stocklytics.com, ecommerce startups accounted for only 13% of total VC investments in 2023, or twice less than a decade ago.

VC Investments into Ecommerce Startups Have Been Falling for Seven Straight Years

VC investments in the ecommerce sector had started falling even before the post-pandemic growth normalization when this entire sector boomed. However, the reduced excitement about online shopping in post-pandemic years and the maturing ecommerce sector have made it even more difficult for new startups to raise money, while those with inflated valuations struggle to attract new investments.

Economic uncertainty, rising interest rates, supply chain issues, and consumers cutting back on spending due to inflation have added new pressure on ecommerce startups, pushing VC investors further from this market.

Statista and Deelroom data show that ecommerce startups accounted for only 13% of total VC investments in 2023, much less than SaaS or manufacturing startups. SaaS has steadily become the most prominent investment category in venture capital. In 2023, 47% of total venture capital has been invested in startups with a SaaS business model, including fintech, security and marketing. Another 40% of total VC funding went to manufacturing startups.

The 13% share of ecommerce startups is the lowest figure these companies have had in a decade, reflecting the downsizing trend that has been going on for some time now. The Deelroom data show VC investments have been falling for seven straight years. Back in 2017, ecommerce accounted for 41% of all VC investments, or three times more than last year.

Ecommerce Startups Still Raised $155 Billion in a Decade

Despite the apparent slowdown in VC funding activity, ecommerce startups have still raised impressive amount of fresh capital over the past ten years.

The Crunchbase data show these companies raised close to $155 billion since 2013, pushing the cumulative funding amount to $159 billion in October. Nearly 45% of that value, or $71 billion, went to Asian companies, mainly from India and China, proving the region’s leadership in the ecommerce landscape.

US startups raised $40.3 billion, with California as the leading hub. Statistics show the European ecommerce sector has received $28.9 billion of VC investments, 2.5 times less than Asian startups and 30% less than US ecommerce companies.