Alta was exactly what Amy Wu Martin was looking for. <\/p>\n
Last year, Wu Martin, an investor at Menlo Ventures, was searching for a startup that used AI to address the lack of personalisation in online shopping. After being introduced to Jenny Wang and trying out a beta version of her personal styling app Alta \u2014 which suggests looks built from their existing wardrobes, akin to the virtual closet in the 1995 film \u201cClueless\u201d \u2014 she wanted to help bring the app to the wider market. <\/p>\n
\u201cEvery major e-commerce company probably has tried personalization to an extent, but doesn\u2019t really know you,\u201d said Wu Martin, who previously invested in AI-driven companies like Gen-AI video platform Higgsfield and mental health startup Slingshot AI. \u201cAlta\u2019s thesis is they need to understand what\u2019s in your closet because that\u2019s the starting point.\u201d <\/p>\n
It all led to Alta ultimately raising an $11 million seed round in June, led by Menlo Ventures, with participation from Agla\u00e9 Ventures, a venture firm backed by the Arnault family\u2019s holding company Financi\u00e8re Agache.<\/p>\n
Alta\u2019s fundraise is indicative of a wider trend among venture capitalists. The rapid adoption of AI is spawning a new class of startups that have encouraged Silicon Valley to give fashion tech \u2014 which they\u2019ve sparsely invested in before <\/b>\u2014 another look. In the past year, a number of startups that offer solutions for everything from design assistance to social shopping have collectively raised more than $100 million from serial tech investors like Thrive Capital, Menlo Ventures and Forerunner Ventures, among others. Luxury is also taking note of AI\u2019s impact on fashion: This year\u2019s LVMH Innovation Award winners, which go on to partner with the conglomerate\u2019s brands, included AI-driven content creation studio Omi and Kahoona, an AI-powered customer data platform. <\/p>\n
While 10 years ago, investors poured millions into e-commerce brands that pitched themselves as tech companies simply because they sold online, today they\u2019re attracted to those attempting to solve industry pain points via technology, such as virtual try-on and personalised shopping. But they\u2019re also the latest in a long line of businesses that have attempted to do the same and failed \u2014 it\u2019s been 30 years, and there\u2019s still no version of the \u201cClueless\u201d closet that\u2019s reached mass adoption. <\/p>\n
Still, venture capitalists are convinced that reality has never been closer. To get there, they\u2019re backing founders with rigorous tech chops, and unlike the DTC brands that were pressured to expand quickly, are more patient in helping new founders grow with gradual technological improvements. <\/p>\n
\u201cThe nature of VC is that most of these companies will fail, and if anything has happened now \u2026 is that it\u2019s much easier to build a product,\u201d Wu Martin said. \u201cThe onus is really on the investor to really spend time with that founder; understand what the longer term defensible vision really is.\u201d<\/p>\n
A New Investment Philosophy <\/p>\n
Investors today are less seduced by charismatic founders selling a dream \u2014 or fashion brands overselling their minimal tech capabilities. Instead, the companies securing funding have leaders with real expertise. <\/p>\n
Wang, for instance, is a software engineer who worked for companies like DoorDash. <\/b>Search and discovery platform Daydream, which raised $50 million last June, was co-founded by Julie Bornstein, a former chief operating officer at online styling service Stitch Fix, while Cheryl Liu, a former technical product manager at Amazon<\/a> founded Gen-AI design platform Raspberry AI, which raised $24 million in January. AI-powered virtual try-on app Doji, which raised $14 million in May, was created by former Google<\/a> machine learning engineer Jim Winkens and Dorian Dargan, who helped build VR games at Meta. <\/p>\n That experience allows founders to see both the big picture and the finer details of their businesses. Wang\u2019s technical skills made it easier for her to fine-tune Alta\u2019s software to improve the quality of its recommendations, according to Wu Martin; having a founder with those capabilities made her more confident investing in the platform.<\/p>\n \u201cIt was really important for us to find a team that was very AI native because we thought that actually solving the challenge of serving style is one of the hardest parts,\u201d Wu Martin said. <\/p>\n Investors are also keen on backing founders who have experience building similar platforms \u2014 particularly those that have already delivered for them. Bornstein, co-founder of AI-powered platform Daydream, which she describes as \u201cChatGPT for fashion,\u201d previously founded the personalised shopping startup, The Yes, which went on to be acquired by Pinterest in 2022. <\/p>\n When the idea for Daydream first came to her, she <\/b>reached out to Forerunner Ventures<\/a> founder Kirsten Green<\/a>, who had invested in The Yes. Green soon signed on as a partner, co-leading Daydream\u2019s seed round last June with Index Ventures<\/a>, and participation from Google Ventures and True Ventures. <\/p>\n \u201cWhen it comes to AI, you really want to bet on a founder,\u201d said Fr\u00e9d\u00e9rique Dame, a general partner at Google Ventures. \u201cWhen you find a founder that is as exceptional as Julie at understanding fashion intrinsically and how people shop, it\u2019s really incredible to be able to invest early.\u201d <\/p>\n Even fashion tech startups that don\u2019t use AI explicitly are getting a lift from the excitement around its potential to change the industry. Alexa von Tobel, founder of venture firm Inspired Capital, for example, said she invested in affiliate marketing software platform ShopMy in December 2023, in part because she predicts that a boom in AI-generated content will push consumers to seek referrals from humans \u2014 be it friends or their favourite influencers. <\/p>\n