Whatnot Inc., a livestream shopping platform aiming to rival TikTok Shop, has secured $265 million in funding, pushing its valuation to $4.97 billion. The funding round was led by prominent investors Greycroft Partners, DST Global, and Avra.

Doubling Sales Performance

The Los Angeles-based startup reported over $3 billion in sales on its platform in the past year, a significant leap from the previous year. Whatnot facilitates sales across diverse categories such as sneakers, collectibles, vinyl records, and handbags. Its global reach spans eight countries, including the U.S., Canada, France, and Germany.

Co-founder & CEO Grant LaFontaine highlighted for Bloomberg the transformative potential of livestream shopping, saying, “The opportunity for what live and social commerce can do for sellers and businesses is tremendous. It’s going to change every category of retail.”

Livestreams Driving Engagement

Whatnot hosts 175,000 hours of livestreams weekly, showcasing its commitment to engaging its growing community. Sellers like Val Zapata, founder of Shoe Game Co., have experienced remarkable success, with Zapata selling over $6 million worth of sneakers on the platform last year. Describing Whatnot’s unique approach, Zapata said for Bloomberg, “It’s like Instagram meets eBay. You have a marketplace, but you have to entertain these people.”

Competition With TikTok Shop

The funding comes amid uncertainty surrounding TikTok Shop, which faces potential regulatory hurdles in the U.S. ByteDance, TikTok’s parent company, must sell TikTok’s U.S. operations by January 19, raising questions about its future. Bloomberg notes that TikTok Shop had aimed to exceed $17 billion in sales in 2024, but Whatnot’s growth positions it as a formidable competitor.

Strategic Expansion Plans

Whatnot plans to utilize the new funding to:

• Hire more engineers to enhance platform functionality.
• Improve customer service to retain and grow its user base.
• Expand into new markets, including Australia.
• Introduce new product categories, such as golf and art.

Additionally, Whatnot plans a tender offer to repurchase up to $72 million of its shares, further consolidating its market presence.

Backing From Top-Tier Investors

The funding round attracted new investors, including Greycroft, Avra, Lightspeed Venture Partners, and Durable Capital Partners. Returning investors Andreessen Horowitz, CapitalG, BOND, and Y Combinator have also continued to back the company. Since its inception in 2019, Whatnot has raised $746 million in total funding.

Creating a New Wave of Influencers

LaFontaine envisions the live-shopping trend driving the emergence of a new category of e-commerce content creators. “Just because you’re entertaining on YouTube doesn’t mean you have all the skills to succeed on Whatnot,” he explained. “Live and social commerce will create its own wave of influencers.”

U.S. Adoption of Live Shopping

While livestream shopping generates hundreds of billions in annual sales in Asia, U.S. adoption has been slower.

TikTok Shop generated $100 million in Black Friday sales this year, marking a threefold increase from 2022, as per company data. The platform reported a 165% year-over-year rise in shoppers, with related hashtags #tiktokshopblackfriday and #tiktokshopcybermonday, accumulating over 4 billion and 3.5 billion views, respectively.

However, EMARKETER notes these figures highlight the substantial difference between social commerce adoption in Asia and the United States. Retail social commerce sales in China are projected to reach $899.57 billion this year, while U.S. sales are expected to total $71.62 billion. Douyin, TikTok’s ByteDance-owned sister app in China, reported $500 billion in social commerce sales in 2023, significantly outpacing TikTok’s performance of less than $4 billion.