INSUBCONTINENT EXCLUSIVE:
Joanna Glasner
Contributor
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The alumni of these universities raised the
most VC in the past year
Global unicorn exits hit multi-year high in 2018
It has the feel of a science fiction plot
A young man heads online to look up deals on things he likes.
Slowly, the tables turn
Now, it the computer that starts telling him what he wants
Read news with this political spin…
OK, I lied
This isn''t sci-fi at all
And it the kind of thing venture capitalists seem keen on funding.
An analysis of Crunchbase data shows that global venture funding for
personalization and recommendation platforms has surged in recent quarters
Investors are pouring billions into the space, creating a string of newly minted unicorns relying on algorithms to customize music streams,
news feeds and much more.
Exits are also riding high for software-driven tastemakers
Recent ones include Spotify smash IPO, along with China-based news aggregator Qutoutiao, which is poised to go public at a
multi-billion-dollar valuation.
Herein we take a look at where the money is going, how it could accelerate and the changing nature of how we
find new things to like.
Getting personal
Before we go further, let define the personalization category
Essentially, we&re looking at business models that involve using software to match humans with things they might want to consume
This could be music, news, handbags, wine, other humansand lots more.*
Personalization isn''t generally considered a discrete sector
To use a cooking metaphor, it sort of like chicken
It not a cuisine so much as an ingredient you can dress up in almost any culinary style
Likewise, you can add software-driven personalization and recommendations to a wide variety of businesses focused on e-commerce, digital
media, food delivery and so on.
It apparently a useful ingredient for driving up valuations
In the table below, we lay out some of the recent and most significant funding rounds for companies in a range of sectors that are deploying
software-driven personalization and recommendation models.
The list represents more a sampling than a comprehensive data set, as a
significant number of companies incorporate some form of software-driven personalization
We also mostly left out the enormous and heavily funded set of startups that rely on a combination of software and actual humans to deliver
recommendations.
As you can see from the selected list above, those securing the largest rounds are a globally diverse bunch
Having a computer tell you what you want is a market niche that transcends national boundaries.
News and entertainment
Lately, the biggest
chunk of funding is going to China-based news and entertainment aggregators.
Six-year-old Toutiao is climbing the unicorn ranks at a
Its parent company, Beijing-based Bytedance, has raised more than $3 billion to date and is reportedly seeking new funding at a $75 billion
With active users in the hundreds of millions, its success stems from the use of machine learning to figure out people interests and offer
up content they&ll click on.
At least three other China-based news and entertainment aggregators have raised $50 million or more in fresh
funding since last year, including public market-bound Qutoutiao, loosely translated as &fun headlines.& The company describes its value add
as providing technology-based &content personalization& to help users navigate the exponential growth in online offerings.
And then there
iQiyi, the company sometimes called the Netflix of China
It scored one the year largest IPOs, and it was recently trading at around a $21 billion valuation.
Mature markets for personalization
For
the United States market, meanwhile, the companies most closely associated with software-driven personalization have been public for quite
some time.
Netflix, now valued at around $160 billion, went public 16 years ago
Google acquired YouTube back in 2006
And Amazon.com has been serving up algorithm-driven suggestions of what to buy for two decades.
Articles on the oddities of software-driven
video recommendations date back to at least 2002
By now, Americans are pretty used to apps attempting to make our shopping and binge-watching selections
While occasionally creepy, it can also be convenient.
So what next on the personalization horizon Looking at funded startups, it apparent
there an ongoing drive among retailers other than Amazon to take back some market share by offering a more customized shopping
experience.
One startup working in the area is New York-based Dynamic Yield, which has raised $63 million since last summer to scale a
machine learning-based platform used by retailers like Stitch Fix and Urban Outfitters to match shoppers with things to buy
Another is True Fit, which has raised more than $110 million to work with prominent apparel brands and retailers to match consumers with
styles that fit and flatter.
There a lot at stake
Research firm Boston Consulting Group predicts that personalization will push a revenue shift of some $800 billion to the 15 percent of
companies that get it right.
That a big number, and it underscores a rapidly changing shift in consumer behavior
Call it the age of the tasteful machine.
Of course, it still possible to cultivate personal style and taste on your own
However, startup entrepreneurs, tech giants and venture capitalists seem to share a unified vision of software making a much bigger
contribution to that effort.
As a result, what was once science fiction is now just becoming the way we shop.
* We decided not to include
recommendation engines for financial services products and insurance
These are generally not so much tastemaking as matching products to an existing credit history and questionnaire answers.
