Daydream, a new AI-based shopping platform from retail and e-commerce veteran Julie Bornstein, has raised $50 million in seed funding.
Co-leading the round were Forerunner Ventures and Index Ventures, while GV — the venture-capital arm of Google parent Alphabet Inc. — and True Ventures also participated.
Full details on Daydream, which is set to launch in beta this fall, haven’t yet been revealed, but Bornstein said it will be a search and discovery platform for fashion that’s inherently built on the capabilities of generative AI, rather than just seeking to tack AI features onto the usual e-commerce experience. It will use advancements in AI fields such as natural-language processing and computer vision to allow shoppers to search for products in different ways using text and images and narrow down results through conversation with an AI agent, which Bornstein said will be more than the standard AI chatbots that understand context and recommend products from a retailer’s catalogue.
Bornstein’s last e-commerce venture was The Yes, an app that used AI to personalise the products users saw in their feeds. In 2022, Pinterest acquired the company for $87.6 million, and Bornstein joined the social network as its chief shopping officer. She moved into an advisory role in January 2023 and left Pinterest in July of that year, starting work on Daydream that month.
“We are taking a big swing, and we think this is the right time to do it,” she said.
Daydream won’t carry inventory but will collect a commission on sales, which will still happen on the sites of its brand and retail partners. Nearly 2,000 brands spanning emerging Gen-Z labels to luxury are already part of its catalogue through partnerships with retailers and the brands themselves, including Net-a-Porter, Alo Yoga, Altuzarra, Jimmy Choo and Doen. The aim is to ultimately have every brand and retailer as a partner, according to Bornstein.
Funding has continued pouring into generative-AI projects, even as investors have grown choosier and pulled back overall. In the first quarter of 2024, total venture-capital investment in generative AI reached $3 billion globally, according to an estimate from EY.
Many start-ups in the space are either building foundational AI models or business-to-business applications, but Bornstein said they wanted to go after one of the first big consumer-facing plays based on the technology. Her co-founders in the start-up — Matt Fisher, Dan Cary, Lisa Green and Richard Kim — have backgrounds spanning technology and retail, with time spent at companies including Microsoft, Amazon, Google and The Yes.
“What’s really exciting is when you have the combination of a great team with a very relevant and justified use of AI,” said Danny Rimer, partner at Index Ventures. (Index Ventures is an investor in The Business of Fashion.)
Index Ventures reached out to Bornstein before it knew she was working on Daydream, according to Rimer. It had come up with a thesis that AI would enable big advancements in e-commerce, which it believed hadn’t fundamentally changed in two decades. It contacted Bornstein because of her long experience in retail and e-commerce, including executive roles at Stitch Fix, Sephora, Nordstrom and Urban Outfitters.
“We were absolutely convinced by Julie and by the Daydream founding team,” he said.