How should I invest in direct-to-consumer brands and e-commerce infrastructure?

This blog post has been written by the person who has mapped the direct-to-consumer and e-commerce infrastructure market in a clean and beautiful presentation

The direct-to-consumer (DTC) and e-commerce infrastructure market has evolved dramatically beyond the early-stage brand building phase into a sophisticated ecosystem of profitable businesses and investment opportunities.

Today's DTC landscape features specific categories growing at 15-25% annually, infrastructure companies generating $100M+ revenues, and clear investment pathways through SPVs, rolling funds, and private placements. The key shift is from growth-at-all-costs to unit economics, with successful brands achieving 45%+ gross margins and 3x+ LTV/CAC ratios.

And if you need to understand this market in 30 minutes with the latest information, you can download our quick market pitch.

Which DTC product categories are growing fastest and show long-term demand signals?

Food & Beverage leads growth at 18.7% CAGR reaching $195B by 2031, driven by subscription meal kits and specialty ingredients that create sticky customer relationships.

Beauty & Personal Care maintains strong momentum with $58.6B projected by 2028, particularly in clean and personalized formulations where consumers pay premium prices for "hero" products. Wellness & Supplements represents the largest opportunity at $833.5B by 2026, fueled by nootropics and functional beverages targeting health-conscious demographics.

Pet Care shows exceptional resilience at $25.1B by 2025, benefiting from the humanization trend where pet owners spend increasingly on personalized nutrition and health monitoring. Home Goods & Furnishings captures remote work trends with 16.8% CAGR to 2028, focusing on customizable and sustainable décor for aging housing stock.

Genetic & Health Testing emerges as a high-growth niche at 24.5% CAGR through 2034, driven by personalized medicine adoption. Eyewear maintains steady 13.5% CAGR with virtual try-on technology reducing return rates significantly.

Long-term demand indicators include subscription model adoption, health consciousness trends, sustainability focus, and categories with naturally low return rates that improve unit economics.

Which infrastructure companies enable DTC brands and how do they generate revenue?

Fulfillment leaders like Shippo operate as SaaS shipping APIs with pay-per-transaction models, serving 100,000+ merchants while ShipBob provides 3PL services through distributed micro-warehouses enabling 2-day shipping nationwide.

Need a clear, elegant overview of a market? Browse our structured slide decks for a quick, visual deep dive.

If you want fresh and clear data on this market, you can download our latest market pitch deck here

What ecosystem gaps remain underserved and which startups are addressing them?

Returns management represents the largest inefficiency with high return rates destroying profit margins, addressed by Loop Returns and Returnly through automated exchange systems.

Middle-of-funnel conversion remains neglected as brands focus on top-of-funnel acquisition and bottom-funnel optimization, leaving abandoned cart nurturing underutilized. Startups like Outplay and StackAdapt target this gap with specialized retargeting tools.

Personalization and discovery suffer from shallow product information and poor search functionality, creating opportunities for AI copywriting tools like Hypotenuse AI and advanced search solutions like Algolia. Last-mile fulfillment faces carbon footprint concerns and speed demands, with companies like Meteor Space developing custom fulfillment networks.

Cross-border payments complexity around HS-codes and duties creates friction that Airwallex and Primer address through simplified international commerce tools. Attribution and measurement challenges from cookie deprecation and opaque social commerce metrics drive demand for solutions like Branch and AppsFlyer.

Subscription churn after introductory offers represents a persistent challenge that Recharge and Bold Subscriptions tackle through retention optimization tools.

Who are the top-funded DTC brands in 2025 and what attracted investors?

Allbirds leads with public market validation based on sustainable materials innovation and strong customer loyalty metrics, while Warby Parker's asset-light model and recurring eyewear sales attracted significant pre-IPO investment.

Blume captures the Gen Z wellness demographic through influencer co-ownership models and authentic brand positioning in beauty. Feastables leverages celebrity partnership with MrBeast and viral marketing capabilities to drive rapid customer acquisition in the food & beverage space.

Misfits Market raised $526M total by addressing food waste reduction while offering price and value advantages in grocery delivery. Lovevery achieved $126M Series C funding through high customer lifetime value and subscription model stability in the kids/education category.

Investment thesis patterns include strong unit economics (45%+ gross margins), subscription or repeat purchase models, authentic brand positioning with specific demographic targeting, and solving real consumer problems rather than creating artificial demand.

Wondering who's shaping this fast-moving industry? Our slides map out the top players and challengers in seconds.

Which private infrastructure startups offer investment opportunities and on what terms?

Shippo represents the largest private infrastructure opportunity at $1B unicorn valuation with $50M Series E funding, accessible through secondary shares and private placements for qualified investors.

What metrics should guide investment decisions between DTC brands versus infrastructure enablers?

DTC brands require 45%+ gross margins, 3x+ LTV/CAC ratios, and 30%+ repeat purchase rates to demonstrate sustainable unit economics, while infrastructure enablers need 50%+ ARR growth and clear take-rate models.

Brand evaluation focuses on customer acquisition efficiency with organic traffic growth above 60% and Net Promoter Scores exceeding 40, indicating strong product-market fit. Time to ship under 48 hours and inventory turnover above 10 times annually signal operational excellence.

Infrastructure companies demonstrate value through platform adoption metrics like API call growth, partner integration expansion, and merchant retention rates above 90%. Annual contract value growth and expansion revenue from existing customers indicate pricing power and market penetration.

Financial health markers include free cash flow positivity for mature brands and clear path to profitability for growth-stage infrastructure companies. Churn rates below 5% monthly for brands and below 2% annually for infrastructure signal strong retention capabilities.

Market positioning evaluation examines competitive differentiation, total addressable market size, and regulatory risk factors that could impact long-term viability.

If you need to-the-point data on this market, you can download our latest market pitch deck here

How are DTC brands acquiring customers profitably in 2025?

Social commerce through TikTok Shop, Instagram Shopping, and Snapchat Shops generates the highest ROI with native content integration reducing acquisition costs by 40-60% compared to traditional advertising.

Community and influencer equity models create authentic partnerships where creators receive ownership stakes rather than just payments, driving long-term brand advocacy and reducing ongoing marketing costs. Email and SMS automation through platforms like Klaviyo and Postscript generate 30-50% of total revenue through behavioral trigger flows.

Content-first SEO targeting long-tail keywords and video content captures high-intent traffic at lower costs than paid acquisition. Subscription and loyalty programs through Recharge and membership tiers increase customer lifetime value by 25-35% while reducing churn.

Cross-platform attribution tools help optimize spend allocation across channels, while first-party data collection through quizzes, reviews, and preferences reduces reliance on third-party cookies. Referral programs with meaningful incentives generate 15-25% of new customer acquisition for successful brands.

Looking for the latest market trends? We break them down in sharp, digestible presentations you can skim or share.

What are typical investment stages and check sizes, and which funds are most active?

Pre-seed rounds range from $100K-$500K with funds like Founder Collective and LearnStart focusing on early DTC concepts and infrastructure tools.

Seed stage investments span $500K-$2M, dominated by Forerunner Ventures and Craft Ventures who specifically target consumer brands and enabling technologies. Series A rounds reach $2M-$8M with CRV, Sequoia, and Summit Partners leading larger rounds for proven traction.

Series B and beyond involve $8M-$30M checks from a16z, Bessemer, and Sapphire Ventures focusing on scaling infrastructure and multi-channel brand expansion. Industry-specific funds like Volition Capital target middle-market e-commerce companies with proven business models.

Rolling funds and SPVs provide alternative access through platforms like AngelList, with DTC-focused syndicates requiring $1K-$10K minimum investments for accredited investors. Opportunity zones and QSBS benefits provide tax advantages for early-stage investments held for five-plus years.

Average ownership stakes range from 10-25% for seed rounds to 5-15% for Series B, with liquidation preferences and anti-dilution provisions standard for institutional rounds.

What legal and operational requirements apply to early-stage e-commerce investments?

Accredited investor status requires $1M+ net worth or $200K+ annual income ($300K+ joint), verified through SEC Regulation D compliance and platform KYC processes.

Entity setup involves establishing an LLC or corporation for holding investments, with pass-through taxation benefits for LLC structures and K-1 reporting for partnership interests. Subscription agreements detail investment terms, while SPV participation requires understanding general partner fees and carried interest structures.

Regulatory compliance includes KYC/AML verification through platforms like AngelList, Republic, and SeedInvest, plus ongoing reporting requirements for portfolio companies. Tax considerations include Section 1202 QSBS benefits providing up to $10M in capital gains exemption for qualifying small business stock held five years.

Form 8949 reporting tracks cost basis and holding periods for capital gains calculations, while state-specific regulations may apply for certain investment structures. Professional legal and tax advice becomes essential for investments above $50K or complex deal structures.

Due diligence requirements include reviewing financial statements, cap tables, and key performance metrics, plus understanding dilution risks and liquidation preferences in investment documents.

If you want to build or invest on this market, you can download our latest market pitch deck here

What characterized the 2025 funding landscape for DTC brands and infrastructure?

The 2025 funding environment featured selective investor focus on profitable growth over pure revenue expansion, with successful raises requiring clear unit economics and path to profitability.

Major exits included Klaviyo's public market success and Warby Parker's continued public performance, while several 2021-era overfunded brands faced down rounds or strategic sales. Infrastructure winners like Shippo's $50M Series E and Primer's $40M Series B demonstrated investor confidence in enabling technologies.

Failed companies typically shared characteristics of poor unit economics, over-reliance on paid acquisition, and inability to build repeat purchase behavior. Successful raises focused on specific market niches, strong customer retention metrics, and clear competitive advantages.

Emerging patterns included increased focus on sustainability and health categories, consolidation in crowded markets like meal delivery, and growing investment in cross-border e-commerce infrastructure. Series A and B rounds became more competitive, requiring stronger traction metrics than previous years.

Secondary market activity increased for later-stage infrastructure companies as investors sought liquidity ahead of anticipated IPO windows in 2026-2027.

What 2026 trends will affect this market across macro, platform, and consumer dimensions?

Macroeconomic conditions point toward moderating inflation and potentially stimulative monetary policy, creating favorable conditions for consumer discretionary spending and startup funding availability.

Platform changes include cookieless tracking implementation requiring first-party data strategies, TikTok regulatory resolution affecting social commerce, and iOS privacy updates continuing to impact attribution. Amazon's advertising reorganization will reshape marketplace dynamics for brands balancing DTC and marketplace strategies.

Consumer trends emphasize sustainability and resale market growth, health and wellness prioritization across all categories, and preference for authentic brand relationships over transactional commerce experiences. Gen Z purchasing power expansion drives demand for values-aligned brands with clear social impact.

Technology adoption includes AI-powered personalization becoming table stakes, voice commerce integration expanding, and AR/VR try-before-buy experiences moving mainstream. Cross-border commerce growth accelerates as international shipping costs normalize and payment friction reduces.

Planning your next move in this new space? Start with a clean visual breakdown of market size, models, and momentum.

What are the most practical next steps to gain exposure to this market?

Building a mini DTC brand through Shopify plus Shippo integration provides hands-on market education while validating specific niche opportunities with minimal capital investment.

• Launch an MVP testing product-market fit in underserved categories like genetic testing accessories or sustainable pet products
• Partner with existing DTC founders by offering specialized services in fulfillment, marketing automation, or customer service
• Join focused investment syndicates like "DTC Catalysts" on AngelList targeting infrastructure and enabling technology deals
• Invest in niche SPVs or rolling funds specifically targeting logistics, payments, or marketing automation startups
• Develop infrastructure tooling addressing identified gaps in returns management, middle-funnel conversion, or cross-border payments

Investment exposure requires choosing between direct brand equity for higher risk/reward versus infrastructure investments for steadier growth with larger market opportunities. Geographic diversification through international DTC enabling technologies provides portfolio balance while capturing global e-commerce growth.

Education investments include attending industry conferences like Shop.org and Shoptalk, following key investors like Forerunner Ventures and Craft Ventures on social media, and subscribing to industry publications tracking funding rounds and market developments.

Conclusion

Sources

1. Global DTC Food Market Report
2. DTC Industry Statistics
3. Direct-to-Consumer Genetic Testing Market
4. Shippo Unicorn Status Announcement
5. Loop Returns Case Study
6. Primer Website
7. Klaviyo IPO Coverage
8. Gorgias Funding Information
9. Loop Returns Series B
10. Returnly Funding Coverage
11. Meteor Space Custom Fulfillment
12. DTC Startups to Watch
13. Shippo Funding Details
14. Gorgias Funding News
15. E-commerce Customer Service Guide