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Daydream raises $50M seed funding to build AI-powered search engine for e-commerce

TechBrunchBy TechBrunchJune 20, 20245 Mins Read
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Online shopping trends are expected to remain strong this year, but e-commerce is more fragmented than ever. With brands selling on numerous platforms, from TikTok shops to established marketplaces, live shopping, and even their own channels, you might think it would be easier for shoppers to find what they're looking for. But that's not quite the case, and shoppers often have to spend a lot of time searching.

To make matters worse, SEO algorithms and an influx of content have made it difficult to sift through useful information, making current search less effective for shopping.

But it's 2024, and if there's one thing that's supposed to be the solution to just about every problem, it's AI. It makes sense that Daydream, a new e-commerce search engine that uses AI to make search more personalized and useful for people, just raised a massive $50 million seed round.

Founded by e-commerce veteran Julie Bornstein, Daydream is focused on using generative AI, machine learning and computer vision to deliver personalized shopping results. The company plans to open its platform to US consumers in beta this fall, with an initial focus on the fashion sector. More than 2,000 brands are already on board, including Net-A-Porter, Altuzarra, Jimmy Choo, Doen, Alo Yoga and La DoubleJ.

Daydream essentially lets you search for products using natural language and image recognition. For example, consider a query like, “I'm going to a wedding in Costa Rica this summer and need advice on what to wear.” You can also upload images of clothing and provide additional filters in a conversational format, such as, “I like this outfit in blue.”

The round was co-led by Forerunner Ventures and Index Ventures, with participation from Google Ventures and True Ventures. The startup did not disclose its valuation.

New ways to search

Bornstein, who has held executive roles at companies including Nordstrom, Urban Outfitters, Sephora and Stitch Fix, believes that the search tools currently available in e-commerce are bland and unpersonalized, and while he acknowledged that some progress has been made with the rise of the AI ​​generation, he stressed that generic search engines often don't deliver accurate results.

“We have been training [consumers] For the past 20 years, people have been finding the right classification terms from our site to find what they are looking for. When ChatGPT was launched, people who have been working in this field for many years said that this is [tech] “This allows us to combine language and imagery to express what we need as consumers,” she said.

To solve this problem, Daydream is fine-tuning its pre-built models and creating a detailed dataset of product catalogs combined with the team's deep understanding of the fashion industry, which Bornstein believes will enable better results for natural language queries.

Meanwhile, Bornstein acknowledges that the idea the startup is working on is not unique, and said good execution, tailoring the right model and building a great user interface are key for the company to stand out.

Daydream is certainly entering a crowded field. Big players like Amazon, Google, Mastercard, and TikTok already employ various AI techniques in their shopping platforms, as do startups like True Fit, which focuses on finding the perfect product for shoppers, and Remark, which trains AI personas based on human shopping experts. Google has offered a similar search method for some time, and on a smaller scale, e-commerce startups like Deft and Cherry are trying to combine image and text search to find the right products to shop.

Kirsten Green of Forerunner Ventures believes that the search tools offered by Google and Amazon for shopping are uninteresting and inefficient, and that the only personalization offered by most e-commerce companies is in the form of ads. She sees an opportunity for Daydream to build unique experiences through deep personalization.

“The experiences Daydream provides will reflect user preferences and become more customized as it recognises more detail and patterns. It also offers the potential for a much wider range of products to explore while still providing a boutique store experience,” Green told TechCrunch in an email.

Frederic Damm, general partner at Google Ventures, believes Daydream will have an advantage in the market because customers expect customized experiences, adding that the company has an experienced team to tackle any user adoption challenges.

Luckily for Daydream, its team has plenty of experience building AI, search technology, and e-commerce tools. Bornstein herself sold her last AI-powered shopping service, The Yes, to Pinterest, and her chief product officer, Dan Carey, previously worked in Google's AI research group. Daydream's CTO is Matt Fischer, who led data and applied science at Microsoft; its chief commercial officer is Lisa Green, who worked in tech, fashion, and business development at Google, The Yes, and Condé Nast; and its chief strategy officer is Richard Kim, who was head of shopping strategy and operations at Pinterest.

Bornstein said much of the new funding will go towards hiring engineering talent and rapidly expanding: The company currently has 23 employees and plans to grow that number to 35 by the end of the year.

She added that because Daydream doesn't plan to process orders and simply acts as a discovery layer for shopping, it is relying on commission-based revenue for now and isn't looking to generate ad-based revenue. And because it's a discovery layer, the company may white-label its tech in the future, like visual fashion-focused search company Stye.



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