Despite booming consumer demand, VC interest in e-commerce startups falls in 2020

Walmart reported earnings this morning. Most of the numbers are immaterial to you and I, having little to nothing to do with the world of private capital and startups, but one metric did leap out: In its quarter ending July 31, Walmart's U.S. e-commerce sales" grew by 97% compared to the year-ago quarter, with what the company called strong results across all channels."

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Walmart's total revenue grew 5.6%, so you can see the discrepancy between the company's physical business and its e-commerce efforts, with one managing single-digit gains and the other nearly hitting triple digits. For reference, in its fiscal ending May 1, 2020, Walmart's e-commerce sales grew by 74%. In the quarter ending January 31, 2020 that figure was a far-slimmer 35%.

The e-commerce acceleration is real, as shown through a host of numbers you can parse, including Walmart's own. Heck, when The Exchange was digging through recent fintech venture capital results, we noted that rising e-commerce spend was perhaps part of the reason why late-stage fintech shops had such strong results.

So when I was reading Q2 venture capital data on the state of retail tech broadly, and e-commerce tech more specifically, I was expecting a stellar quarter with lots of dollars invested into a great many deals.

And yet, while Q2 2020 was a bit better than Q1 2020 for e-commerce VC results, it wasn't much of a comeback. And the first half of this year is pretty damn slow overall, when compared to prior results for e-commerce-focused venture capital deals.

What gives? I have an idea or two, but first, let's parse the data that business market data provider CB Insights compiled, as we extend our apparently never-quite-ending look at the ridiculously interesting first-half of 2020 for startups and VCs.

VCs fall out of love with e-commerce startups?

In 2019, e-commerce saw an average of 314 deals per quarter and just under $5 billion in invested capital, with the four-quarter pace for the year coming in at $4.97 billion per.