• Investors are opening their wallets to social-shopping startups as TikTok's US future sits in limbo.
• Companies like Whatnot and ShopMy have raised rounds in the tens of millions of dollars.
• Upstarts are also making acquisitions and launching creator funds to capitalize on the moment.

The moment is ripe for social-commerce startups in the US.

Investors are betting big on platforms like Whatnot and ShopMy. In January, Whatnot said it closed a $265 million fundraising round after crossing $3 billion in livestream sales in 2024. ShopMy also said it closed a new round worth $77.5 million after reaching profitability.

"The timing of this raise aligns with a fundamental shift we're seeing in the market — creator marketing is evolving from an experimental channel into a core performance driver for brands," ShopMy's CEO Harry Rein told Business Insider.

Part of the category's momentum stems from TikTok. Over the past year, the company helped popularize livestream selling and connect thousands of merchants with influencers via its e-commerce tool, Shop.

But the app's US future is uncertain. It's disappeared from app stores and faces other fallout from a divest-or-ban law that requires its Chinese owner to separate from its US assets. Some e-commerce partners are testing alternative platforms to diversify where they sell.

Outside ShopMy and Whatnot, apps like Flip are gaining steam this month. Flip, a TikTok-like app focused on user-generated product reviews, recently landed in the top 10 in Apple's app-store rankings. Flip could benefit from a TikTok ban if the company fails to find a path forward by an April deadline set by President Donald Trump.

"If the TikTok ban does move forward, these platforms have a huge opportunity," said Ollie Forsyth, a former senior manager at investment firm Antler who now writes the newsletter New Economies. "Not only can they acquire huge volumes of creators, they can also acquire a huge number of new consumer users."

How social-commerce startups are seizing the moment

On top of investors pouring cash into social-commerce startups, startups themselves are spending now to capitalize on a moment of flux in the US market.

Flip pledged to offer equity grants to creators, for example, to encourage them to engage more on the platform.

Attracting new users in large numbers will be key to filling the TikTok void if a ban were to go into effect, said Matt Nichols, a partner at Commerce Ventures.

TikTok Shop succeeded because it had a unique combination of a large user base and an algorithm that could match those users with products they were likely to buy, Nichols said.

"Twenty years ago, retailers dictated what consumers purchased, and there was a long sales cycle," Nichols said. These days, there are "more quickly changing demand trends based on influencers, which has worked really well for TikTok Shop, but also hyper-fast retailers like Shein."

As an investor, he sees the best opportunities in startups working to help retailers and influencers succeed on other platforms that already have similarly big user bases, like Instagram and YouTube.

Former TikTok e-commerce leader Sandie Hawkins said in a recent interview with BI that the shopping experience TikTok made popular is likely to be imitated elsewhere.

She said social shopping creates a "community environment" where friends tell you what they think you should buy. "You're taking those recommendations right there, and you're closing the loop instead of having to send them to go someplace else," she said.

Here's a breakdown of some of the big deals announced in January in the social-commerce category:

• Livestream shopping app Whatnot closed a $265 million Series E round at a roughly $5 billion valuation. DST Global, Avra Capital, and Greycroft led the round, with participation from Andreessen Horowitz, Lightspeed Venture Partners, and Durable Capital Partners, among others.

  Whatnot's CEO Grant LaFontaine told BI the company planned to use its new funding to scale marketing, product, and engineering and expand into new markets like Australia.

• Gloss Ventures, an investment company focused on launching creator brands through social commerce and other channels, raised $15 million from private-equity firm Peterson Partners.

  Gloss Ventures' cofounder Quinn Roukema told BI the new funds would support its marketing efforts and plans to expand retail sales globally.

• Creator-affiliate platform ShopMy raised a $77.5 million Series B round led by Bessemer Venture Partners and Bain Capital Ventures. Menlo Ventures participated, as did previous investors Inspired Capital and AlleyCorp.

  Rein, ShopMy's CEO, told BI the company planned to use its funds to expand into new categories like hospitality and health and wellness, as well as to scale its performance marketing tech with new data analytics and measurement features.

• Influencer-marketing firm Later announced a $250 million acquisition of affiliate company Mavely. The deal was funded with a strategic investment from growth equity investor Summit Partners. CEO Scott Sutton told BI the purchase aimed to help Later offer clients a fuller picture of their marketing spend.
  
  He said Mavely has 120,000 creators driving sales of over $1 billion in merchandise value.
  
  "All of that data and all of that ability to track what's happening in the creator economy helps us to make money for creators, helps consumers discover the right types of products, and helps us deploy ad dollars for marketers in a really seamless way," Sutton said.

• Influencers have filed a lawsuit against Capital One.
• They allege its Shopping extension hurt their earnings by unfairly claiming credit for sales.
• Capital One said it disagreed with the premise of the lawsuit.

First, the influencers came for PayPal's Honey. Now, Capital One is under scrutiny.

Capital One is the subject of a lawsuit filed this week by creators who allege the company's Shopping browser extension hurt their affiliate-marketing commissions by stealing credit for driving sales.

"We disagree with the premise of the complaint and look forward to defending ourselves in court," a Capital One spokesperson told Business Insider.

Capital One Shopping is a free browser extension that searches for discount codes and coupons, compares prices across about 30,000 online retailers, and lets users earn rewards that can be exchanged for gift cards. It makes money by earning a commission when its users purchase an item from its merchant partners.

In a class-action lawsuit filed on Monday in a Virginia court, two creators who promote products on social media allege the browser extension is designed to "systematically appropriate commissions that belong to influencers."

The lawsuit alleges Capital One Shopping "stole credit" by swapping out influencers' affiliate-marketing browser cookies with its own. Cookies are small data files stored on a user's device that help companies track users' browsing history.

The war for the last click

Much like recent lawsuits filed by influencers against PayPal over its Honey browser extension, the Capital One Shopping case homes in on the marketing practice of "last-click attribution."

In this model, cookies, unique web links, promo codes, and other analytics tags are used to determine the last piece of content a user engages with before they make a purchase. That entity, be it a YouTube video or an ad, gets credit for the purchase.

The practice has fallen out of favor in some marketing circles because it doesn't consider the full cycle of persuading someone to buy a product. There are also concerns that an intermediary may try to game the system to unfairly claim last-click credit for purchases that they had little to do with.

Companies in the affiliate-marketing industry often seek to adhere to "stand down" practices, where they won't override another affiliate's cookies.

In their lawsuit, the content creators Jesika Brodiski and Peter Hayward allege Capital One Shopping took credit for sales and conversions that were originally derived from affiliate-marketing links they shared on social media.

Brodiski shared affiliate-marketing links on social media for products on Walmart.com, and the lawsuit claims that — if a user had the Capital One Shopping extension activated during the checkout process — Capital One would remove her associated cookie and replace it with its own. The lawsuit says Brodiski earned about $20,000 through affiliate marketing in 2024 but that her earnings were hampered by Capital One Shopping.

Hayward is part of the Amazon affiliate-marketing program and similarly alleges Capital One would replace his referral tag with its own.

The lawsuit also says Brodiski and Hayward "face future harm in the form of stolen referral fees and sales commissions because the Capital One Shopping browser extension continues to steal affiliate marketing commissions with each passing day."

A court will need to certify the class action in order for the case to proceed

The plaintiffs are seeking a jury trial. If the case is certified as a class action, other influencers could join the suit.

Christopher Roberts, a partner and class-action attorney at the law firm Butsch Roberts & Associates, told BI the most difficult part of such cases is getting the class certified. The court will need to rigorously analyze various factors, such as whether the class is big enough and whether it would make more sense to litigate complicated cases individually.

Certification aside, Roberts said he felt the case would come down to what discovery showed.

"This case, on its face, is very well pled," Roberts said, "and it's pretty specific as to the code for this app being supplanted on the computer so that they can get the affiliate payment."

• Content creators have filed two lawsuits against PayPal over its Honey browser extension.
• The creators allege Honey took some of their potential affiliate earnings by improperly claiming credit on sales.
• Honey disputes the allegations in the lawsuits and said it would defend against them vigorously.

Influencers are suing financial giant PayPal in two class-action lawsuits filed this week. The content creators separately alleged that the company's browser extension Honey, which searches for coupons around the web, took affiliate commissions away from them by improperly claiming credit for driving sales.

A spokesperson for Honey said the company disputes the allegations in the lawsuits and would defend against them vigorously.

The lawsuits ask the US District Court in Northern California to consider what's fair play in the cutthroat world of affiliate marketing. It's a major business that drove about 20% of US e-commerce revenue on Cyber Monday, according to Adobe Analytics.

Affiliate marketing is a practice in which YouTubers and other content creators earn a commission if they inspire a purchase. Honey similarly earns money through affiliate commissions, getting paid if a user clicks on its browser extension to search for a coupon or deal before buying.

The referrer who actually gets paid the commission — and it's generally only one — is determined by a mix of links, browser cookies, and other tags that indicate the final source of referral, a practice known as last-click attribution. In short, the last click wins.

"Honey follows industry rules and practices, including last-click attribution, which is widely used across major brands," the Honey spokesperson said.

In the lawsuits, the plaintiffs allege that Honey would take credit for driving online sales it didn't actually help with. The suits say that even if Honey couldn't find a coupon, it would get the last click, sometimes taking it away from a content creator who had linked to a product.

"In its simplest form, Honey is not providing benefits that they say they're providing, and they are basically saying to online retailers that they were responsible for a referral for a sale when they are not," Devin Stone, a counsel for one of the plaintiffs who also runs the YouTube channel LegalEagle, told Business Insider.

The Honey spokesperson said the extension helps "millions of shoppers with additional savings on their purchases whenever possible" while helping merchants "reduce cart abandonment and comparison shopping."

Honey's last clicks may be tough to challenge in court

The plaintiffs are seeking damages as well as injunctive relief, a measure that would require Honey to change its affiliate practices. If the lawsuits are certified as class action, other creators who believe their affiliate businesses were harmed by Honey could also sign on to the suits.

But it may be tough for creators to prove that Honey is doing anything unlawful by taking credit for driving sales, said Robert Freund, an advertising and e-commerce lawyer. PayPal could argue that Honey is driving final sales even in instances when it fails to offer a discount coupon. And because it's a browser extension, it's often going to be the last click a user makes before purchasing.

"The difficulty there for the plaintiffs is you're essentially trying to make the system of last-click attribution for affiliates unlawful," Freund told BI. "I can understand why a creator affiliate would think that it's unfair, but I don't know that it's illegal."

"I don't think it's a frivolous case by any means, but there's certainly some challenges ahead for the plaintiffs," he added.

Honey has leaned on creators for its own marketing efforts

Even if Honey prevails in getting the lawsuits dismissed, it may have to adjust its practices in order to make peace with the creator community. The company works with a lot of influencers to advertise its product and could lose a large chunk of that marketing channel if creators believe it's damaging their affiliate businesses.

Honey has been under fire in the creator community since December 21, when YouTuber MegaLag posted a video that criticized the company's affiliate marketing practices.

Since then, other prominent creators like Marques Brownlee and Hank Green have spoken out against the extension.