Retail tech start-up Lily AI secures $25 million Series B financing

PARIS: Lily AI, a product attributes platform that ensures fashion companies and consumers speak the same language, has closed a $25 million Series B round.

The round saw the participation of new and returning investors including Canaan Partners, Conductive Ventures, Sorenson Ventures and New Enterprise Associates.

The new financial backing is meant to support the California-based start-up's plans to grow its business further into mid-market retail e-commerce brands; branch out into home and beauty; and expand geographically, with an eye toward the U.K. and Europe. It also plans to offer further applications within the retail stack.

Lily AI was created in 2015 by entrepreneurs Sowmiya Chocka Narayanan and Purva Gupta as an AI-empowered app with emotional intelligence for fashion shoppers, with initial funding from investors such as Unshackled Ventures, an early-stage venture capital fund for immigrant-founded start-ups.

Initially, the female-led company looked to build an emotional intelligence-powered shopping experience, available through an iOS app, that used machine learning to understand a woman's preference and body perception to offer confidence-boosting recommendations.

Its seed funding round led by NEA and Unshackled Ventures raised $2 million. In 2020, it secured $12.5 million in Series A funding from Canaan Partners, NEA and Fernbrook Capital Management, which allowed the company to pivot from its earlier app-based solution toward an enterprise product offering focused on creating customer-centered product taxonomies to improve e-commerce site search, demand forecasting, merchandise planning, product recommendations and discovery, as well as search engine optimization and marketing.

“The language of the consumer is basically where we use deep image recognition technology [and] industry-leading AI capabilities [to] read images and text, extracting attributes that matter to the end consumer,” Gupta, the company's chief executive officer, explained to WWD.

Gupta said the Series B funding arrives “at an interesting point where we have proven with the first few applications [that] we've been able to solve a technology problem through image recognition.” It has then shown fashion companies the impact that feeding the resulting product attributes could have in the short term, which the executive estimated at up to 10 percent of a business' revenue. It counts Bloomingdale's, Gap Inc., Macy's and ThredUp among its U.S.-based clients, and the executive said they were in talks with “a very large U.K.-based retailer.”