The first quarter of 2026 confirmed a structural change in how venture capital values the fashion industry. Investors are increasingly supporting platforms and infrastructure instead of brands. Capital flows reflect this.
Over $620 million in the first quarter of 2026
In the first three months of the year, fashion-related startups have raised more than $620 million (€538 million) in disclosed funding across over 15 rounds. The largest round was from San Francisco-based direct-to-consumer platform Quince. This closed a Series E financing of $500 million in March at a valuation of $10.1 billion.
The company, whose sales topped $1 billion last year, uses AI-driven supply chain optimization to offer goods at a fraction of traditional retail prices. Investors rated it as a technology company, not a fashion retailer.
This pattern is not limited to a single case. US AI shopping assistant Phia, founded by Phoebe Gates and Sophia Kianni, raised $35 million in a Series A round. The round was led by Notable Capital, with participation from Khosla Ventures and Kleiner Perkins. This gave the company a valuation of $185 million. The platform reports 13 percent higher conversion rates and 50 percent fewer returns for partner brands.
Nashville-based fintech company Croissant secured $28 million in a round that included equity and debt capital. Croissant is developing a payment infrastructure for the second-hand fashion industry. CEO John Howard said the platform will begin paying brands upfront for future resale transactions.
Statusphere, a US micro-influencer marketing platform, closed an $18 million Series A round. Statusphere works with brands such as Parlux, Kendo Brands and Express. The round was led by Volition Capital.
Funding for sustainable projects remains consistent
In the area of material innovation, the rounds are smaller but consistent. British biotechnology company Epoch Biodesign closed a strategic round of $12 million. Investors included Canadian activewear brand Lululemon, Kompas VC and Leitmotif, a venture capital firm backed by Volkswagen. The financing brings total capital raised to over $50 million. It will support the commercialization of an enzymatic recycling technology for virgin-quality recycled nylon.
San Francisco-based climate tech start-up Rubi raised $7.5 million. The round was co-led by AP Ventures and FH One Investments, with participation from H&M Group and Talis Capital. It serves to further develop its CO2-to-textile platform.
Cambridge-based biotech company Sparxell secured $5 million in a pre-Series A round. The round was led by Swen Capital Partners and aims to fund the scaling of a plant-based, biodegradable color technology. Swiss traceability company Haelixa received two million euros in a pre-Series A round to expand DNA-based product authentication technology.
High-profile investors are entering the sector
What makes the current situation notable is not the transaction volume. This has been stable at around 20 to 28 transactions per quarter since the beginning of 2024. The change lies in the profile and size of the investors. Firms such as Andreessen Horowitz (a16z), Khosla Ventures, Kleiner Perkins, Index Ventures and Forerunner Ventures have entered fashion technology in the last 18 months.
BlackRock is reportedly preparing to take a stake in Lithuanian resale platform Vinted. The valuation is around eight billion euros. The Qatar Investment Authority is negotiating a minority stake in Italian luxury sneaker brand Golden Goose. Corporate venture arms, notably Unilever Ventures and the L’Oreal Bold Fund, also completed several transactions during the quarter.
According to data from Crunchbase, annual funding for startups at the intersection of AI and fashion has remained stable at around $100 million since 2022. The broader AI-generated fashion market was valued at $2.14 billion in 2024. It is expected to reach $75.9 billion by 2035, according to research firm Meticulous Research. Start-up consultancy Waveup found that companies that use AI in their operations receive around three times more capital than traditional fashion start-ups.
For industry executives, the conclusion is clear. Venture capital firms are increasingly evaluating fashion companies using the same criteria as software platforms. They look at engagement metrics, unit economics, and workflow integration instead of brand value and wholesale margins. This leads to a reassessment of what the industry deems valuable. The companies that will attract capital in 2026 will be the ones that turn the fashion industry’s persistent inefficiencies into quantifiable problems. These inefficiencies range from overproduction to opaque supply chains. The solutions for this are measurable and technology-driven.
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