At a Glance
- Phia just closed a $35 million round led by Notable Capital, with Khosla Ventures and Kleiner Perkins joining.
- The company has 11× revenue growth, 6,200 retail partners, and hundreds of thousands of monthly active users.
- A recent security incident saw its browser extension capture webpage content, but the feature was removed after notification.
Why it matters: The funding and incident highlight both the rapid growth of AI-driven shopping tools and the importance of data security for user trust.
Phia is a mobile app and web browser extension that helps shoppers save money by showing resale or second-hand alternatives to the products they’re looking for. A snowstorm that battered New York City left its founders, Phoebe Gates and Sophia Kianni, stuck in their apartments while their team shuffled into the office.
Snowstorm Keeps Founders at Home
Kianni laughed, saying, “We were like, ‘It’s okay, stay home.’ It’s dangerous. Nobody needs to go to the office.” The founders remained in their apartments, but many employees still made the trek to the office. Kianni added, “Our team is sending Slack photos right now… The entire porch is snow.”
Funding Milestones
The startup, ten months old, just closed a $35 million round led by Notable Capital with participation from Khosla Ventures and returning investor Kleiner Perkins. Earlier, in October on the News Of Philadelphia Disrupt stage, Phia had closed an $8 million round that included checks from celebrity investors such as Kris Jenner, Sara Blakely, and Sheryl Sandberg.
> Gates explained the new fundraise: “We are just at such a prime time of opportunity.” She noted that commerce has not been adapted in the last 30 years and that a truly personalized, end-to-end shopping experience is now possible.
Business Model and Partnerships
Phia’s core function is to display resale or second-hand alternatives. For example, if a shopper is about to buy a brand-new Anthropologie dress for $200, Phia can show the same dress on Poshmark for $80.
Kianni said, “A lot of [brand partners] were very much taking a bet on us and joining the platform when we had less proof points.” The app earns a cut from sales, similar to an affiliate model. She added, “With new offerings that we have, we actually have data to be able to show things like, we can give them a 15% increase in average order value, or 30% stronger new customer acquisition, or 50% lower return rates.”
Marketing Strategy and Growth
The founders, who are Gen Z digital natives, have amassed over 2 million followers across social media. Their podcast, “The Burnouts,” features interviews with figures from Bryan Johnson to Paris Hilton. They use this reach to promote Phia’s value proposition.
Gates stated, “Gone are the days where you would go to a static HTML page that’s not personalized for you, your taste, your sizes, and what you might want to donate or sell.” She envisions a future where shoppers start their journey on Phia with a personalized feed and outfit recommendations based on their current closet.
Security Incident
In November, Fortune reported that Phia’s browser extension could capture the HTML code of websites visited while the extension was active, effectively logging browser history. Phia removed the feature after notification. In a statement to Fortune, the company said, “The extension previously logged webpage content to understand if the site was a shopping destination, and that Phia has never in the past, or at present, stored this data.”
Kianni assured users, “We always are extremely transparent with users about the reasons why we are requesting certain permissions, and everything is displayed very clearly up front.” She added, “In terms of the way that we’re building our tech and our back end, we’ve always made sure all data is aggregated, anonymous, and only used for the purpose of being able to help users find the best products as efficiently as possible.”
Future Vision
Kianni said, “I think that’s where AI agents play a huge role.” She believes that manual shopping work can be compressed to deliver the shortest path to the perfect item. Gates added, “We’re on the cusp of a completely new way of shopping. We want to make the entire ecosystem just way more efficient and make shopping fun again.”
Phia plans to use the new capital to recruit top machine learning engineers, aiming to turn the app into a “holistic shopping agent.” Kianni emphasized that the company’s number one goal is attracting top engineering talent, and that the capital will help attract the best people.
The current team, about twenty people, works out of the New York office when weather permits. Kianni notes, “It’s not even about team size anymore. It’s just about the quality of the talent you’re attracting.”
Key Takeaways
- Phia’s $35 million round positions it to scale its AI shopping platform.
- The company’s rapid revenue growth and extensive retail partnerships underscore its market traction.
- A recent security incident highlights the need for transparent data practices in AI-driven services.
- The founders plan to leverage new funding to hire top engineering talent and expand the platform’s personalization capabilities.
