Phia raises $35M to build AI-powered shopping agent

Phia, a 10-month-old startup based in New York City, has raised $35 million in a funding round led by Notable Capital. The round also saw participation from Khosla Ventures and returning investor Kleiner Perkins. The fundraise follows an earlier $8 million round closed by the company. Founded by Phoebe Gates and Sophia Kianni, the startup operates with a team of about 20 employees and is positioning itself to change how consumers interact with online retail.

The platform currently functions as a mobile app and browser extension that helps users find secondhand alternatives to retail items—for instance, suggesting an $80 secondhand dress instead of a new $200 version. Phia operates on an affiliate marketing model, which is a revenue model where the app earns a commission on sales. Since its launch, the company has onboarded 6,200 retail partners and achieved 11x revenue growth. According to the founders, Phia’s new offerings provide brand partners with data showing a 15% increase in average order value, 30% stronger new customer acquisition, and 50% lower return rates.

The rapid expansion has not been without friction. In November, Fortune reported that cybersecurity researchers found a feature in Phia’s browser extension that was able to capture the HTML code of the websites users visited while using the extension, essentially collecting data from their browser history. Phia subsequently removed the browser extension feature. In a statement, the company asserted that the extension previously logged webpage content to understand if the site was a shopping destination, but that Phia has never stored this data in the past or at present. Co-founder Sophia Kianni emphasized that the company’s backend data is aggregated, anonymous, and used solely to help users find products efficiently.

Phia plans to use the newly secured capital to recruit machine learning engineers to build out its technology. The founders aim to transition the platform into a holistic AI shopping agent that replaces static HTML pages with personalized feeds and outfit recommendations based on what users already own in their closets. “Commerce itself for the consumer hasn’t really been adapted in the last 30 years, and the opportunity to make a truly personalized, end-to-end shopping experience is today,” said Phoebe Gates, founder of Phia.

Why it matters

Phia is attempting to shift consumer behavior from static web pages to personalized, AI-driven shopping agents, aiming to increase efficiency in the retail ecosystem.