London-based circular fashion start-up Fleek has raised $25 million in a Series B funding round to speed up development of artificial intelligence (AI) technology that will make the second-hand fashion market more efficient. The investment will help the company to further digitize sourcing, grading, and trading processes and continue to grow its used apparel marketplace.

The funds have been allocated at a moment when the second-hand clothing industry is expanding much faster than the clothing industry itself. Even though there is growing consumer demand, a lot of the supply chain is still manual, quality is varied, and trading networks are weak. Fleek seeks to tackle these issues by leveraging AI and digital marketplace technology to build a more transparent and streamlined environment for buyers and suppliers globally.

AI Technology to Modernize the Used Apparel Industry

Fleek was established in 2021 by Abhi Arora and Sanket Agarwal, and is a business-to-business platform that brings together vendors of second-hand clothing and purchasers from around the world. The company has also created AI-driven tools that streamline multiple aspects of the resale process, minimizing the need for manual checks and enhancing efficiency.

The global second-hand fashion market is more than $200 billion, but much of its hardware is lagging behind the soaring demand, the startup says. Manual sorting techniques, variable grading requirements, and fragmented information systems can make it challenging for suppliers to maintain accurate prices and inventory levels. These inefficiencies can cause delays in transactions, higher expenses, and waste of clothes.

Fleek Sort is an AI-powered tool that can classify and rate garments.

Fleek Sort is one of the primary technologies behind Fleek, and it's a vision-language AI model that has been trained with millions of second-hand marketplace transactions. It uses photos or video footage to identify garments, classify products, evaluate quality and create product listings without manual review.

The company has already implemented Fleek Sort in sorting hubs in Pakistan, India, and Dubai, and is also conducting pilot projects in the United Kingdom, Europe and the United States. The technology aims to normalize grading processes in various markets and contribute to consistency in product assessments.

Once clothing is processed, its stock is automatically added to Fleek's marketplace. The platform then uses AI-based pricing, search, recommendation and matching capabilities to match available inventory to interested buyers around the world. Every sale adds more data to the AI model, which enhances its ability to predict what's good for the market and what items are available for sale.

The objective of the Data-Driven Platform is to enhance the efficiency of the market.The aim of the Data-Driven Platform is to increase the efficiency of the market.

The ongoing data from transactions creates a foundation for Fleek's AI to get a more accurate sense of the worth of secondhand garments, understand purchasing patterns, and enhance inventory suggestions over time. These capabilities help suppliers realize more value from used garments, and buyers to more effectively and transparently source garments.

Talking about the company's technology, co-founder and Chief Technology Officer Sanket Agarwal said there are a lot of useful data that is yet to be tapped into the global second-hand supply chain. He added that Fleek has built the world's first AI system that is trained to understand the nature of second-hand products, from identification, valuation, buyer interest, to market opportunities. Agarwal said each transaction would enhance the intelligence of the system and can become vital infrastructure for the future of the resale industry.

Marketplace expands across international markets.The marketplace expands across international markets.

According to Fleek, since its inception it has linked more than 2,000 suppliers to more than 50,000 buyers in over 100 countries. The company estimates that preventing more than 12 million garments from entering waste streams thanks to its platform.

Company estimates say this has helped the environment, as some 13 billion litres of water have been saved and the equivalent of some 23,000 tonnes of carbon dioxide have been avoided due to new garment production. These figures are also calculated by the company, but they show the general goals of the circular fashion economy of prolonging product life cycle and minimizing the waste of textiles.

Funding to Support Global Expansion

The funds raised will go towards scaling up its AI engine, second-hand clothing market connections, and global marketplace infrastructure, said Fleek. The company will further expand its supply base and will also continue to enhance the level of technology platform automation.

The Series B round was co-led by Burda Principal Investments with eBay, FJ Labs, H14 and other existing investors such as Andreessen Horowitz, HV Capital, Y Combinator, and others participating in the round.

Julian von Eckartsberg, Managing Director Europe at Burda Principal Investments, said the firm is impressed with Fleek's technological setup which it feels will pave the way for the next generation of the global fashion industry. The company's expanding supplier network and artificial intelligence-based system puts them in a strong place to expand with the rising demand for second-hand apparel, he added.