As return fraud accelerates across ecommerce, retailers are searching for smarter ways to protect margins without damaging customer trust. Pinch AI Raises $5M in new funding as it positions itself as a specialized intelligence layer built to address one of retail’s fastest growing profit drains. The investment signals rising confidence in AI driven post purchase risk management as a core MarTech and commerce capability.
Pinch, an AI powered post purchase intelligence platform, announced a five million dollar seed round co led by Dynamo Ventures and Infinity Ventures, with participation from Defined Capital and PayPal Ventures. The company was founded by former fraud and risk leaders from PayPal, Google, and Simility to address what it sees as a long ignored gap in retail operations.
Pinch was created after its founders observed that while payments fraud had evolved with advanced AI systems, returns were still governed by rigid rules and manual reviews. Average ecommerce return rates now hover around twenty five percent, with apparel and luxury categories often exceeding that level. These dynamics have turned returns into a major drag on growth and profitability.
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Led by Co Founder and CEO Arthi Rajan Makhija, Pinch built what it describes as the industry’s first post purchase risk operating system. The platform autonomously evaluates customer intent, detects emerging abuse patterns, and dynamically orchestrates return and refund decisions across checkout, return initiation, and warehouse operations. The goal is to identify abusive behavior without penalizing loyal shoppers.
“Traditional return systems rely on blunt policies, manual investigations, and guesswork that treat every shopper the same by rewarding bad actors and frustrating loyal customers,” said Arthi Rajan Makhija, CEO & Co Founder. “Abusive behaviors like wardrobing, empty-boxing, counterfeit swaps, and FTID fraud are surging, yet most retailers have no unified view of post-purchase risk. We built Pinch to give retailers an intelligent operating system that continuously learns, adapts, and intervenes in real time. Our platform identifies the abusive 1% without penalizing the loyal 99%, allowing brands to boost margins while actually improving the customer experience.”
Early results point to tangible impact. Enterprise retailers using Pinch have reported roughly an eight percent reduction in return rates and a twenty percent increase in VIP retention. A North American premium apparel brand reduced overall returns by eight percent and achieved a ten percent lift in contribution margin while automating most return reviews end to end.
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Retail leaders have also highlighted the platform’s focus on customer experience. “While many fraud vendors try to force-fit return and policy abuse into platforms built for other use cases, Pinch built its solution from the ground up for this specific problem, and it shows,” said Rohit Nathany, Chief Product & Technology Officer, Mejuri.
Investors echoed that view. “From the beginning, it was clear this team had the domain expertise and technical depth to solve a problem retailers have struggled with for years,” said Jon Bradford, Managing Partner at Dynamo Ventures.
With Pinch AI Raises $5M in fresh capital, the company plans to expand its abuse prediction models, warehouse intelligence, and adaptive return engine. It will also grow its go to market efforts and integrations across order management, returns, warehouse, and customer experience systems. For retailers facing an explosion in return fraud, the funding underscores how AI driven post purchase intelligence is becoming essential to sustainable growth.
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