TLDR:
Key Points:
- Consumer companies are thriving despite challenges.
- Forerunner Ventures’ analysis shows consumer startups can be profitable.
Kirsten Green, founder and managing partner at Forerunner Ventures, believes that consumer startups can be just as successful as enterprise data companies. Despite the struggles faced by companies like Allbirds and Peloton, Forerunner’s analysis of over 12,000 venture-backed companies reveals that consumer companies are just as likely to go public and trade at high revenue multiples as their enterprise counterparts.
The Rule of 40, which celebrates startups with a 40% revenue growth rate and profit margins, applies to consumer companies as well. Forerunner’s report challenges the notion that consumer startups are struggling and argues that there is still significant opportunity in the sector.
It’s important to note that Forerunner’s definition of consumer companies includes a broad range of businesses that rely on consumer behavior and engagement, such as Shopify and Toast. This unconventional categorization highlights the evolving nature of the consumer sector and the diverse revenue models within it.
Despite the negative press surrounding consumer startups, Forerunner Ventures’ analysis provides a different perspective on the sector, suggesting that consumer companies can be a profitable and underappreciated opportunity for investors.
