Kirsten Green’s consumer-focused Forerunner Ventures, which led early checks for Warby Parker, Away and Glossier, has closed on $500 million for its latest fund, the firm announced Monday.
The firm’s seventh flagship fund, which is the same size as its 2022 vintage fund, sends a strong signal of confidence in consumer tech, an area of investing that has fallen out of VCs’ favor in the past two years.
Forerunner will write checks out of Fund VII of between $1 million and $20 million from seed to Series A. It brings the firm’s total AUM to nearly $3 billion.
Despite the industry’s retreat from consumer tech, Green is consistently bullish.
“AI’s ascension is paired with consumers increasingly expecting far more assistance and quality from what they invest their time and money in,” Green wrote in a blog post announcing the fund.
Founded in 2012, Forerunner has made its name as one of Silicon Valley’s most prominent consumer tech investors, sticking to the segment as its sole focus. Most recently, Forerunner has led rounds into AI-enabled personalized shopper Daydream, social media app Pie and AI-powered personalized travel startup MindTrip.
Forerunner’s performance has been mixed. Its 2016 vintage fund, Forerunner Partners III, generated an internal rate of return of 22.6%, outperforming benchmarks. However, Fund VI, closed in 2018, reported an IRR of 8.29% according to Q1 2024 returns by the University of Texas endowment fund, one of Forerunner’s LPs. PitchBook does not have LP returns data on its first two funds. Forerunner led seed rounds for Warby Parker and banking company Chime out of its debut fund.
The sector has weathered a tough storm. Consumer tech companies raised $40 billion in venture funding in 2021 in the US. By 2023, that figure had dropped to $9.6 billion, according to PitchBook data.
In the last couple of quarters, however, interest in consumer tech has been ticking up again. Autonomous vehicles developer Waymo raised $5.6 billion led by Alphabet in October at a $45 billion valuation. Clothing brand Vuori received $825 million earlier this month co-led by General Atlantic and Stripes.
Meanwhile, some of the companies most strongly favored to IPO in the coming months are consumer-facing: Chime and Klarna are two of the industry’s most-anticipated public listings.
Correction: An earlier version of this article incorrectly identified Forerunner Ventures’ investment into The Farmer’s Dog as part of its debut fund and incorrectly stated the firm’s founding year. Forerunner was founded in 2012. (Nov. 11, 2024).
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