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Welcome back! For more than a decade, Forerunner Ventures founder Kirsten Green has had a front-row seat on what’s hot or not in consumer startups. After a particularly brutal period for these startups when interest rates spiked, investors like Green are especially optimistic—largely because they’ve seen artificial intelligence breakthroughs create multibillion-dollar consumer businesses for OpenAI and Perplexity. “Typically, there is more money than amazing startups or exponential businesses,” Green said on the eve of the San Francisco firm’s first-ever conference. Now, “there’s more opportunity” than the firm can realistically invest in. But Green, whose firm last fall closed a $500 million fund to invest in early-stage consumer startups, also worries that some investors in AI-enabled consumer apps are primed for disappointment. Individuals have been quick to try out AI-powered search apps and image-generating tools. But for some startup customers, the current excitement may wear off. “The work you have to go from trial to habit is still very real, and until you’re in the habit area, I don’t know if you can evaluate your revenue clearly,” she said. “Virality is a feature, not a foundation.” Green is highlighting a worry we’ve heard from investors periodically during this AI rush. Several high-profile startups, such as Cursor maker Anysphere and search engine Perplexity, have hit $100 million in annualized revenue in just a few years. In an even more eye-popping trajectory, coding assistant Lovable passed $50 million in annual recurring revenue just six months after launching. These startups are hitting milestones far faster than software companies did before OpenAI’s GPT breakthroughs. But investors are worried that growth will falter as consumers and businesses fail to renew once their initial subscriptions expire. Green says she expects some, like coding assistant Cursor, to build lasting businesses off their early popularity. But she is skeptical that hitting big revenue milestones quickly guarantees startups’ success. “Do I suddenly think we’re in a completely new paradigm of what growth looks like, and now you’re not a good company if you don’t get to $100 million in revenue fast? I don’t think so,” she said. Green has seen virality up close. In 2013, she invested in online makeup retailer Glossier, which grew quickly by reaching fans on social media and blog posts. But demand cooled as new beauty brands reached young customers on TikTok. The company has discussed raising money at a sharply lower valuation than its 2021 peak of $1.8 billion, according to Puck. Forerunner also backed Oura, maker of a health wearable ring, in 2019. Oura most recently raised capital at a $5 billion valuation, a big markup from Forerunner’s initial investment. The most notable win for Forerunner came earlier this month when Chime, the banking startup Forerunner backed in 2013 during its seed round for 17 cents a share, went public at $27 a share. (The stock has come off early highs, but recently traded around $33.) The firm recently backed two young consumer AI companies: Daydream, an AI search tool for shopping, and Arcade, which lets consumers use generative AI to create jewelry or furniture they can then purchase. Recently, it has also made investments in companies like Decagon, which is selling customer service support to businesses including consumer ones such as Duolingo, the foreign language app. Forerunner is now set to start investing out of its new fund. AI is inherently part of every startup the firm’s partners are speaking to. “AI is technology in 2025,” Green said.
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