What will consumers want this year? To find the answer, we talked to someone who thinks about this question all the time. In fact, she says it guides all her decisions.
Nicole Johnson has worked for more than ten years at Forerunner Ventures as a partner. This San Francisco company focuses on consumer businesses and manages more than $3 billion in investments. They have supported many successful startups like Warby Parker, Away, Glossier, Prose, Chime, Hims & Hers, and Marc Lore's food delivery company Wonder.
We talked with Johnson about exciting consumer trends, why consumers are moving to private messages, and what kinds of investments she wants to make. We also discussed how new business owners can get her attention in meetings. Here are the main points from our talk, which we have shortened and made clearer.
What’s your outlook for the consumer this year?
We are optimistic, bullish as ever. While there’s so much uncertainty in the world, you have a consumer who is savvier and looking for more agency than ever. That’s an open-minded consumer, so it feels like a great time of opportunity.
What are some consumer areas that excite you right now?
We’re thinking about the intersection of consumer behavior and emerging technology. We’re seeing strong interest in offerings that are more anticipatory, more personalized, more responsive and enable action for the consumer. We think about the consumer wanting—or needing—to be the CEO of their own life, taking matters into their own hands, and having a little more personal agency. AI and genAI is obviously a huge part of this. It enables a lot of these personalized actions.
Broadly, this is a theme we’re seeing and monitoring across consumer health care, which is a large area of focus right now, given all the need and opportunity that exists. That’s top of mind for me; also, personal finances, personal safety and security, education, learning, career development.
Are there any consumer trends or areas that you think are oversaturated right now?
Now that the first wave of genAI companies has been around for a bit, we’re seeing more and more and more companies that are solving real problems. It’s not just little novelties. We’re seeing platforms holistically delivering on consumer needs in health care, finance, education, child care, and parenting, so it feels like a lot of the extra buzzy stuff has evaporated.
You’re bullish on the consumer. Are you bullish on venture as well? Is it still a tough environment for startups to get funding?
It still feels tough to get funding for the average company. The bar has gone up. Excellence still wins at the end of the day. It’s harder to be a middle-of-the-road company than ever. If you’re bottom quartile or bottom half, forget about it. For that middle-of-the-road company with a good, but not the greatest, story of momentum and potential, I think it’s harder to get funding.
But there’s still an incredible volume of activity happening in that upper echelon that has us really excited. The industry has been through a lot, as has the market at large, but people have their heads on straight. We’re feeling good about 2025.
What sorts of companies are you looking to invest in this year?
With the great appetite for personalization in health care, we’re looking a lot at personalized medicine, specifically as it relates to AI companies that are able to serve up personalized insights, whether that’s through combining different biometrics or vast data inputs to deliver more personalized care. We’re seeing people deliver that in a lighter-weight fashion through your phone, instead of needing the full four-wall clinical engagement model.
With finance, there’s a lot around lighter-weight offerings that allow wealth management to reach a broader audience. A single wealth adviser used to be able to service just a catch number of customers, but now with technology, they’re able to scale that more efficiently.
There’s also a lot in and around edtech, with personalized learning experiences. We’re seeing a lot of AI learning for kids. There are the B2B models selling to schools or teachers, and there are ones that are going direct to consumer and selling as a companion for parents looking to have their kids engage more thoughtfully—and safely—with AI, to have enriched learning experiences, but in a more controlled setting. I think some of those ones are super interesting, because you already, naturally, have a lot of parents handing the device to their kids. Their kids are playing with different AI-powered interfaces. Maybe a little bit of scaffolding would be useful. Security and privacy concerns are starting to catch up.
When a founder pitches you, what are the green flags you are looking for?
There’s a huge emphasis on the founder themself. I can’t say that enough. One thing that’s particularly important—and maybe even more important for a consumer company that needs to live and die by understanding their customer and being able to reach them in a noisy audience: We need a founder who’s really magnetic and visionary. A person who can pull people into the narrative, get all the right people and resources involved, whether that’s PR, talent, investors at the current round, downstream investors later on, or eventually the public market.
There’s also founder-market fit. Are they solving this problem because they randomly came across it? Or are they really uniquely suited to tackle it? Because if the idea is any good, we’re going to see 10 others in that category, so why this founder? This team?
We also look at structural or distribution advantages that a company has. That could be some marketing channel they have an incredibly unique grasp of. It could be their access to influencers or thought leaders in their category. For a company with physical products, it could be something around IP or supply chain that gives them a really unique hook. What is the unfair advantage here?
What does this kind of dynamic founder, this magnetism, actually look like in a pitch meeting?
As a potential investor, I try to put on the hat of: If I had a really good, cushy job at a top company, would I risk it all and go work for this person? Could I see myself being so excited about this that I would drop everything to get on that journey? Would I tell my best friends to go take this big life risk and join this early bandwagon? Frankly, that’s what it takes to get the best talent. After the founder starts the company, it’s no longer just about them. It’s about the full might of the team that they’re assembling around them.
Does this person have the ability to get people excited and have a command of the business—not just of the 20 slides they’ve presented, but of all the next-level questions that inevitably get asked? A good pitch is not usually somebody reading through 20 slides and then a little Q and A at the end. Typically, it’s a bit more conversational, and it’s certainly encouraging when folks can go off script and go really deep on whatever, wherever the questions take us organically.
I’ve got my eye out for really unique insights about a market. A lot of the pitches that come across our desk, they’re in subcategories under the umbrellas of consumer and commerce that we’ve already done a lot of diligence and proactive research on before a meeting. So I’m definitely impressed when people have taken the thinking one or two steps further and are coming to the table with unique insights about a category that the next person, who also saw the white space and ran after this opportunity, doesn’t have in their pocket.
Are there any unique or creative channels that you’re seeing your portfolio companies use to reach new customers?
One big thing on people’s minds right now is this inevitable, massive shakeup coming in advertising. Everybody’s bracing themselves and looking to diversify. If you look at where searches are increasingly beginning, it’s no longer just Google. These new AI-native interfaces beg a new ad-unit experience and business model. We’re just starting to see solutions to help brands figure out how to monitor how they show up in these nascent but burgeoning channels, and we expect whole businesses will be built on this evolving need. But it’s still really early innings. We’re in that hyper-creative, everything moving fast, changing fast phase right now.
Is there even a word yet for that SEO equivalent for genAI tools?
No. A lot of these newer market companies are trying to mint terms, but I don’t think anybody’s landed on exactly what that is yet. I would also add that with all the shakeup that’s going on, we’re seeing more of an emphasis on one-to-one communications on social media.
So much consumer activity has moved to [direct messages]. People are still paying attention there. It’s the brand’s job to meet consumers where they are, so I think some of the nimblest, forward-thinking brands are being thoughtful about these one-to-one interactions in social channels. That communication suddenly becomes a lot more feasible when you can enable it with genAI, as opposed to needing to massively staff up your CX team to monitor all these social channels.
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Vietnamese Version of this post: https://kenkai.vn/tin-tuc/forerunner-ventures-tim-kiem-startup-tieu-dung-tam-nhin-loi-the/
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