Thirteen years ago, Forerunner Ventures began contributing to a new era of consumer startups, investing in companies such as Warby Parker, Bonobos, and Glossier. None of these companies has undergone a traditional initial public offering (IPO). Warby Parker went public through a special purpose acquisition company, Bonobos was acquired by Walmart, and Glossier remains privately held, along with many other design-centric brands in Forerunner’s portfolio. Despite these outcomes, Forerunner founder Kirsten Green does not view this as a failure. She observes that in the current business environment, alternatives to the traditional IPO have become commonplace.
For example, companies like fintech Chime and smart ring manufacturer Ōura, both founded in the early 2010s, were also early investments for Forerunner. They have each reached valuations exceeding $5 billion, showcasing their resilience in competitive markets. Chime has confidentially filed to go public, while Ōura’s CEO has indicated there are no immediate plans for an IPO. At a recent TechCrunch’s StrictlyVC event, Green expressed that she is not concerned about Ōura CEO Tom Hale’s public comments regarding the company’s lack of IPO preparations, emphasizing the company’s phenomenal growth and Forerunner’s focus on that growth.
Green noted that investors have long adapted to a market with fewer traditional public offerings by increasingly engaging in the secondary market to manage liquidity and exposure. She characterized this shift as both practical and strategic, given the extended time it takes for companies to reach a suitable scale for a successful IPO. The secondary market is described as a driver of the industry, providing opportunities for unlocking returns and liquidity.
For industry observers, this marks a significant shift from the past, where firms could anticipate a major liquidity event within a few years. The reliance on the secondary market is not solely a response to public markets favoring large, high-performing companies. Another advantage, according to Green, is the improved efficiency of price discovery with more participants involved, even if this leads to lower valuation deals.
Green illustrated this point with the example of Chime, whose valuation has fluctuated greatly in recent years, from $25 billion in 2021 to $6 billion last year on the secondary market, and more recently climbing to $11 billion. She explained that in a primary funding round, the negotiation involves the company and a single investor, while the secondary market sees wider participation, and eventual public markets will have even broader involvement in setting company value.
Despite fluctuations in valuations, Green is less focused on these later numbers due to Forerunner’s strategy of early-stage investments, providing the firm with greater flexibility. This strategy involves identifying major shifts in consumer behavior and aligning them with new business models, a framework that has proven successful in the past with brands like Bonobos and Glossier and is currently guiding investments in companies like The Farmer’s Dog.
Green emphasized that great companies require time to grow and that not all growth paths are the same. Venture capital is adapting, becoming more patient and willing to trade when necessary.