Overview of Forerunner Ventures

Founded 13 years ago, Forerunner Ventures has been at the forefront of nurturing a new generation of consumer startups, including notable brands like Warby Parker, Bonobos, and Glossier. Rather than opting for traditional initial public offerings (IPOs), these companies have each taken unique approaches; for instance, Warby Parker became public through a special purpose acquisition vehicle (SPAC), Bonobos was acquired by Walmart, and Glossier remains privately held.

A Shift in IPO Norms

According to Forerunner founder Kirsten Green, the absence of traditional IPOs among these brands does not signify failure. Instead, she views this trend as an adaptation to a continually evolving financial landscape where alternatives to classic public offerings have gained traction.

Significant Startups in Forerunner’s Portfolio

Forerunner’s investments include early-stage companies like Chime, a fintech firm, and Ōura, known for its innovative smart rings. Both companies, founded in 2012 and 2013 respectively, have achieved impressive valuations exceeding $5 billion. While Chime has taken steps toward going public with a confidential filing, Ōura has no immediate plans for an IPO, a matter raised by Green during a recent TechCrunch event.

“We haven’t even gotten to the thought around our table about selling, because we’re here for the growth that’s happening,” said Green, referring to Ōura.

Evolution of the Secondary Market

As the market evolves, Green highlighted the role of the secondary market, which has become increasingly important for investors seeking liquidity. “Companies are waiting so long to go public,” she noted, emphasizing that the venture capital model often spans a decade. “The secondary market is continuing to drive the industry and allowing people to unlock returns and liquidity.”

This transition from quick liquidity events—such as acquisitions or traditional IPOs—to reliance on secondary markets marks a substantial shift in the investment landscape. The broader participant base within secondary markets can enhance price discovery, even if it results in lower valuations in some cases.

Variability in Valuations

Discussing Chime’s valuation fluctuations, Green explained how the company’s worth has seen significant variability: dropping from $25 billion in 2021 to around $6 billion in the secondary market, before recently rebounding to about $11 billion. Green highlighted the impact of broader participation on valuation clarity.

“With the secondary market, you’ve got more people in the mix… and then when you [eventually] go to the public markets, you’ve got everybody setting the price for what they perceive to be the value of a company,” Green clarified.

Strategic Focus on Consumer Behavior

Forerunner Ventures has a strategy that revolves around identifying shifts in consumer behavior and combining them with innovative business models. This adaptability has proven effective for early-stage brands like Bonobos and Glossier, as well as for newer entrants like The Farmer’s Dog, which has achieved significant revenues while maintaining profitability.

Green’s perspective highlights the notion that exceptional companies require time to grow, and venturing into creative strategies for exit becomes increasingly important in a landscape where traditional exits are less common.