Thirteen years ago, Forerunner Ventures began supporting the emergence of a new wave of consumer startups, such as Warby Parker, Bonobos, and Glossier. None of these companies have followed the traditional initial public offering (IPO) route. Warby Parker went public via a special purpose acquisition company, Bonobos was acquired by Walmart, and Glossier remains privately held, alongside many other brands in Forerunner’s portfolio known for their design-forward approach.
Forerunner’s founder, Kirsten Green, perceives this as a success rather than a failure, asserting that alternative paths to the traditional IPO have now become standard practice.
Forerunner also backed companies like fintech firm Chime and smart ring manufacturer Ōura in their early stages. Both founded in 2012 and 2013, respectively, they have surpassed valuations of $5 billion, demonstrating their resilience in competitive markets. While Chime has confidentially filed for a public offering, Ōura’s CEO has indicated that an IPO is not in their immediate plans.
At TechCrunch’s StrictlyVC event last week, Green expressed contentment with this approach. When asked whether she was concerned by Ōura CEO Tom Hale’s remarks about the company not preparing an IPO despite robust sales, she described Ōura as an “off-the-charts phenomenal company.” She emphasized that Forerunner is focused on the company’s growth rather than contemplating a sale.
Green indicated that investors have adapted to a landscape with fewer traditional public offerings, increasingly utilizing the secondary market to manage liquidity and exposure. Forerunner’s team is actively engaged in the secondary market, which Green described as both practical and strategic, given the extended timeframes required for companies to achieve suitable sizes for IPOs or public trading. This market continues to drive the industry, providing opportunities for unlocking returns and liquidity.
This shift is noteworthy for industry observers who recall a time when major liquidity events such as acquisitions or traditional stock market introductions occurred more swiftly. The trend toward secondary markets is partly a response to public markets favoring large-scale, high-performing companies.
Green highlighted that involving more participants in price discovery, even at the cost of discounts in deals, is advantageous. She cited the example of Chime, whose valuation has fluctuated significantly in recent years, from $25 billion in 2021 to a reported $6 billion on the secondary market last year, and more recently, rising again to $11 billion.
Regarding price setting, Green noted the differences between the negotiation of a Series D funding round between a company and an investor and the broader participation involved in the secondary market and public markets.
Green noted that Forerunner is less dependent on later valuations due to its strategy of early-stage partnerships with startups, providing them with flexibility. Forerunner’s approach involves identifying major consumer behavior shifts and aligning them with emerging business models. This strategy proved successful in the early 2010s with brands like Bonobos and Glossier and continues with current endeavors such as The Farmer’s Dog, a company noted for its profitability and projected $1 billion annual revenue.
Green emphasized that great companies require time to develop, and not all growth trajectories are identical. Venture capital, historically quick to seek exits, is adapting to longer timelines and occasional trading.
