The CQ | 2024 Wrap: Our State of the Market Report on Early-Stage VC, IPOs & M&A, Consumer AI
Plus the Forerunner Team's Must-Reads of the Week
The CQ is Forerunner’s weekly newsletter rounding up the most pressing consumer news and analysis, plus some bonus musings from our investment team. Subscribe now to get the latest edition in your inbox every weekend.
As we wrap up the year, we’re reflecting on this unique and complicated time for the market: one with no shortage of reasons to be optimistic, but also plenty of intricacies putting strains on the VC and startup ecosystem. Given these dynamics, we’re sharing an excerpt from a presentation we delivered to our investors in the Fall featuring our research on the state of early-stage VC, IPOs & M&A, and the consumer AI opportunity. (We also gave Newcomer a sneak peek last week).
The Forerunner team is taking the end of the year off to rest & recharge. See you back here in 2025!
What We’re Talking About on Slack:
The New Yorker takes a look at the year creators took over. Hawk Tuah Girl, Moo Deng. Matt Gaetz on Cameo, Kamala Harris on Call Her Daddy and Donald Trump on Joe Rogan and Theo Vonn…you don’t have to look far to see that creator culture dominates mainstream culture in an almost incomprehensibly powerful way. Unlike the previously popularized category of “influencers,” creators cast a wider net that allows for more business flexibility and opportunity: podcasters, musicians, comedians, newsletter writers, and pundits. “The attention economy has dominated the Internet for over a decade now, but never before have its protagonists felt so central to American life–or had such direct access to the levers of power. In this creator era, who you are is more important than what, precisely, you do or make, in part because what you make is always changing, as digital platforms evolve. Today’s podcast is tomorrow’s 24/7 Twitch livestream. Cultivating a personal brand is more requisite than ever.”
Only 16% of holiday shoppers plan to spend more this season because of inflation, a two-point decrease from last year, says a CNBC survey. Meanwhile, 48% expect to spend the same amount and around 35% intend to spend less, also down slightly from the previous year. Average spending per person is $1,014, down from $1,308 in 2023. Older, lower-income Americans and women aged 18-49 are more likely to cut back, mostly citing inflation or financial struggles.
As Gen X nears retirement, many fear they can’t afford it—now or ever. This chronically overlooked group, born between 1965 and 1980, are facing unique challenges as many take care of their own kids and their parents, struggle with higher costs for tuition, housing, and groceries, in addition to saving for retirement and potential future healthcare costs as they age. Many Gen Xers entered the workforce during a shift from traditional pension plans to 401(k) plans, which put the onus on individuals to manage their savings, and that caused many to miss out on opportunities to save more early on. According to a Bloomberg survey, just 43% of Gen Xers said they can afford to retire at age 65, and 26% of those without a 401(k) said they don’t expect to retire at all. Also notable: 73% of employed Gen Xers said they anticipate working longer to afford retirement, while 38% said they’ll likely have to work their entire lives.
Dollar stores are flashing a warning sign about lower-income consumers. It appears the U.S. economy’s recovery has not reached lower-income households as dollar stores are reporting that consumers are increasingly delaying purchases until the last minute for events like Halloween and are cutting back spending toward the end of the month when their funds are running low. Dollar General said products in its “value valley” aisle, offering $1 items, was the top-performing category in its last quarter. This trend is evident across multiple industries, with companies like Walmart, McDonald's, and auto-repair chains citing weakened demand from low-income consumers. One reason is because the lowest-income households have been hit harder by inflation, especially in essential categories like rent, utilities, and food, which have seen higher price increases compared to discretionary items.
Malls are betting you still want that Gucci bag—at a discount. Despite a downturn in the global luxury sector, high-end outlet malls are going strong. While foot traffic at these malls is still below pre-pandemic levels, retailers are leasing more space at outlet shopping centers, of which there are over 200 in the U.S. Tanger, an outlet retail group that owns 38 properties in the U.S. and Canada, was 97% occupied as of the third quarter, and its stock price has outperformed the S&P 500 since 2019. While some luxury brands, like Hermès and Chanel, still avoid discounting, others are warming to the idea of outlet stores, particularly European brands seeking to increase their U.S. market share. This is leading to a broader customer base. “You have a much wider group of people buying luxury.”
AI wants more data. More chips. More real estate. More power. More water. Bloomberg investigates how AI’s hunger for resources is reshaping energy, infrastructure, and supply chains while raising environmental and geopolitical concerns. Data centers are consuming increasing amounts of electricity and water, prompting tech companies to invest in renewable energy, nuclear power, and advanced cooling solutions. There is also increased competition for land and resources, as companies race to build data centers and secure the necessary chips, rare metals, and skilled labor. “In a sign of the clashes to come,” even non-tech companies are getting in on the boom, which has created “even more of a premium on other industries outside of data centers to try to lock up low-cost renewable generation.”
When ‘middle age’ arrives in your 20s: About 20% of people ages 25 to 34 feel middle-aged, according to a new study that also found that the average 25-year-old says middle age starts around 37 and ends at about 53, meanwhile the average 65-year-old says it starts at 46 and ends at 62. (For the record, it’s generally defined as 40 to 60.) A different survey discovered that 1 in 10 millennials experienced a midlife crisis around the age of 34. “People in their 20s and 30s are hitting milestones such as marrying and buying a home later than past generations, but the expectations to do so are creating stress for them. That stress makes them feel older, as do mounting concerns about job security, debt, child-care costs, and caregiving for older relatives.”
How estrangement has become an epidemic in America: The country’s political polarization, exacerbated by the recent election, is creating rifts within families. Many people are severing ties with close relatives, with research showing that 1 in 2 adults are estranged from a close family member, and 1 in 5 cite political views as the cause. Younger adults under 35 are most likely to experience these political rifts, often because they choose to prioritize their own mental well-being and relationships that align with their values. “Family relationships may be more fraught today because they exist in what sociologist Zygmunt Bauman called ‘liquid culture,’ a period characterized by rapidly changing norms and values. The traditional bonds and shared values that once unified individuals and families have eroded, leaving relationships more fragile and increasingly susceptible to the strains of political and cultural polarization.”
Our modern masculinity problem, explained. One example: 1 in 3 men under 30 have a girlfriend, while two-thirds of women in the same age group have a boyfriend, with women often choosing older, more economically viable men. “When men don’t have the prospect of a romantic relationship, they come off the rails. They’re less likely to be employed, they’re more likely to engage in misogynistic content, and some men, without the prospect of a romantic relationship, become shitty citizens,” says New York University professor. A challenge in addressing these issues is the current lack of empathy toward men, largely because they have historically held positions of power and privilege and due to some voices in the “manosphere” that have misogynized the conversation. Some factors that he thinks could make a remarkable difference in the lives of young men are mandatory community or military service and having a strong male role model.
If men are in trouble, what is the cause? Research reveals a growing gender gap, with boys, especially those from disadvantaged backgrounds and adverse home environments, disproportionately represented in the lower percentiles of academic performance and behavior. This leads to major differences in high school graduation rates (89% for girls, 83% for boys), gaps in college attendance (57.9% female, 42.1% male), and college graduation rates (66% for women, 58% for men). Researchers say in several areas—some negative, some positive—men generally dominate the opposite ends of the spectrum. Many more men than women commit violent crimes, die by suicide, are diagnosed with autism, and participate in risky behavior. At the other extreme, men are at the very highest levels of test scores, particularly in math. “In contemporary America, the more one learns about male and female propensities, the more one understands partisan hostility—the currently male-heavy Republican Party, today’s female-freighted Democrats, and the understandable but increasingly hopeless impossibility of reaching a productive compromise or finding common ground.”
Portfolio Highlights:
OURA and Roon make TechCrunch’s list of most disruptive startups of 2024.
OURA closes its $200M series D in funding, as the company looks ahead to expanding how it supports people’s overall health and longevity
Necessaire co-founder Randi Christiansen is quoted in the Business of Fashion’s story about the brands driving the body care boom.
Marc Lore, founder and CEO of Wonder, speaks about his priorities when starting a business in a video for Inc.
There are ~608 jobs currently available at portfolio companies, check ‘em out.