SAN FRANCISCO, CA - SEPTEMBER 07: (L-R) Glossier Founder and CEO Emily Weiss, Forerunner Ventures Managing Partner Kirsten Green, and moderator Ingrid Lunden speak onstage during Day 3 of TechCrunch Disrupt SF 2018 at Moscone Center on September 7, 2018 in San Francisco, California. (Photo by Steve Jennings/Getty Images for TechCrunch)
Photo: Steve Jennings/Getty Images for TechCrunch

Forerunner’s Kirsten Green on how to carve a space in venture capital

Protocol Pipeline

Hello, and welcome to Pipeline.

Don’t forget! On Tuesday, I’m excited to host a Pipeline virtual event on lessons from times the bubble burst. While there’s been a lot of talk about advice for founders, there hasn’t been as much for venture capitalists on how to adapt. I’ll be joined by Beezer Clarkson, Matt Murphy and Geoff Yang to talk about how to shift strategies when the market changes, what emerging managers should focus on in order to survive and when it is — and isn’t — time to make that next big bet. RSVP here to join us.

This week in the startup world: a 28% markdown is the new up round, a VC begs for his portfolio companies to be sued by the DOJ and an interview with Forerunner’s Kirsten Green.

Carving out your space in venture capital

Kirsten Green gets asked a lot, “How do I get into venture?” Even 10 years in, it’s still hard for the founder of Forerunner Ventures to answer that question: She felt like an outsider with a chip on her shoulder who had to work to carve out her own space.

“I talk to a lot of people starting firms today, and I think in so many ways it's easier because there's a lot of examples to point to and a lot of investors have backed new managers and been successful,” she said. “But the hard thing about today is that there's so much of it that it’s like you can do anything, and sometimes that has its own set of challenges.”

Green early on adopted the motto “Fewer things better” and focused the firm on consumer startups. In the beginning, that meant brands like Dollar Shave Club and Warby Parker, which gave Forerunner a rep as a DTC specialist. But in the firm’s last fund, 45% of new investments were in B2B companies like wholesale marketplace Faire.

Ahead of the firm’s 10th anniversary on Monday, I spoke to Green about what her trajectory was like — and what will happen in a downturn when people are declaring the DTC movement dead:

On starting a new firm: “Until I made the decision to raise the fund, I wasn't hell-bent on raising my own fund or starting my own firm,” Green said.

  • She launched Forerunner Ventures after a period of six or seven years of exploring what she wanted to do and being open-minded about what the next stage of her career could be.
  • Launching a new firm wasn’t something she had to do in order to venture her own way. It was the only way she could do venture then as a self-described relative outsider who didn’t come in with a Rolodex. “I probably underestimated myself and overestimated myself,” Green said looking back. “Because on the one hand, I didn't think I had the right pedigree to go get a job. On the other hand, every single time a person looked at me cross-eyed when I intimated that I would start my own fund, I felt like, ‘Oh, I can do that.’ That was just fuel on the fire.”

On how not to squander a downturn: “I like ’22 way better than ’21,” she told me.

  • For companies, it’s a good time for them to test their mettle because the game is more complicated. “Instead of being one-note, like we just need to get scale or we just need marketing to be out there, you actually need to be able to pull all the levers of a business to stay in business or to earn the right to build this business — and that's much healthier,” Green said.
  • For VCs, she remembers being the only investor left standing for a company about to run out of cash, and having to say no, despite having the cash, because it was a bad business plan. “Then they hated me, of course, and it was terrible. But it was a good experience.”

And the big question: Is DTC dead? “Saying DTC sucks overall is taking it a little too far,” she said.

  • The firm did make good investments in companies like Warby Parker and Dollar Shave Club (more than enough to return its $42 million first fund), but the companies were the first movers.
  • The challenge became all the businesses that were the Warby Parker or Dollar Shave of X. “The 10th of those is not innovating anymore,” Green said. “They're actually just being smart and following a better business model. I think you can make money there, but I don't think you could probably make venture money there. It’s about being at that edge of change and being at the forefront of defining new models.”
  • While Forerunner is synonymous with consumer investing, it’s evolved to look at all facets of that — including B2B companies like wholesale marketplace Faire or brand partnership organizer Canal. Its last fund was 45% invested in B2B businesses.

For more from my conversation with Kirsten, read the full interview on Protocol.com.

Overheard

“Dear Justice Department, please sue one of our portfolio companies!” It’s not every day that a VC issues an invitation for the government to investigate a portfolio company, but Stewart Alsop promises a bottle of the finest champagne for any company that grows large enough to be considered a monopoly. Perhaps covering the legal fees would be a more enticing offer?

“28% down is an upround” — at least in this economy, joked BloomTech’s Austen Allred. This week Stripe marked down its internal 409A stock price by 28% in a valuation cut, according to the WSJ. It sounds bad, but compared to the overall fintech market and Klarna’s funding round that saw an 85% discount, it could’ve been way worse.

“If you have an option, you should take a term sheet from almost any other VC over Tiger right now,” Mercury CEO Immad Akhund tweeted after hearing from multiple founders that Tiger had pulled term sheets. While there have been lots of reports of firms backing out, Tiger is one of the first to be called out by name (albeit by anonymous founders and VCs.)

Humane’s new hype video is out. It’s got Nas and Kanye and still no substance on what the super stealthy startup’s product is going to do. If you look at the glowy half-moon on a hand though, it looks like early patents might’ve been a good indicator of plans to turn your skin into a screen. Plus it has a trademark for “the future is not on your face.”

A MESSAGE FROM: FIREWALL HOSTED BY BRADLEY TUSK

Bradley Tusk, a venture capitalist and political strategist, is the host of Firewall, a twice-weekly podcast where he and his guests discuss tech, politics and the unique ways in which they intersect.

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Inside track

Sar Haribhakti did something I should do: go back to my sources and ask how their views have evolved, especially when it was on the subject of Tiger Global. The then-and-now perspective is an interesting one, as one investor said: “amazing timing until it wasn’t.”

The Riveter’s Amy Sterner Nelson said she was 37, pregnant and leaving her career as a litigator to start a company. After raising $30 million, she shared her playbook on how to start if you don’t have an “in” with investors.

Are SAFEs no longer safe? Y Combinator created the SAFE (a simple agreement for future equity) and it’s become a popular fundraising tool industrywide. But ex-SoftBank investor and founder Daniel Kang warns other founders to understand what could happen in a downturn.

Homebrew’s Hunter Walk hasn’t told his startups to pull the brakes — yet. Instead, he narrows it down to two questions you need to ask to understand the market.


Loom used to fly out candidates for one-week trials to make sure it was a good fit for everyone, but that didn’t work in a hyper-competitive hiring market or as Loom scaled. In a thread on how to iterate on your hiring process, Shahed Khan explained how they switched tactics and adopted Geoff Smart’s Who system instead.

Need to know

Everyone raised a fund this week. Lightspeed amassed $7 billion across new funds, Battery Ventures brought in $3.8 billion, China’s Qiming raised $3.2 billion and Cathay Innovation added a third $1 billion fund to the mix. Multicoin raised $430 million for its latest fund and Capchase has $400 million more in debt to dole out. That’s nearly $16 billion to deploy just across six firms.

But that didn’t stop layoffs or shutdowns. Hopin let go of 29% of its staff, GoPuff cut 10% and OpenSea laid off 20% as part of this week’s Great Restructuring. Pakistan’s Airlift also shut down after a funding round couldn’t come together.

The mixed messages reflect how Q2 was a “mixed bag” for venture capital, according to PitchBook and NVCA’s latest report. VC fundraising level was at a near-record high, but the value of deals fell compared to 2021. Already, AngelList is forecasting a return to normalcy.

Tiger Global is cooling down until December. TechCrunch reported that the firm is telling founders it won’t be writing many new checks until December.

Investors aren’t paying up. Ed tech startup Byju in India has had trouble getting investors to wire $250 million in promised cash as part of an $800 million funding round.

Ev Williams called it quits, or as Platformer’s Casey Newton more critically phrased it, he gave up. After 10 years of trying practically everything to make Medium work, it’s now Tony Stubblebine’s problem. Williams is moving on to starting a holding company and research lab.

From Protocol: The near-daily doom and gloom coming out of the crypto world has been hard to keep up with, so my colleagues assembled an explainer on everything you do need to know about the crypto crash.

Also on Protocol: Twilio’s Jeff Lawson has some thoughts about startups paying high salaries to poach Big Tech employees and what’s going to happen now that the funding has dried up.

Your weekend reading: How would you feel about swimming in a canal to get to work? The Saudi crown prince’s dream of a desert utopian city is becoming stranger than fiction, according to a new Bloomberg report. “The complete absence of being tethered to reality, objectively, is what was demonstrated there," one worker said about MBS’ $500 billion dream, a place called Neom.

A MESSAGE FROM: FIREWALL HOSTED BY BRADLEY TUSK

Where tech meets politics. Each week, Bradley Tusk breaks down the trends, policies and regulations that affect everyone from scrappy startups to the giants of Silicon Valley. He interviews founders, elected officials, journalists and scholars, including Sebastian Mallaby, Francis Suarez, and Alexa Von Tobel.

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Thanks for reading, and I hope you join me on Tuesday, July 19, for Pipeline’s event on lessons from the times the bubble burst. Don’t forget to RSVP. If you like what you’re reading, sign up here to get it in your inbox. Send story tips and newsletter feedback to bcarson@protocol.com.

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