Forerunner’s Kirsten Green: How to carve a space in VC

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?