Jul 29, 2022, 9:48 AM ETInterview, Fireside Chat

Investing with Forerunner’s Eurie Kim

Direct-to-consumer (DTC) success has evolved from simply establishing new distribution channels to building community through social media and non-traditional retail routes.
Current market opportunities are shifting from product-centric models to those focused on "experience and services," such as biometric tracking (e.g., Aura Ring) and teledermatology (e.g., Curology).
The "DTC" acronym now implies deep integration into the consumer's daily life and ongoing relationship, rather than just a direct sales model.
Traditional incumbents previously underestimated social media as a distribution channel, treating e-commerce as a secondary "store #100" rather than a primary shift in consumer behavior.
Future growth for new brands requires meeting consumers across fragmented platforms (email, messaging, retail) rather than relying on a single digital channel.

Yuri Kim advocates for entrepreneurs to view venture capital as building a "firm" first, rather than just raising a "fund," to prioritize long-term team and operational structure over immediate capital deployment.
Forerunner Ventures prioritizes founders who possess a specific triad of traits: vision (to dream of unseen possibilities), discipline (to execute step-by-step), and magnetism (to attract talent and capital).
The firm avoids investing in founders who view entrepreneurship merely as a desire to escape corporate jobs; they seek those with a deep, long-term commitment to the work despite the "grind."
Early-stage investment criteria are highly sector-specific; a DTC brand requires an outward-facing "mascot" founder, whereas a SaaS company prioritizes deep technical or process expertise.
Forerunner invests across all aspects of commerce: the physical products, the retail/distribution experiences, and the commerce-enablement technology powering these systems.

The venture capital market is experiencing a significant slowdown in deal velocity due to the inability of buyers and sellers to agree on pricing in a high-friction environment.
Early-stage valuations are now closely correlated with public market performance, with later-stage public comps (down 20-70% depending on the sector) serving as a reference point for private pricing.
Founders are being forced to accept lower valuations to secure capital, potentially leading to "tighter" operational focus and more efficient capital allocation as a result of reduced dilution.
There is a growing "flight to quality" where experienced teams with proven business models are being priced, while companies lacking clear paths to profitability may struggle to raise Series A or B rounds.
Founders are advised to be more selective with their cap tables, prioritizing investors who offer active support during downturns over those offering high valuations without engagement.

Current economic headwinds (slowing growth, inflation, geopolitical conflict) create a challenging backdrop but are viewed as opportunities for "capital-constrained" innovation similar to the 2008 global financial crisis era.
The demographic focus has shifted from the "millennial rise" to the "millennial settling down" (parenting) and the "Gen Z emergence" (entering earnings power), requiring nuanced strategies for each.
Post-pandury behavioral shifts have transformed health, wellness, and aging care from "nice-to-have" luxuries into "need-to-have" essentials, driving investment in companies like Calibrate and Duos.
The "Metaverse" and Web3 are viewed as potential future platforms, but currently lack a clear "silver bullet" user experience comparable to the internet's payment infrastructure (PayPal).
Early-stage investment in Web3 is currently experimental, with low-friction entry points (e.g., Lolly Chrome extension for Bitcoin cash-back) serving as the primary method to onboard mainstream users.

Female investors are noted for distinct strengths in mediation, translating diverse viewpoints (technical, hardware, financial), and fostering non-adversarial board dynamics.
The ability to maintain open, vulnerable communication channels with founders allows female investors to identify operational or co-founder issues earlier than traditional, transactional relationships.
Women control approximately $32 trillion in global consumer spending, making diverse investment perspectives a direct performance imperative for identifying market gaps.
Leadership roles often require "maternal" skills such as patience, negotiation without power plays, and the ability to manage complex human dynamics within high-pressure environments.