Why this VC thinks 2026 will be ‘the year of the consumer’

Investment in consumer technology startups has faced challenges since 2022, largely due to a volatile macroeconomic climate and escalating inflation, which have led venture capitalists to become cautious regarding consumer spending. While the past few years have primarily seen AI investments targeting enterprise customers—who offer lucrative contracts and rapid scalability—one venture capitalist anticipates a resurgence in the consumer sector by 2026. Vanessa Larco, a partner at venture capital firm Premise and a former NEA partner, shared her insights during a recent episode of the Equity podcast. She believes that while enterprises have substantial budgets and a pressing need to implement AI solutions, many struggle with adoption due to uncertainty about where to start. "The exciting aspect of targeting consumers and prosumers is that they already have a clear idea of how they want to use the technology," Larco explained. This leads to quicker purchases and ongoing usage if the product meets their needs. In contrast to enterprise sales, where product-market fit can be elusive, consumer-focused startups receive immediate feedback on whether their offerings resonate with the market. Larco noted, "If you’re selling to consumers, you’ll quickly know if it’s fitting a need or whether you need to pivot, refine your product, or entirely restart." Recent trends suggest that consumer tech is on the verge of a revival. For instance, OpenAI's introduction of apps in ChatGPT allows users to shop with Target, explore real estate via Zillow, plan trips with Expedia, and create Spotify playlists—all integrated into the chatbot experience. Larco envisions AI evolving into a concierge-like service, fulfilling user needs seamlessly. However, she raises a critical question: which services should be specialized and which should be generalized? As OpenAI aims to make ChatGPT the central hub of the consumer internet, Larco is intrigued by which established companies will adapt and survive, versus those that may be overshadowed by OpenAI's advancements. Although she anticipates a significant year for mergers and acquisitions in 2026, she is particularly interested in investing in startups that have a unique value proposition that OpenAI is unlikely to disrupt, especially those that require managing real-world assets. Furthermore, Larco is keeping a close eye on the implications of OpenAI potentially introducing a revenue model similar to Apple's App Store, which could influence existing companies like Airbnb. As she navigates the evolving landscape, Larco predicts the emergence of innovative monetization strategies and business models that cater to a transformed consumer experience. Amidst the rise of AI-generated content, Larco has observed a troubling trend on social media platforms, where misleading AI-generated videos can obscure the truth. "As AI-generated content becomes more prevalent, the question arises: where do we find credible information?" she pondered. She foresees platforms like Reddit and Digg stepping up to verify authentic human content, while Meta might pivot towards becoming more of an entertainment entity rather than a news source. In light of Meta's recent acquisition of AI startup Manus, Larco speculates that this could enhance Meta’s Ray-Ban smart glasses, a product she values for its functionality, allowing her to manage calls, messages, and inquiries without reaching for her phone. She believes we are on the brink of a breakthrough in effective voice AI assistants, which could provide a more natural interaction for specific tasks compared to traditional screens. Ultimately, Larco envisions a future where designers can strategically choose the optimal interface for different use cases, significantly enhancing user experiences across the board.