Investments in consumer tech startups are in a downturn through 2022, as the turbulent macroeconomic environment and rising inflation have made VCs concerned about consumer spending power. For the past few years, most AI investments have focused on winning enterprise customers, offering hefty checks, multi-year contracts, and quick paths to scale.
But one VC sees the consumer sector poised to bounce back in 2026.
“This is going to be the year of the consumer,” said Vanessa Larco, partner at venture firm Premise and former partner at NEA, on this week’s episode of the Equity Podcast.
Larco says that even if enterprises have large budgets and a strong desire to implement AI solutions, adoption is often hindered because “they don’t know where to start,” Larco says.
“The funny thing about consumer and consumer is that people already know what they want to use it for,” Larco added. “And so they buy it, and if it meets the need, they continue to use it.”
In other words, adoption accelerates, and startups building AI products don’t have to guess whether they’ve truly achieved product-market fit or just won a contract.
“If you’re selling to consumers, you’ll know very quickly whether it fits your need or not, and you’ll know right away if you need to tweak your product or make some changes to it or scrap it altogether and start something completely different,” Larco said.
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And in today’s anxiety-inducing economy, consumer tech products that manage to scale demonstrate particularly strong product-market fit.
There are early signs that consumer technology is improving. Late last year, OpenAI launched apps in ChatGPT, allowing users to shop with the Target app, explore the housing market with Zillow, book trips with Expedia, or create a Spotify playlist through the ChatGPT chatbot experience.
“AI is going to feel like concierge-like services that will do everything you have in mind for you,” Larco said. “The question is, which of it should be specialized, and which should be general purpose?”
Or put differently, as OpenAI works to make ChatGPT the new operating system of the consumer Internet, which legacy companies – like TripAdvisor or WebMD – will remain in their own right, and which ones will be eaten up by OpenAI?
While Larco thinks 2026 is going to be a “gangbuster” year for M&A, she’s interested in investing in startups that “OpenAI won’t want to kill.”
“OpenAI does not manage real-world assets,” she said. “I don’t think they’re going to create any Airbnb competitors because I don’t think they’re going to want to manage homes… I don’t think they’re going to create any of these marketplaces that require actual humans because they don’t want to have humans managing them.”
Besides looking at which startups could fill the gap, Larco is also keeping an eye on what would happen if OpenAI “decides to pull an Apple or Android where they take a 30% cut of all the traffic you send them.”
“Would Airbnb want to play along with that?” he asked.
Overall, Larco anticipates that new monetization strategies and new business models will emerge from the evolving consumer experience online.
‘Social change has to be brought about’
While doomscrolling on Instagram about Trump’s capture of Venezuelan leader Nicolas Maduro, Larco noticed something. She came on stage to deliver news on the growing crisis, but instead she was mobbed by a massive crowd AI-generated Maduro Slope,
While deepfakes are steadily becoming mainstream on social media, this was one of the first major news events where AI-generated nonsense muddied the truth.
“At that time, I was thinking, if I’m just watching AI-generated videos and photos, I want it to be funny,” she said.
Larco says she’s been flooded with AI videos on social media looking so realistic that she’s convinced it’s all AI at this point, and she’s not alone. If we all start believing that everything we see on Meta’s platforms or on TikTok is no longer real, then the question will be where do you get the real stuff?
Larco says others may make up for the lack of finding true, non-AI content as platforms like Reddit and Digg take steps to verify humanity. But for meta? Maybe it will just become an entertainment company, a platform for user-generated short films.
“I think we should move on from getting your news from (Meta),” Larco said. “You’re just getting funny videos out there. It’s not social media. It’s just gaming and entertainment media.”
‘Some things do better with voice than on a screen’
When Meta acquired AI agent startup Manus last week, many saw it as a venture play. Larco thinks this could be a step taken to improve Meta’s Ray-Ban smart glasses, a product the VC is a big fan of because they allow him to answer phone calls, respond to messages, take photos and videos, and ask Meta AI questions, all without needing to take out his phone and navigate to the screen.
Larco says he thinks truly useful voice AI assistants are finally “on the verge of happening”, powered by more advanced technology and more robust computers.
“Some things do better with voice than with a screen,” he said. “And because sound sucks, we needed the screen as a crutch. But I would love to start separating what things are really better on a screen and what things are better with audio.”
They are getting answers to the questions asked by their children, which is the tallest building? Definitely the sound. Taking out your phone to type a question now feels “old,” Larco said.
He said, “I think it will be really fun for designers because they ultimately have to choose which form factor is better for which use case.”
