Our Full Research on What the Data Says about Consumer vs. Enterprise

Early this year, we published an article in The Information about how performance of consumer startups stacks up to enterprise startups. This was based on an aggregation of over 12,000 tech companies that raised a series B since 2012, where 7,800 were then classified as enterprise or consumer and analyzed. In the analysis, we found that:

• Consumer startups are as likely to go public as enterprise startups
• Consumer startups are as likely to fetch >10x multiples at IPO as enterprise startups
• Consumer startups are more likely to surpass the Rule or 40 than their enterprise counterparts

It may seem like a narrative violation, but consumer startups largely meet or surpass the benchmarks of enterprise, according to the data on startups that had raised series B rounds. It’s true that there are more public enterprise companies than consumer companies — but also, there are more enterprise startups that get early-stage funding.

After we published our piece, we received many follow-up requests for further discussion about the report. So today, we’re outsourcing the larger body of underlying research we did to produce the analysis, so people can flip through the data themselves and get a more granular view of how startups fare in the consumer and enterprise markets.

As a part of this, it’s relevant to consider how Forerunner defines a consumer company. We believe there are two types of consumer businesses: 1. companies where the consumer pays for the product (”consumer-paid”) or 2. companies where revenue relies on consumer engagement, behaviors, or spend (”consumer-driven”). In this report, we compared both of these consumer categories to enterprise for a more specific view on how each performs — and to address those who might have wondered if the Shopify and Toasts of the world skew the numbers in favor of consumer (spoiler alert: they don’t).

Overall, evaluating enterprise vs. consumer startups is a more nuanced effort than any one research report can show (even one based on analysis of 7,800 companies). But if we were to give a TL;DR on what we’ve learned with this effort, it’s that the consumer startups that muscle their way to a series B go on to perform just as well — if not better — than their enterprise counterparts.

Now, as AI ushers in a wave of new business models and consumer value propositions, we’re entering a cycle of change, growth and fundamentally new opportunities across all industries. Consumer is especially well-poised: consumer companies are known for their agility, adaptability and business model variation, and the top ones are almost always born out of a major technological shift. That means the next set of generation-defining consumer businesses are being built right now. (More on this to come in another post!).

Check out the full report and let us know what you think!