As we plan our investment strategy for our next fund, it has become increasingly clear to us at Listen that the venture market didn't just slow after 2021 — it reorganized. Capital is concentrating, AI is reshaping where capital is allocated and what it costs to build, and the consumer founders who were never chasing vanity valuations are finally being proven right. Here's how we see it coming together:
The ecosystem is collapsing into two lanes: giant multi-stage platforms that LPs use to index venture, and a smaller set of specialist firms with real, provable edge. As big funds lead rounds, allocation has become permissioned. Large fund specialists earn their seat by changing underwriting by winning customers, unlocking distribution, providing follow-on capital, or de-risking go-to-market. Firms without clear differentiation may be structurally squeezed out. The days of a generalist fund getting into a great deal just by showing up are likely over.
What looks like momentum in AI isn't cheap capital. It's pent-up capital. Since 2022, money has been sitting on the sidelines desperate for conviction, and AI fits the bill.
This is fundamentally different from 2020–21, when capital was cheap and growth was subsidized indiscriminately. Today's surge is driven by urgency, not ease. Competition is intense, prices are rising quickly, and true edge at scale is harder to find than it looks. The application layer feels like the App Store era — early category winners attract massive capital, only to be challenged rapidly by fast followers. Switching costs collapse. Underwriting the durability of a business model becomes a genuinely challenging exercise.
Venture once subsidized CAC. Now it's subsidizing AI infrastructure — where even the model providers are losing money on every call. But the real beneficiaries aren't the companies building it, they are the companies consuming it.
Think about what consumer brands can do today that they couldn't three years ago: faster launches, leaner operations, better products, more precise marketing, at a fraction of the opex. The best founders I know right now aren't raising to grow headcount. They're raising to own a category while maintaining a lean cost structure.
I think about our portcos Factor and Rugiet. Two massive businesses. Built with obsessive focus on consumer experience and data. Incredibly capital efficient. Not built on the back of endless venture rounds. That profile used to be the exception. I think it's becoming the template.
Founders take the most risk. When the tools shift in their favor, I don't think about what it means for returns. I think about what it means for them.
Consumer brands don't have software gross margins or billion-dollar exit paths. And when tech VCs value consumer like software and exits happen at retail multiples, everyone loses — especially the founder, who took all the risk.
The best consumer outcomes have always come from the same three things: early entry, disciplined capitalization, and realistic exits. The metric that actually matters isn't valuation — it's return. The price you sell over the price you pay. A $200M exit at the right entry is the real win. A $1B exit at the wrong entry is a participation trophy. We want founders building those businesses to stop letting frameworks designed for software companies set their expectations.
We don't think the market reorganizing changes what we do at Listen. It confirms it.
Innovation can be copied. Brand can't. Customer trust can't. When a founder builds something with genuine brand equity — not just a good product, but a real relationship with their customer — that's durable in a way that doesn't show up cleanly in a model but shows up everywhere else.
We'll continue to run sub-$100M funds. We'll invest earlier, because formation-stage companies need less capital than they ever have. We'll take meaningful ownership because we want to actually be useful — not just a name on a cap table. And we'll underwrite to realistic outcomes, because that's what actually works in consumer. Capital Efficiency in consumer drives optionality toward value creation.
Excited to deploy Fund IV into the future of consumer.
Jeff & Rick