Investment in consumer technology startups has been slowing since 2022, as a turbulent macroeconomic climate and rising inflation have made venture capitalists nervous about consumer purchasing power. Over the past two years, most investment in AI has focused on winning over enterprise customers, who offer big checks, multi-year contracts and quick paths to scale.
But one venture capitalist sees the consumer sector poised for a recovery 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, in this week’s episode from the Equity podcast.
Larco says that although companies have big budgets and a frantic desire to implement AI solutions, adoption often stalls because “they don’t know where to start,” Larco says.
“The fun thing about the consumer and prosumer… is that people already have in mind what they want to use it for,” Larco continued. “And then they buy it and, if it meets the need, they continue using it.”
In other words, adoption is faster and startups creating AI products don’t have to guess whether they’ve actually achieved product-market fit or whether they’ve just won a contract.
“If you sell to consumers, you’ll know very quickly whether you fit a need or not, and you’ll know quickly if you need to pivot or make some changes to your product or scrap it completely and start something totally different,” Larco said.
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And in today’s anxiety-inducing economy, consumer technology products that manage to scale demonstrate especially strong product-market fit.
There are early signs that consumer technology is having its moment. Late last year, OpenAI launched apps on ChatGPT, allowing users to shop with the Target app, explore the real estate market with Zillow, book travel with Expedia, or create a Spotify playlist, all through the ChatGPT chatbot experience.
“AI will feel like a concierge service, doing whatever you have in mind,” Larco said. “The question is: which should be specialized and which should be general purpose?”
Or put another way, as OpenAI works to make ChatGPT the new consumer Internet operating system, which legacy companies, like Tripadvisor or WebMD, will continue to exist in their own right and which will be gobbled up by OpenAI?
While Larco believes 2026 will be a “successful” year for M&A, she is interested in investing in startups that “OpenAI won’t want to kill.”
“OpenAI does not manage real-world assets,” he said. “I don’t think they’re going to build an Airbnb competitor because I don’t think they want to manage homes… I don’t think they’re going to build any of these marketplaces that require real humans because they don’t want to manage humans.”
Aside from which startups can fill the gaps, Larco is attentive to what happens if OpenAI “decides to launch an Apple or Android where they keep 30% of all the traffic they send to it.”
“Is Airbnb going to want to play with that?” she asked.
Overall, Larco predicts that new monetization strategies and new business models will emerge from the evolution of the online consumer experience.
‘The social has to change’
While scrolling through Instagram about Trump’s capture of Venezuelan leader Nicolás Maduro, Larco noticed something. She had come to the platform to receive news about the escalating crisis, but instead was overwhelmingly inundated with Maduro’s fall generated by AI.
While deepfakes have become increasingly common on social media, this was one of the first major news events in which AI-generated garbage muddied the waters of truth.
“At that moment I thought, if I’m just going to watch AI-generated videos and photos, I want it to be fun,” he said.
Larco says she’s been inundated with enough realistic-looking AI videos on social media that she just assumes it’s all AI right now, and she’s not alone. If we all start to assume that nothing we see on the Meta or TikTok platforms is real anymore, the question will be: where do you get the real thing?
Larco says others could fill the gaps on where to find truthful non-AI content, such as platforms like reddit and dig take steps to verify humanity. But for Meta? Maybe it will simply become an entertainment company, a platform for user-generated short films.
“I think we should stop receiving your news from [Meta]”Larco said. “From there, you just get funny videos. It’s not social media. They are just means of gaming and entertainment.”
‘Some things work better with voice than with a screen’
When Meta acquired AI agent startup Manus Last week, many saw it as a business move. Larco believes it could be a move aimed at improving Meta’s Ray-Ban smart glasses, a product VC is a big fan of because they allow you to answer phone calls, respond to messages, take photos and videos, and ask Meta AI questions, all without having to take out your phone and navigate a screen.
Larco says he believes truly useful AI voice assistants are finally “about to happen,” powered by more advanced technology and more robust computing.
“Some things work better with voice than with a screen,” he said. “And because the voice sucked, we needed the screen as a crutch. But I’d love to start separating what things are actually better on a screen and what things are just better with audio.”
Get answers to your kids’ questions about which building is the tallest? Definitely voice. Pulling out your phone to type the question now seems “archaic,” Larco said.
“I think it will be a lot of fun for designers because they will finally be able to choose which form factor is best for which use cases,” he said.
