Is Consumer the Contrarian Bet of the AI Era?

Consumer investing has been venture capital's least favorite table for years. According to Carta, consumer companies captured just 7.1% of all U.S. venture investment in 2023 — down from 14.3% in 2019. Carta's Q1 2025 data shows the downward trajectory has continued: consumer startups posted their lowest quarterly funding totals since at least 2019, raising 47% less than the prior quarter. SVB's analysis of the top 100 active VC firms puts it even starker: by 2024, consumer deals had fallen to just 6% of their portfolios, half of what it was two years prior.

The reasons aren't hard to find. High-profile flameouts like Allbirds — which hit a $4B market cap on its first day of trading in November 2021 and now sits at roughly $29M — and the collapse of DTC e-commerce aggregators, which saw a 97% funding decline between 2021 and 2023, burned a generation of investors. As Antler's Tobias Bengtsdahl put it in late 2024: "Consumer is out of fashion. Founders in that space have been treated very harshly since 2022." Marc Andreessen has argued that enterprise can go in and out of fashion four different times and a fund can stay the course — implying consumer offers no such luxury.

So the consensus is clear. Which is exactly why it's worth questioning.

Here's my thesis: in the AI era, technology advantages are increasingly replicable. A competitor can spin up a comparable model, fine-tune on similar data, and close the gap in months. What AI cannot replicate is brand — the cultural resonance, the aesthetic coherence, the earned trust that makes someone choose one product over an identical one. That takes human taste, time, and genuine community. It's actually harder to build in a world flooded with AI-generated content and cookie-cutter product drops. Scarcity of soul becomes a moat.

The brands of the future won't win on product specs alone. They'll win on identity — who buys them and what that says about you. They'll be built in public, with community woven into the DNA from day one rather than bolted on via an influencer campaign. They'll use AI for operational leverage — personalization, logistics, content at scale — while keeping creative direction, taste-making, and brand voice stubbornly human. The aesthetic can't be AI-generated. That's the point.

One obvious counterargument is the consumer wallet. The economy feels stretched. Cumulative inflation since 2021 has permanently reset household budgets, credit card debt has hit record levels, and sentiment remains fragile. If consumers are trading down on groceries, will they really pay up for a premium brand?

It depends on the brand.

Historically, the answer has more often been yes than the macro headline suggests. Lululemon built a dominant business selling $100 leggings through multiple recessions by turning a product into an identity purchase — proof that the right brand can command a premium regardless of the economic backdrop. Its recent struggles are instructive too: as the brand diluted its positioning through overexpansion and product missteps, pricing power and market cap followed. Brand is the moat. When you lose it, you lose everything.

The research supports this. McKinsey's 2024 State of the Consumer found that even squeezed middle-income households planned to splurge on discretionary items at a rate comparable to wealthier consumers. Deloitte's 2025 value-seeking consumer study, drawing on 9,000 U.S. consumers, found that between 10–40% of brand value perception has nothing to do with price at all. The pattern isn't "consumers stop spending when times are hard." It's "consumers get more intentional." They cut the noise and double down on the brands that mean something to them. In a world of infinite mediocre products, that intentionality may actually accelerate.

The question for investors isn't whether consumer is back. It's whether we can identify the brands with the cultural gravity to command that intentional spend — and back them early enough to matter.

We're early in that window.