Welcome to this regular sector pulse from our early-stage team.

In this article Lauren Mathurin, Director, and Nicole Scola, Senior Vice President in our early-stage Relationship Management team, join me to discuss the consumer technology sector.

Both Lauren and Nicole have a dedicated focus on early-stage consumer tech companies, with Nicole’s focus also including healthtech and wellness.

Nicole: While the consumer space itself is booming¹ and it’s arguably never been easier to create a company, many founders who want to grow through venture capital find themselves in stabilisation mode.

What’s been fascinating is seeing those founders and CEOs executing on more capital-efficient strategies, exploring treasury and working capital management options as they plan to grow lean and push for profitability.

Lauren: Having recently returned from maternity leave it’s been fantastic to reconnect with consumer founders and investors over the last few weeks. It’s clear that consumer founders are eager to scale faster by embedding AI functionality into workflows. For instance, I’m hearing founders say that they are using more AI-native marketing tools to support their marketing and content creation.

In consumer, social is the name of the game, whether that’s scaling up user-generated content or leveraging brand marketing campaigns to drive awareness across all other core channels.

Lauren: We’re seeing a lot more founders plan around ‘seed-strapping’. The intention is to raise an early round of funding and use that capital to scale lean until the company reaches profitability.

Investors seem more focused than ever on cash burn control and an understanding of the metrics that matter most. One positive consequence of a less bullish funding environment is that we’re seeing real discipline in our consumer client base. An analysis we ran internally this year suggested that in fact our B2C clients are on average more profitable than their B2B counterparts, and consumer appetite for new offerings is booming.

Nicole: Consumers seem to be taking a proactive approach to their health, with wellness spending up in recent years¹. We see this across platforms, products and wearables: despite the cost of living crunch, consumers seem to be eager to gain more insight and ownership over their health by actively monitoring their data.

There is also a rise in beauty, particularly with the ability to scale through social media and the rise of K-Beauty.

I’d also say that re-commerce is attracting attention. Although buying second hand is probably a departure from normal shopping habits for some generations, it is becoming the norm for Gen Z, who face cost pressure and are consistently focus on finding good value for their money.

Lauren: Carl Pei and his team at Nothing have achieved extraordinary things challenging huge companies like Samsung, Google and Apple. And Yoto is another leader in smart, connected hardware.

I learned so much watching Emily Wood’s interview with Yoto’s CEO Ben Drury on the Second Thoughts podcast – and I think many consumer tech founders could learn from Ben’s stories about how they refined Yoto’s target demographic in particular.

He mentioned that when Yoto started, the team thought the upper limit of the target age range was around eight years old. That was very quickly disproved, and Yoto now positions itself as being for kids up to 12 and even older. Ben also mentioned that 80% of Yoto’s buyers are women – which they’re trying to shift! It shows how fluid a customer profile can be, and how consumer tech leaders need to constantly respond to their buyers’ evolving needs.

Nicole: For sure, the State of Consumer 2026 event we co-hosted with TikTok Shop and Boots in June.

It was a hugely enjoyable day. We brought 275 founders, investors and big brands together to discuss ways to shape trends, understand consumer data, and build brands people really love. We heard that the consumer packaged goods (CPG) market is set to expand from $5.6 trillion to $7.8 trillion by 2033: mind-blowing numbers that indicate there is real positive momentum in the sector.

We hear a lot about ‘social-first’ sales and marketing in consumer tech, but the data tells us that consumer journeys are actually really mixed. People still rely on brick-and-mortar retail to make decisions, especially in categories like beauty and wellness. Globally, physical retail still accounts for 80-85% of consumer sales, so it’s clear there’s a long way to go for consumer tech founders, brands and investors.

There’s one data point that’s always stuck with me that I think really encapsulates the present moment.

Although consumer spending represents 60% of GDP, only around 3% of VCs specialise in the industry². That’s a huge discrepancy and shows that the consumer founders raising money today are really doing something extraordinary.

Nicole’s point draws out a key issue for consumer tech companies: despite impressive innovation in the space early-stage startups need the capital that can help turn a promising idea into a scaled global challenger.