Consumer is actually thriving, says Glossier, Away, Farmer’s Dog-backer Forerunner Ventures

It’s ugly out there for consumer companies.

Sneaker company Allbirds, which raised over $300 million before its 2021 initial public offering, has seen its stock shed 98% of its value. Peloton has reportedly been entertaining private equity buyers, possibly to sell its at-home exercise business for parts. And, most recently, athleisure bull and former Outdoor Voices CEO Tyler Haney has pivoted her consumer marketplace business TYB into a massive multiplayer online role-play game.

Despite these indications that venture capitalists may generate fatter returns from investing in, say, artificial intelligence, Forerunner Ventures says it has evidence suggesting the opposite—that consumer startups can generate returns on an equal playing field with enterprise data companies.

“Some of the challenges that the market generally expresses around consumer are legit,” Forerunner founding partner Kirsten Green told Fortune in a recent interview at her San Francisco office. “That’s probably the reason why there are fewer companies getting started in that space. But if you do have a beat on that space, you have a point-of-view on what good can look like. The opportunities and chance of being successful are just as high as another category.”

Forerunner analyzed over 12,000 venture-backed companies that raised Series B rounds since 2010. It categorized 7,800 of this group as either enterprise or consumer.

According to Forerunner (which, it should be noted, is a big investor in consumer startups), consumer companies are a touch more likely to go public than enterprise companies when both raise Series B rounds. They’re just as likely to trade at 10 times revenue at the time of an initial public offering than enterprise ones. (The firm, however, did not provide guidance on how consumer firms perform post-IPO.)

The Rule of 40—the enterprise software-focused metric that celebrates startups whose revenue growth rate and profit margins total 40% or more—can even be applied here. For consumer companies in the dataset that met the Rule of 40 standard, 62% of those consumer startups went public (as compared to 44% of enterprise companies), reports Forerunner.

Forerunner’s report is likely to provide welcome talking points to those who say the death of the consumer sector is overblown, a group that includes YC CEO Gary Tan.

“The negative connotation, and the press about consumer, is actually making it seem way worse than it is,” said Rachel Hirsch, founder and general partner at Wellness Growth Ventures, which invests in consumer companies like tinned fish juggernaut Fishwife and Katy Perry-founded beverage maker De Soi. “To some degree, it's just a landscape of opportunity.”

That said, it’s important to understand how Forerunner is defining consumer, since it may be counterintuitive: The firm says consumer includes companies whose revenue relies on consumers, whether that’s consumers paying directly or if that business relies on consumer behavior and engagement. Under this definition, the category includes companies like Shopify, Toast, and Oscar. To explain this untraditional categorization, Forerunner says that consumer companies have historically “been tough to quantify” and that companies like Shopify and Toast make the bulk of their revenues from processing consumer payments.

“I think that when people say consumer, they’ll think of Away or Glossier…but that’s a very narrow perspective on what those companies are and even what that category is,” said Green. “The whole world is continuing to blend, blend, blend.”

Read the full report here and draw your own conclusions as to whether consumer startups are an underappreciated opportunity or unwanted, out-of-season merchandise.

Elsewhere…Mistral AI has raised €600 million (about $643 million) in its Series B, led by General Catalyst. It’s a quick turnaround: The Paris-based AI darling closed its Series A round back in December.

See you tomorrow,

Allie Garfinkle and Alexandra Sternlicht
Twitter: @agarfinks and @iamsternlicht
Email: alexandra.garfinkle@fortune.com and alexandra.sternlicht@fortune.com
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This story was originally featured on Fortune.com