Consumer VC investing is at an all time high, but should it be?

Eric Feng
7 min readSep 7, 2021

Despite the Covid-19 pandemic (or perhaps because of the pandemic), the venture capital backed startup sector in the US has been on an absolute tear. Last year, over 1,100 US startups that were venture backed delivered a record $287 billion in exit value (i.e. the company’s valuation at the time of IPO or acquisition). In just the first half of 2021, similar startups have already blown past last year’s total with a staggering $372 billion in exit value to date.

Fueled by these great returns, US VC firms have doubled down on the startup sector and deployed a record $150 billion into startups the first half of 2021 already. That is nearly equal to 2020’s entire annual total of $164 billion, which was also itself an all time high at the time.

And fueled by their frenzied investment pace, VC firms have collectively raised $74 billion in fresh capital in the first 6 months, nearly equal the record setting $81 billion raised in all of 2020. The VC sector will very likely pull in more than $100 billion in new capital in a single year for the first time ever. Record startup exits, record VC deal pace, and record amounts of money just waiting to be invested? It’s a good time to be an entrepreneur.

Consumer entrepreneurs have been one of the primary beneficiaries of this rabid investor appetite. The $43 billion invested in B2C companies in the first half of 2021 also nearly equals the $49 billion invested in all of 2020, and will certainly beat the high water mark of 2018 when B2C companies netted $58 billion.

What’s causing this heightened interest in the consumer startup sector?

TrueBridge, one of the top limited partners supplying capital to VC firms, directly credits the pandemic. In their 2021 State of Venture Capital report, they state: “The pandemic has transformed consumers’ lives, driving meaningful changes in behavior and preferences and, as a result, significant VC investment and exit activity in consumer-facing companies.”

In other words, consumers are behaving differently because of Covid-19, which has created opportunities for new startups to build successful products and services to serve that changing behavior. And investors are then eagerly funding these breakout new companies.

Logical thesis that sounds like the perfect conditions for both entrepreneurs and investors alike. But is it really?

The more App Store rankings change, the more they stay the same

As I’ve written previously, the iTunes App Charts (which ranks the most popular mobile apps across a variety of categories like Gaming and Social) has become an incredibly interesting and accurate peak into what events, activities, and trends matter in the world. If something important is happening, it’ll be reflected in what apps are being downloaded across a billion Apple devices.

For example last week, the Zello Walkie Talkie app rocketed from outside the top 2k apps to the #1 most popular iPhone app in the US on August 28th. Why? Because that’s when Hurricane Ida entered the Gulf of Mexico. Last year, Zello reached #2 on the App Charts on August 26th when Hurricane Laura made landfall. Whenever a hurricane is approaching the Eastern Seaboard, Zello is approaching the top of the App Charts.

So what does the App Charts say about the aforementioned thesis that changing consumer behavior in the pandemic has created exciting opportunities for new D2C startups to break out, and for investors to fund those startups?

To answer this question, let’s turn to data from App Annie, the best App Charts analytics company around. I’ve queried App Annie for data on the Top 30 most popular overall iPhone apps in the US of the past 4 years. This is the definitive App Store ranking. When interesting things happen in the world — hurricanes, holidays, pop culture phenomenons, pandemics, and more — it shows up on the Top 30 list.

I then computed the average number of days those Top 30 apps were available for download in the US App Store — in other words, this is the official age of the app.

To first set the stage with some background info, in 2018 the average Top 30 app had been available in the App Store for about 4.4 years, which means the most popular apps that year were mostly from established companies, and not brand new startups. If we are to believe that changing consumer behavior from the pandemic has opened the door for startups, we’d expect the average age of Top 30 apps to decline during Covid as consumers favored new startup apps.

In reality, the opposite has happened. After staying pretty consistent between pre-pandemic between 2018 and early 2020, the average age of Top 30 apps jumped from 4.6 years old to over 7 years old during the pandemic. In other words during the pandemic, consumers have been choosing to download older, more established apps at a higher rate compared to new, upstart apps.

So consumer behavior has indeed changed during the pandemic, but it’s not new startups that are benefiting from them in the App Charts, but rather the incumbent companies with older apps that have already been around for many years.

Analyzing further, let’s now explore that same metric of average age of a Top 30 app, but for 3 specific App Chart categories: Social Networking, Shopping, and Gaming apps. Pre-pandemic between 2018 and early 2020, the average Top 30 Social Networking app had been around for 5.7 years. In the pandemic, that age jumped to 6.5 years.

Similarly, the average age of a Top 30 Shopping app jumped from 6 years to 7.7 years in the pandemic. The Gaming apps category has historically favored new apps as people are constantly installing new games to play (hence the lower average age). But even the Gaming category saw a sizable increase in the average age of a Top 30 app during the pandemic, going from 1.1 years to 1.5 years.

Looking at data for other app categories like Education, Food, Finance, Lifestyle, and more, the same trend holds true. Over and over again, US consumers have sought out older, more established apps to install at increasingly higher rates during Covid-19 instead of new, startup apps.

Know the saying “Fortune favors the bold”? On the App Charts during Covid-19, fortune favored the OLD.

Some good news for new apps

Numbers don’t lie. Older, established apps on average are seeing increasing success on the App Charts compared to new startup apps. But numbers, particularly average numbers, also don’t tell the whole story. Covid-19 has actually helped new, startup apps in one way: US consumers are trying out more different apps during the pandemic.

To illustrate this, let’s count up the total number of unique apps that made the Top 30 most popular app list any week of the year. For example, the ​​NCAA March Madness Live app cracked the Top 30 one week in 2018 so that’s part of the total count for 2018. Pre-pandemic between 2015–2019, there were on average 210 unique apps in the Top 30 overall charts each year. But during the pandemic, that number has steadily increased and 2021 is on pace to have the most unique apps that achieved Top 30 status of the past 7 years.

Just to achieve Top 30 status is an incredible accomplishment that takes on average garnering nearly 50k new app installs per week. To do that, even for just a fleeting moment, puts you in rare company with only a few hundred other apps each year.

So while consumers may favor older apps (as evidenced by the increasing age of Top 30 apps), those same consumers are still giving new apps a chance at success during the pandemic. That includes not just trying out new apps less than a year old like byte, Clubhouse, Hype Simulator, MrBeastBurger, Poparrazi, WOMBO and more, but installing them in such high enough volumes to push them into rarified Top 30 status. Their time on the Top 30 charts may be brief, their moment of glory may be temporary, but consumers during Covid-19 are putting more apps onto the Top 30 charts than they have in years, which is a big deal.

Because as long as consumers are willing to give something new a shot, there’ll be startups ready to take that shot, and investors eager to fund that shot.

Just gotta keep shooting.



Eric Feng

Current: Co-founder of @cymbalxyz, Co-founder of @GoldHouseCo Ventures. Past: @Meta (via Packagd), GP at @KleinerPerkins, and CTO of @Hulu and @Flipboard.