Why a VC Predicts 2026 Will be ‘The Year of the Consumer’

Consumer Tech Startups: A Forecast for 2026 and Beyond

Since 2022, investments in consumer tech startups have faced challenges, fueled by a shifting macroeconomic landscape and heightened inflation concerns. Venture capitalists have shifted their focus towards enterprise customers, who offer substantial funding and quick scalability in the AI sector.

However, one venture capital expert predicts a resurgence in consumer tech sectors by 2026.

2026: The Comeback of Consumer Tech

“This is gonna be the year of the consumer,” declared Vanessa Larco, partner at the venture firm Premise and former partner at NEA, during a recent episode of the Equity podcast.

Enterprise Focus vs. Consumer Demand

Despite enterprises wielding hefty budgets and a desire to implement AI solutions, Larco notes that adoption often stalls due to confusion about where to begin. “The fun thing about consumer and prosumer…is that people already have in mind what they want to use it for,” she explained. “They purchase it, and if it meets the need, they just keep using it.”

Consumer-driven products often see quicker adoption rates, giving AI startups clarity about product-market fit early on.

Clarity in Consumer Adoption

“If you’re selling to consumers, you’ll know very quickly if it’s fitting a need or not,” Larco stated. “You’ll be able to pivot or refine your product swiftly based on feedback.” In an uncertain economy, tech products that successfully scale reveal a strong alignment with consumer needs.

Early Signs of Consumer Tech Revival

Recent developments suggest consumer tech is regaining momentum. Late last year, OpenAI unveiled features in ChatGPT that integrate shopping experiences with Target, housing searches via Zillow, travel bookings with Expedia, and Spotify playlist creation—all through its chatbot interface.

AI as a Concierge Service

“AI will feel like concierge-like services, doing everything you envision,” Larco remarked. “The challenge lies in determining which services should be specialized vs. general-purpose.”

Legacy Companies vs. New Age Giants

As OpenAI shapes the landscape of consumer internet, questions arise about the fate of established companies like Tripadvisor or WebMD—will they adapt or get overshadowed by newcomers?

Investing with Strategy in Mind

Larco anticipates a vibrant year for mergers and acquisitions in 2026, focusing her investment interests on startups that add unique value OpenAI may not pursue. “OpenAI doesn’t manage real-world assets,” she noted, suggesting that they may not dive into marketplace models that require managing human resources.

Monetization in the Evolving Landscape

With potential shifts in monetization strategies on the horizon, Larco predicts the framing of fresh business models adapted to the evolving consumer experience.

‘Social Media Must Evolve’

While observing events on Instagram, Larco took note of how information is increasingly muddied by AI-generated content. She expressed frustration at how AI deepfakes have infiltrated significant news stories, raising concerns about authenticity in social media.

The Quest for Authentic Content

Larco points out that as users grow skeptical of content on platforms like Meta and TikTok, alternative spaces could emerge to provide trustworthy information. “I think we should move on from getting your news from [Meta],” she suggested.

‘Voice Technology: A New Frontier’

In the wake of Meta’s recent acquisition of AI startup Manus, Larco sees promise in enhancing Meta’s Ray-Ban smart glasses, which allow seamless interaction without a phone. “Truly useful voice AI assistants are on the cusp of happening,” she believes.

Redefining Interaction

“Some tasks are simply better with voice than with a screen,” Larco concluded, envisioning a future where designers can selectively choose the optimal form factor for different use cases. “Asking a voice assistant about the tallest building feels modern, while pulling out a phone to type seems archaic,” she quipped.

Here are five FAQs based on the idea that 2026 will be "the year of the consumer" according to the VC perspective:

FAQ 1: Why do experts believe 2026 will be the year of the consumer?

Answer: Experts suggest that technological advancements, changing consumer behaviors, and a focus on personalization will converge by 2026. This shift toward consumer-centric approaches is expected to drive significant innovation and growth in the market.

FAQ 2: What trends are contributing to this prediction?

Answer: Key trends include the rise of e-commerce, increased use of artificial intelligence for personalized experiences, sustainability concerns leading to ethical consumption, and a greater demand for transparency from brands. These trends indicate that consumers will wield more influence over purchasing decisions.

FAQ 3: How will businesses need to adapt in 2026?

Answer: Businesses will need to prioritize consumer feedback, invest in technology that enhances the shopping experience, and create value-driven offerings. Adapting to changing consumer preferences and ensuring strong engagement will be crucial for success.

FAQ 4: What role does technology play in this consumer-centric future?

Answer: Technology enables companies to better understand consumer behavior through data analytics, automate personalized marketing, and enhance online shopping experiences through virtual reality and augmented reality. These innovations will make consumer interactions more intuitive and engaging.

FAQ 5: How can investors capitalize on this trend?

Answer: Investors can look for startups and companies that prioritize consumer experience, leverage technology for personalization, and demonstrate sustainability in their practices. Supporting businesses that align with consumer-centric values will likely yield substantial returns in this evolving market landscape.

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VCs Forecast Robust Enterprise AI Adoption for Next Year — Once More

AI in Enterprise: Where Do We Stand After Three Years?

Three years post the launch of ChatGPT, the AI landscape has experienced a remarkable shift. While optimism around AI’s role in enterprise software has fueled a surge of investment in new startups, many companies are still grappling with effective integration of AI tools.

Enterprises Struggle to Reap AI Benefits

Despite considerable investment in AI, enterprises haven’t effectively realized its potential. A recent survey from MIT revealed that a staggering 95% of organizations reported not receiving a meaningful return on their AI investments.

The AI Adoption Timeline: What to Expect by 2026

So, when can businesses anticipate real value from AI integration? Insights from a TechCrunch survey of 24 enterprise-focused VCs suggest that 2026 is poised to be a pivotal year for meaningful AI adoption and budget increases for this technology.

Industry Opinions on AI’s Future in Enterprise

Here’s what industry leaders are saying:

Kirby Winfield, Founding General Partner at Ascend

“Enterprises are learning that LLMs aren’t a catch-all solution. The focus will shift to custom models and improved data management.”

Molly Alter, Partner at Northzone

“Some AI companies may transition from product-based to consulting models, utilizing their expertise to create tailored solutions.”

Marcie Vu, Partner at Greycroft

“We are excited about voice AI, which represents a fundamental shift in how humans and machines interact.”

Alexa von Tobel, Founder at Inspired Capital

“AI will reshape industries like infrastructure and manufacturing by enabling predictive capabilities.”

Lonne Jaffe, Managing Director at Insight Partners

“We’re observing frontier labs focusing more on turnkey applications in sectors like healthcare and education.”

Tom Henriksson, General Partner at OpenOcean

“In 2026, we expect momentum in quantum technologies, but major software breakthroughs may still be a way off.”

Investment Trends in AI

Key investment areas include:

Emily Zhao, Principal at Salesforce Ventures

“We’re focusing on the intersection of AI and physical environments, as well as advancing model research.”

Michael Stewart, Managing Partner at M12

“Our interests lie in future datacenter technology, emphasizing efficiency and sustainability.”

Jonathan Lehr, Co-founder at Work-Bench

“We’re drawn to vertical enterprise software, particularly in regulated sectors.”

Aaron Jacobson, Partner at NEA

“We’re investing in software and hardware that enhance performance while reducing energy consumption.”

Evaluating AI Startups: Key Metrics for Success

According to experts, a strong “moat” in AI isn’t solely defined by advanced models; it encompasses economic integration and proprietary data access.

Kirby Winfield on AI Moats

“It’s all about being embedded in enterprise workflows and providing unique, defensible outcomes.”

Anticipating 2026: Will Enterprises Begin Seeing Returns on AI Investments?

Industry leaders provide mixed insights on whether 2026 will truly be the turning point for enterprises in realizing value from their AI investments, highlighting the journey ahead.

Shifting Budgets: A New Era for AI Investments

As companies navigate AI vendor sprawl, many are expected to consolidate their spending, directing funds toward proven tools and solutions.

What Will It Take to Raise Series A Funding in 2026?

Startups will need compelling narratives and strong customer adoption metrics to secure funding in an increasingly competitive landscape.

The Rising Role of AI Agents in Enterprises by 2026

Insights indicate that AI agents will evolve from their initial adoption phase, potentially becoming integral to organizational workflows.

Fastest-Growing Companies: Identifying Trends

Companies that adapt to security and workflow gaps created by AI are witnessing rapid growth, underscoring the need for innovative solutions.

Strong Retention: What Makes a Company Stick?

Successful companies are those that continuously solve evolving problems as AI becomes more integrated into their clients’ operations.

Here are five FAQs related to the topic of strong enterprise AI adoption predicted for the upcoming year:

FAQ 1: What is driving the predicted adoption of AI in enterprises next year?

Answer: The anticipated surge in enterprise AI adoption is largely driven by advancements in technology, increased investment from venture capitalists, and the growing need for businesses to enhance efficiency, automate processes, and leverage data for decision-making.

FAQ 2: How are businesses planning to implement AI technologies?

Answer: Businesses are planning to implement AI technologies through various strategies, including integrating AI into existing workflows, investing in AI infrastructure, and collaborating with AI-focused startups to develop tailored solutions that meet their specific needs.

FAQ 3: What challenges might enterprises face when adopting AI?

Answer: While the adoption of AI presents significant opportunities, enterprises may face challenges such as data privacy concerns, integration issues with legacy systems, a lack of skilled personnel, and resistance to change from employees accustomed to traditional processes.

FAQ 4: Which industries are expected to see the strongest AI adoption?

Answer: Industries such as healthcare, finance, retail, and manufacturing are expected to see the strongest AI adoption, as they seek to leverage AI for improved customer experiences, predictive analytics, and operational efficiencies.

FAQ 5: How can companies ensure a successful AI adoption strategy?

Answer: Companies can ensure a successful AI adoption strategy by conducting thorough research on AI solutions, investing in employee training, establishing clear objectives for AI initiatives, and continuously monitoring performance and outcomes to make necessary adjustments.

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The Year Data Centers Evolved from Backend to Front and Center

The Rise of Data Center Activism: A Growing Movement Against the Digital Backbone

For years, data centers have operated in relative obscurity, serving as the lifeblood of the internet without much public interest. However, a notable shift is occurring in 2025, as communities across the U.S. are waking up to the profound impact of these facilities.

A Surge in Activism: Over 140 Groups Mobilizing Against Data Centers

Recent protests against data centers have erupted in numerous states, with activists mobilizing against the rapid expansion of these facilities. According to Data Center Watch, there are currently 142 activist groups spanning 24 states actively opposing new developments.

Concerns at the Core: Environment, Health, and Rising Costs

Activists voice a multitude of concerns, including the environmental implications, potential health impacts, and the increased electricity bills associated with new data center projects.

Unprecedented Growth: The Rapid Expansion of Data Centers in America

The data center industry has seen explosive growth, with construction spending soaring by 331% since 2021, according to U.S. Census Bureau data. This surge is accompanied by projections from major tech giants like Google, Meta, and Microsoft, all poised to invest significantly in new infrastructure.

Government Influence: AI Infrastructure Push from Washington

The Biden administration’s focus on artificial intelligence has further accelerated infrastructure expansion. The Stargate Project, announced earlier this year, is a pivotal part of this initiative aimed at re-industrializing the U.S.

Activist Responses: A Growing Public Discontent

Activists like Danny Cendejas of MediaJustice highlight the spontaneous grassroots movements forming against these projects. “The interest in organizing is growing,” he shares, hinting at the long-term potential for community wins against data center expansions.

Local Reactions: Protests and Community Resistance

The backlash against new data center proposals echoes across the nation. With numerous protests in states like Michigan and Wisconsin, community members are voicing their opposition and demanding greater accountability regarding rising energy prices tied to these expansions.

The Political Landscape: Can Activism Shift Elections?

The growing discontent surrounding data centers is becoming a pressing political issue, with implications for the upcoming 2026 midterm elections. Rising utility costs linked to data center expansions are poised to influence voter sentiment significantly.

Grassroots Success: Stopping the Data Center Surge

Activist pressure is beginning to yield results, with Data Center Watch reporting that approximately $64 billion in developments have been blocked or delayed due to public opposition. Cendejas believes that sustained public pressure is crucial for achieving tangible outcomes.

Industry Response: Big Tech Battles Back

In light of mounting opposition, the tech industry is actively countering these movements. The National Artificial Intelligence Association is paving the way for new lobbying efforts, while tech companies are launching campaigns to promote the economic benefits of data centers. As we look ahead to 2026, both the expansion of server farms and the backlash surrounding them are set to continue.

FAQs: The Year Data Centers Went from Backend to Center Stage

1. What does it mean for data centers to go from backend to center stage?

Answer: This phrase signifies a shift in the perception of data centers from being merely support systems for businesses to becoming integral components that drive innovation, efficiency, and growth. As cloud computing and digital services have evolved, data centers have gained prominence as critical assets in enabling business operations.

2. What factors contributed to the rising importance of data centers?

Answer: Several factors contributed, including the exponential growth of data generation, the increased reliance on cloud services, and the demand for real-time data processing. Additionally, advancements in technology, such as edge computing and AI, have highlighted the need for robust data infrastructure.

3. How have businesses adapted to this shift in the role of data centers?

Answer: Businesses have started investing more in their data center capabilities, focusing on scalability, security, and sustainability. Many are migrating to cloud environments or implementing hybrid models. Additionally, companies are increasingly prioritizing data center optimization and energy efficiency.

4. What are the implications of data centers being at the forefront of business strategy?

Answer: With data centers playing a central role, organizations are more likely to integrate data management into their core strategies. This leads to improved decision-making, enhanced customer experiences, and competitive advantages in the marketplace. It also drives a focus on cybersecurity and compliance, given the critical nature of the data being processed.

5. How does this shift affect the future of technology and IT infrastructure?

Answer: The shift means that data centers will continue to evolve, incorporating innovations such as artificial intelligence, machine learning, and automation. As companies increasingly rely on data-driven insights, the design, management, and operation of data centers will adapt to meet growing demands, paving the way for next-generation IT infrastructure solutions.

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xAI’s Legal Chief Resigns Following Turbulent Year

Robert Keele Steps Down as XAI’s Legal Head to Focus on Family

In a heartfelt announcement, Robert Keele has declared his resignation from xAI, where he held the position of head of legal for just over a year. His decision stems from a desire to dedicate more time to his children. Acknowledging a divergence in perspectives with CEO Elon Musk, Keele shared the news without any comment from Musk on his exit.

A Balancing Act: Family Over Career

“I love my two toddlers and I don’t get to see them enough,” Keele expressed in his posts on X and LinkedIn. Despite describing his tenure at the AI startup as “incredible” and calling his collaboration with Musk “the adventure of a lifetime,” he felt he could no longer juggle both family and work commitments.

Support from the Community

Keele’s announcement has sparked a wave of support on social media, resonating with both xAI colleagues and fellow parents. When he joined xAI in May 2024 as its inaugural legal chief, he had just launched a brief tenure with a fractional legal firm, noting, “Keele Law had a good run (~3 weeks!), but I couldn’t pass up an opportunity to run legal at xAI,” and described himself as “beyond stoked, and insanely lucky.”

Growth and Acquisitions at xAI

Keele joined xAI just ahead of a significant $6 billion Series B funding round back in May 2024, backed by prominent investors including Andreessen Horowitz and Sequoia Capital, boosting the company’s valuation to $24 billion. Shortly after, xAI rapidly expanded, acquiring Musk’s social media platform X in March, which valued xAI at $80 billion and X at $33 billion, according to Musk’s comments at the time.

Background and Successor

Prior to his role at xAI, Keele served as head of legal at Elroy Air and as general counsel for Airbus’s Silicon Valley innovation center. Taking over his responsibilities is Lily Lim, who came to xAI after a rich career, including time at NASA as a rocket scientist focusing on spacecraft navigation for mapping Venus’s surface. She joined xAI in late 2024, specializing in privacy and intellectual property.

Trends in Executive Turnover under Musk

Keele’s departure aligns with a trend of executive turnover across Musk’s ventures. Following the recent exit of X CEO Linda Yaccarino, Tesla has seen several key executives leave, while Musk expects employees to commit intensely to their roles, sometimes requiring extreme measures like sleeping in the office.

The Shift in Corporate Culture

Meanwhile, some startups in the industry reflect a similar mindset by pushing for aggressive workforce reductions, as seen with AI coding company Cognition. Its CEO recently communicated to staff his disbelief in the concept of work-life balance.

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Sure! Here are five FAQs regarding the recent news about xAI’s legal chief stepping down:

FAQs

1. Why did xAI’s legal chief step down?
The legal chief’s resignation comes after a tumultuous year marked by significant challenges and high-profile initiatives within the company. Specific reasons for the departure may include personal decisions or disagreements over company strategy.

2. What were some major events during the legal chief’s tenure?
During the legal chief’s time at xAI, the company navigated complex regulatory landscapes, engaged in notable litigation, and implemented new compliance measures. This period also involved significant public scrutiny over AI-related legal issues.

3. Who will replace the legal chief at xAI?
As of now, xAI has not announced a successor. The company typically conducts a thorough search process to find a qualified candidate who aligns with its strategic vision and legal requirements.

4. How might this leadership change affect xAI?
Changes in leadership can lead to shifts in company policy or strategy, particularly in legal approaches. Stakeholders may expect reassessments of compliance strategies and potential adjustments in ongoing legal matters.

5. What does this mean for xAI’s future legal strategies?
The departure of the legal chief may prompt xAI to reevaluate its legal strategies, particularly in handling regulatory challenges and intellectual property issues. The company is likely to focus on strengthening its legal framework to support its evolving business objectives.

Feel free to adjust or elaborate on any of these points!

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