M13’s Investment Thesis: Understanding the Future of Consumer Behavior

Four key trends in consumer tech are shaping our investment strategy.
By M13 Team

Last Updated: March 7, 2022

Published: March 3, 2022

M13

As former founders and operators, our focus has always been on understanding the future of consumer behavior.

M13 has been fortunate enough to be early backers of DTC businesses such as Daily Harvest, Ring, and FabFitFun. And while the last two years have pushed forward many consumer behaviors—see our thoughts from May 2020—our investment approach today is more focused on the enabling technologies that power the future of money, health, work, and commerce.

What this means in practice is we’ll invest more in the infrastructure that powers these broad themes and applications, and we’ll seek out companies that get to the end users though indirect channels including the physician, employer, and enterprise.

We’ve also been investing in Web3, beginning with Lightning Labs in 2019. Beyond Lightning, our investments include two in the bitcoin space (Fold, River), one in the Flow ecosystem (Unblocked), and one built atop Ethereum and Polygon (Nori).

We view Web3 as a horizontal technology that will permeate across our vertical areas of focus. NFTs will find new use cases and the gig economy will be transformed. Wallets, identity, and social are all deep areas of interest.

Fund I - Fund III


Source: M13


The future of money

As more people embrace digital assets, we’ll continue to see the novel applications manifest through a variety of new real-world use cases.

Lightning Labs is building the rails to make bitcoin usable globally for transactions, and Nori (which incentivizes farmers to sequester carbon in their soil) is authenticated on Ethereum.

A focus on financial wellness also means diversifying assets by earning bitcoin (Fold) and incentivizing personal savings through gamification and crypto rewards (PrizePool). And more than half of U.S. employers now offer workplace financial wellness programs (Northstar) compared to under 25% in 2015.

For small businesses and high-growth companies, Rho is helping to accelerate their business by creating more efficient and automated money management rails.

Technology platforms and tools are modernizing the $36 trillion residential real estate market with real estate transactions by buyers, sellers, landlords, and tenants (Doorstead, HomeLister, Doorvest). And Milo Credit offers the world’s first 100% collateralized crypto-backed mortgage.

Learn more about our portfolio companies that are transforming the future of money:

Doorstead

Transforming property management

Doorvest

Expanding access to rental home ownership

Fold

Bringing bitcoin to the masses

Homelister

Automating the process of selling homes

Lightning Labs

Improving the speed and cost of bitcoin transactions



Northstar

Redefining financial wellness as a benefit

Prizepool

Using prizes to transform the way that we save

Milo

Building a digital bank and lending platform for global and crypto consumers

Rho

Making finance frictionless for organizations





The future of health

We’ve been deep believers in the digital transformation of consumer health and wellness (including Heal and at-home molecular testing Cue Health) in Fund I. The demand for accessible services such as digital pharmacies and community-specific telehealth is visible in the growth of companies such as Capsule, Form Health, and Spora Health. Yet we believe this digital health market is only getting started and will grow 10x in scale and be worth over half a trillion dollars over the next five years.

As we’re seeing during these challenging times, these telehealth-enabled models of care can successfully combine elements of health and wellness into scalable, direct-to-patient platforms and marketplaces. Similar to e-commerce, we’ll look to move further down the stack, invest in the infrastructure layer that makes standing up a digital healthcare business easier, and focus on companies converting the promise of value-based healthcare into reality.

Learn more about our portfolio companies that are transforming the future of health:

adyn

Building science-backed health options for women

Capsule

Reimagining the pharmacy experience with same-day prescription delivery

Form Health

Personalizing medical weight loss

Spora Health

Focusing on health equity for people of color





The future of work

As work becomes increasingly distributed while demanding more from employees, workplaces and workers require streamlined tools and empathetic solutions. Tools that enable smarter collaboration, feedback, and professional development will result in greater efficiencies as well as an anchor in our complex world. From modernizing recruiting for engineers with interviewing.io to creating a safe place for employees to share real-time feedback with AllVoices, startups are reshaping how we work.

In addition to improving the employer-employee paradigm, the future of work includes the rise of the professional creator class (50 million people consider themselves creators). Companies like Clash are helping them distribute their work and monetize from and engage with fans.

Finally it also includes marketplaces and platforms that allow people to earn income in novel ways—for example, M13 portfolio company Shef has leveraged a regulatory opening to help immigrants and “shefs” from all walks of life generate income through their private kitchens.

Learn more about our portfolio companies that are transforming the future of work:

Allvoices

Offering a safe place for employees to speak up about workplace issues

Clash

Helping creators monetize directly from their fans

Interviewing.io

Modernizing recruiting for engineers

Thrive Global

Improving well-being and performance through sustainable, science-backed solutions

Shef

Building a marketplace for home-cooked meals by local chefs



The future of commerce

Consumer adoption of online purchasing will reach about 25% penetration within the next five years. With $850 billion of new TAM coming online in commerce, we see a golden age for emerging DTC brands and founders. However, we will not be investing directly in these companies; instead we’re taking a pick-and-shovel approach—investing in enabling technologies that make these brands more efficient.

For example, Passport builds software to enable U.S. DTC brands to easily ship to international customers, opening up new pockets of demand. Upside Financing allows brands to grow through creative non-dilutive financing options that help mitigate common working capital challenges.

Learn more about our portfolio companies that are transforming the future of commerce:

Carrot

Helping people magically organize all the shopping they do online

Passport

Offering transparent customer support as a software-only international parcel shipping carrier

Pinata

Increasing efficiency in the field with a workforce optimization platform

Upside Financing

Helping CPG brands grow through PO-based financing options



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Get in touch

As the world adapts to shifting consumer behavior, we at M13 are committed to supporting early-stage founders who can change the way we all live, work, and manage our finances. We invest at the seed, Series A, and Series B stages and primarily lead rounds and fully activate our Propulsion Platform. We’ll also join rounds and partner with other investors to support you on your journey.

If you’re a founder building in any of these spaces (or know someone who is), please reach out to us.

cit@m13.co

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