Investor survey results: Upcoming trends in social startups

Voice-based social networks and gaming as a new form of identity were among the top emerging trends in consumer social startups, according to an Extra Crunch survey of top social tech investors. Meanwhile, anonymity and dating apps with a superfluous twist were spaces where investors were most pessimistic.

Extra Crunch assembled a list of the most prolific and well-respected investors in social. Many have funded or worked for the breakout companies changing the way we interact with other people. We asked about the most exciting trends they’re seeing and which areas they expect will soon spawn blockbuster social apps.

Subscribe to Extra Crunch to read the full answers to our questionnaire from funds like Andreessen Horowitz, CRV and Initialized.

Here are the 16 leading social network VCs that participated in our survey:

Stay tuned next week for a follow-up article from these investors detailing their thoughts on social investing in the COVID-19 era.

Olivia Moore & Justine Moore, CRV

What trends are you most excited about in social from an investing perspective?

First, it’s worth noting that consumer social is very hard to predict. Unlike enterprise software, there’s no rational buyer, and the things that take off can seem “random” or dumb. Startups that see huge success in this space are often pioneering a new feature or way of communicating that hasn’t existed before. Any VC who claims to know what the “next big thing” in consumer social will look like should probably go build it themselves!

With that being said — there are a few areas where we see a lot of potential for something new and exciting:

  • “Unbundling of YouTube.” You can build a big company by targeting a vertical within YouTube with a product that has better features and more opportunities for creator monetization. Twitch is a great example of this! We’re also watching early-stage companies like Supergreat (in beauty) and Tingles (ASMR).
  • Voice as a social medium. Voice continues to pick up steam as a broadcast medium via podcasting, but we haven’t seen a lot in social or P2P voice yet. We think a successful platform will leverage the fact that voice content can be created and consumed while doing other things. We’re big fans of companies like TTYL and Drivetime that are making strides here!
  • Flexible digital identities. Gen Zers are online constantly but have different preferences across platforms/friend groups about how they want to “show up” digitally. The rise of “Finsta” accounts is one good example of this. Companies like Facemoji already help users create social content using a curated digital avatar — we’re excited to see what else founders build here!
  • Synchronous, shared mobile experiences. We’re bullish on apps that connect users in real time to have a shared social experience. Most apps now are “single-player,” which creates scroll fatigue. HQ Trivia was an early example more on the entertainment side, while companies like Squad help users browse the internet and watch TikTok together.

What social startup ideas do you see too often that repeatedly fail?

We see anonymous social apps pretty frequently! There’s a graveyard littered with failures in this space. Some of them (like TikTok, Formspring and tbh) get fairly popular, but none have become lasting independent companies.

The idea of anonymity is intriguing, and these apps get a lot of downloads by appealing to our natural curiosity — we want to know what other people are really thinking! However, they can quickly turn negative with bullying and trolls taking advantage of the fact that their identities aren’t tied to their posts. It’s also tough to monetize this type of content (via ads) because it’s often NSFW.

Fundamentally, social apps are successful because you connect with people you care about, and you want to see their updates over time. Anonymity makes this difficult — once the novelty wears off, there’s nothing keeping you on the platform.

Connie Chan, Andreessen Horowitz

What trends are you most excited about in social from an investing perspective?

There are lots of social models that I’m excited about — in particular, companies that help strangers meet strangers, products that leverage audio or video in new ways, vertical communities, location-based social groups and products that address emotions of loneliness, fear and confidence in new ways.

From 1 to 10, how likely is it that each of these will spawn a major social network or social app in the next two years:

  • Voice – 6
  • Augmented reality – 8
  • Offline socializing – 6
  • Online gaming – 10
  • Virtual reality – 8
  • Anonymity – 7
  • Financial advice – 7
  • Art – 5
  • Shopping – 9
  • Fitness – 7

What social startup ideas do you see too often that repeatedly fail?

Conceptually, I love the idea of anonymous networks where users can find safe spaces full of support where they are unafraid to share their innermost thoughts or alternate personalities. However, it seems to be a category that hasn’t worked in the past.

Unfortunately, these anonymous communities sometimes become targets for bullies, trolls, etc. — even with strong community guidelines and content moderation in place. It’s possible that a new incentive model for positive behavior or AI can help solve these issues — I haven’t seen it yet, but would love to find one.

Alexis Ohanian, Initialized Capital

What trends are you most excited about in social from an investing perspective?

We’re excited about social networks that give creators the necessary infrastructure to make money in a seamless way. Because many of us are staying or working at home now, the audiences for consuming online content have never been bigger.

We were in the first round of Patreon, which has pioneered this new economy and is in the perfect position to thrive even during these tumultuous times. Supporting your favorite creator or artist is an irrational purchase that I think will give creatives more resilience through a recession than they would otherwise have. Their fans are signaling to their tribes. At the same time, it feels good because a fan’s contributions are going directly to the individuals they love.

Games also continue to be a de facto social network. They’re the only kinds of social networks that don’t have to overcome strong network effects to challenge incumbent social networks. If you can consider Fortnite a “social network,” Fortnite grew to 100 million MAU faster than any conventional social network because it was bootstrapped by the game itself.

For gaming products that we back, like Guilded, which is a leading product for competitive gaming team management on some of these blockbuster titles, we have a pretty unique opportunity to ride these waves in ways that traditional social networks can’t.

Niko Bonatsos, General Catalyst

What trends are you most excited about in social from an investing perspective?

New online behaviors are getting created right now. The future is getting accelerated right in front of us.

I am excited about new vertical communities around a specific activity/task/use case, next-gen gaming infrastructure tools, the future of dating, voice apps, products that help creators make money and a lot of other stuff that I can’t imagine right now… but sounds stupid, annoying, controversial when I first hear about them.

From 1 to 10, how likely is it that each of these will spawn a major social network or social app in the next two years:

  • Voice – 5
  • Augmented reality – 1
  • Offline socializing – depends on corona :)
  • Online gaming – 9
  • Virtual reality – 3
  • Anonymity – 2
  • Financial advice – 4
  • Art – 1
  • Shopping – 5
  • Fitness – 7 

What social startup ideas do you see too often that repeatedly fail?

“Help me make plans to hang out with my friends.”

Josh Coyne, Kleiner Perkins

What trends are you most excited about in social from an investing perspective?

While we look to founders to educate us on insights and opportunities in social, we’ve been particularly intrigued by the emerging social dynamics underpinning immersive digital games. With more than 30% of the world’s population playing games today, gaming and social behaviors are beginning to blur.

People are increasingly registering their existence digitally within games, and in turn, elevating games into a primary vehicle for social capital and identity. Gameplay is becoming social by default.

We’ve seen this dynamic take hold on a worldwide scale following the release of Epic Games’ Fortnite franchise. Fortnite changed the construct of gameplay from ‘something you do’ to ‘somewhere you go.’ Instead of hanging out at the mall or shooting hoops, friends now had the ability to engage in the same social banter within Fortnite’s digital walls. Interestingly, the same underlying social motivation is at play; all that’s changed is the substrate — from physical to digital. We believe this trend is only just beginning.

Wayne Hu, SignalFire

What trends are you most excited about in social from an investing perspective?

The next generation of social companies may not look anything like Facebook, Snap, Instagram or most popularly held conceptions of a social media platform. Much of traditional social media itself has had a now well-documented social distancing effect on consumers. Naturally, consumers are turning elsewhere to create a sense of belonging and community.

We’re already seeing this unbundling of consumer platforms starting within communities that have a deep affinity and sense of identity, and are not well-served by general purpose social networks — for example, gaming communities assembling in virtual worlds such as Minecraft and Roblox and using Discord to communicate, communities that coalesce around commerce companies such as Glossier and classroom networks connecting through virtual classrooms in ClassDojo (a SignalFire portfolio company).

Another SignalFire portfolio company, GreenPark, is focusing on the rabid sports fandom world, and facilitating endemic cosplay and friendly trash-talking behavior. These are among the next generation of social companies enabling communities that are looking for their own ways of interacting more deeply with each other and forming more meaningful connections.

Alexia Bonatsos, Dream Machine

What trends are you most excited about in social from an investing perspective?

I’ve been investing heavily in vertical social networks, like my portfolio company Ethel’s Club, and consumer products that bring unique offline behaviors online, like my portfolio companies Catch, TTYL and Squad.

From 1 to 10, how likely is it that each of these will spawn a major social network or social app in the next two years:

  • Voice – 9
  • Augmented reality – 1
  • Offline socializing – 7
  • Online gaming – 10
  • Virtual reality – 4
  • Anonymity – 2
  • Financial advice – 3
  • Art – 4
  • Shopping – 8
  • Fitness – 5

Two years is a short amount of time! Art for me (an Art major) equals creative community. My portfolio company Lobus is working toward that end, but it will take longer than two years.

What social startup ideas do you see too often that repeatedly fail?

On demand “hang out” apps. The only people that have the problem of too much free time that they need to manage are undergraduate college students, so these apps almost never reach critical mass. One of these days one of these will become massively popular and prove me wrong, however.

Josh Elman, Angel

What trends are you most excited about in social from an investing perspective?

Overall, the largest companies, product and networks — Facebook, Instagram, WhatsApp, YouTube, Snap, Twitter, Reddit, TikTok, iMessage, etc. etc. etc. — are all serving our needs to connect and communicate quite broadly. They are at such scale (hundreds of millions to billions daily) that they crowd out most of the new opportunities.

That said, in this COVID-era, we’re seeing a willingness for people to find new ways to connect when they can’t be together in person. This includes Zoom of course, but also Houseparty (I was an investor), Discord (I’m on board), and Yubo and Hoop, which allow you to meet new people.

Given these new behaviors, there may be opportunities again to provide real connection between people, and particularly around live experiences and interactions. One company I’m excited about is IRL, which helps people manage their calendars and find times and activities to do together — originally in real life, and now in remote life.

From 1 to 10, how likely is it that each of these will spawn a major social network or social app in the next two years:

  • Voice – 2
  • Augmented reality – 1
  • Offline socializing – 7
  • Online gaming – 7
  • Virtual reality – 2
  • Anonymity – 3
  • Financial advice – 4
  • Art – 3
  • Shopping – 6
  • Fitness – 6

What social startup ideas do you see too often that repeatedly fail?

Creating a slightly different video format that can become a new network. It worked for Musical.ly/TikTok, but it’ll be hard to see another.

Aydin Senkut, Felicis Ventures

I’m most excited about the professional side of social networking (I think the next large company will come in this area) along with other critical areas like a core age or school group (I respect Garrett @ Handshake a lot — we are unfortunately not investors).

I’m not spending much time on social at all except very few and very specific thesis (we just made an investment and will share when it’s public). I feel most areas of social are overheated. Though that might change in post-COVID when people can’t socialize offline for long times.

Voice is likely nine to 10 rank in importance, but necessarily as a social network. I feel it will be integral and the next big UI wave (coincidentally my first investment was SoundHound, which is voice related and not sure if you could call them a social network due to their huge mobile user base) — very excited about them obviously.

On financial advice — we think that as a benefit to companies will be a big area.

On anonymity — I am positive that we are likely to see great future companies in this space because the fundamental premise is different.

James Currier, NFX

What trends are you most excited about in social from an investing perspective?

Live video, social comms apps for work, games related comms apps.

From 1 to 10, how likely is it that each of these will spawn a major social network or social app in the next two years:

  • Voice – 8
  • Augmented reality – 8
  • Offline socializing – 5 (Meetup could be reborn under the new ownership of Kevin White in NYC, but that’s not a new network)
  • Online gaming – 7
  • Virtual reality – 3
  • Anonymity – 0
  • Financial advice – 1
  • Art – 1
  • Shopping – 5
  • Fitness – 3
  • You didn’t mention wellness like Calm or InsightTimer – 5

What social startup ideas do you see too often that repeatedly fail?

Concerts, clubs, bars, local events, photos, memes, content for smart people, managing consumers photos and videos.

Pippa Lamb & Christian Dorffer, Sweet Capital

What trends are you most excited about in social from an investing perspective?

A theme that we’ve been excited about for some time — and continue to be — is the verticalization of social. Social used to be about breadth and volume: Platforms would first become a virtual directory for as many people as possible, and then expected users to filter their network down to lots of smaller interest groups, or specific communities. Those types of platforms are exhausting to consumers now: There’s too much noise that comes with that amount of breadth and volume.

  1. Consumers have been overexposed and over-advertised to, and now only want to spend quality time with the communities they care most about. For us, that means looking at platforms built for specific or niche communities. You can see that in our investment in Peanut: the social network for moms; Yubo: the social network for teens; Wave TV: the largest community of sports fan content; or MyCrew: the social network for fitness. We love meeting founders who are solving specific problems for powerful communities.
  2. Self-improvement and identity exploration continue to have a moment. More than ever, consumers are willing to seek out solace or advice from the relationships they build in virtual communities — be it for better mental health, trauma resolution, identity exploration or simply moral support. Ironically, isolation from COVID-19 has brought people together (virtually). We made an investment in the self-improvement space last summer (not yet public) that has seen an uptick in engagement, and Highrise — a creative avatar community of over 3 million users — is seeing some of their best engagement ever.

Social for a cause. We’re paying close attention to platforms that help further a social cause or facilitate activism. Sustainable living is an important one, especially for Gen Z and millennials.

Voice: The West is behind Asia on how voice is being optimized as a social channel. We see this shifting gradually, facilitated by changes in the hardware market — e.g. AirPods.

From 1 to 10, how likely is it that each of these will spawn a major social network or social app in the next two years:

  • Voice: High — we have been looking at voice for some time. We love Spoon in South Korea.
  • Augmented reality: We love the category, but new entrants need to be able to differentiate meaningfully from existing platforms that are able to simply add more AR features to an already captive audience. While the widening of access to AR technology via existing channels (e.g. extensive filters) has been helpful in driving mass market adoption and familiarization, it’s also been somewhat dilutive to the technology’s appeal. For instance, we’ve met a lot of fantastic creative studios that are truly on the forefront of AR innovation, but find less who have been able to translate this into a standalone, defensive social platform — at scale. It’s a crowded space that has real development costs, and the market has a short attention span.
  • In a separate but related area, we’re excited about AR-enabled IRL experiences through our investment in Electronic Theatre.
  • Offline socializing: As above with our investment in Electronic Theater, we’ve been exploring tech-enabled IRL, both on the “online to offline” origination side and using tech to make IRL experiences more impactful. Pre-COVID, IRL was definitely experiencing a comeback, and we expect this to resume in the future. Localization is a big theme for us, as we believe that local relationships have far greater potential to drive meaningful changes in people’s lives than pure URL networks. The next generation of IRL/URL social networks will be strongly positioned to challenge existing URL incumbents.
  • Online gaming: It’s part of our (Candy Crush) DNA to track behavioral trends in the gaming community for leading indicators of wider future trends in social. Often, they have the potential for mainstream adoption outside of the category. As gaming continues to go mass market, we anticipate there will be a real opportunity for the likes of Discord and similar to play a much greater role in people’s lives.
  • Virtual reality: VR is an interesting category, but there are real hardware barriers to overcome. For the time being we still consider VR niche: let’s see when headset usage becomes more commonplace, and how that impacts the landscape upon which such companies are built.
  • Anonymity: A category we’ve looked at a few times, but tough to scale. There are already many such platforms with impressive organic growth, but they tend to hit a ceiling (as they eventually need to bring in more safety measures) and struggle to monetize.
  • Financial advice: Innovation in this space seems most likely from consumer fintech platforms that are well-positioned to add social components versus standalone social platforms wading into this category without any transacting capabilities.
  • Art: No strong opinion.
  • Shopping: As a general rule we don’t love platforms that help users acquire more “stuff,” but are excited about a whole host of new platforms that are enabling more sustainable consumption, or play in the “digital lifestyle” space. We see transformative potential here: the fashion/shopping industry is broken, and we are actively looking for creative technological solutions that users will love.
  • Fitness: High — we are passionate about platforms that facilitate narrow shared-interest consumer groups

What social startup ideas do you see too often that repeatedly fail?

As above, anonymous chat apps often get great initial organic growth, but have a tough time at scale for the same reasons above (eventual product constraints, limited monetization).

The endless list of dating apps with a twist.

Interest-based social networks that never manage to get sufficient liquidity to be powerful at scale.

Jim Scheinman, Maven Ventures

What trends are you most excited about in social from an investing perspective?

For some context, our roots at Maven Ventures are in consumer social. Before becoming an investor, one of the first startups I joined as an entrepreneur was Friendster, the first social network. I subsequently left to be the first employee alongside Michael and Xochi Birch at Bebo, which was acquired for $850 million by AOL in 2008.

Since then, I’ve been interested in the intersection of consumer social behavior and video technology. I was one of the first investors and helped launch Tango, the early leader in mobile video. And as the only micro-VC to invest in Zoom — in addition to coming up with the name of the company — I also helped Eric in the very early days implementing some of the organic and more consumer-facing features.

This coronavirus pandemic has created a situation where Zoom has hundreds of millions of new consumer customers with potential massive opportunities for social consumer behaviors on top of the Zoom platform. We made our first investment that we’ve made in a little while in a startup in this consumer video space and we’re excited to make more. Other trends in social [that] we’re excited to invest in are related to family and home productivity, mindfulness culture and social experiences for baby boomers.

From 1 to 10, how likely is it that each of these will spawn a major social network or social app in the next two years:

  • Voice – 4
  • Augmented reality – 4
  • Offline socializing – 2
  • Online gaming – 8
  • Virtual reality – 8
  • Anonymity – 1
  • Financial advice – 3
  • Art – 5
  • Shopping – 7
  • Fitness – 5

What social startup ideas do you see too often that repeatedly fail?

I’ve seen many businesses trying to solve the problem of individuals getting together offline for activities. Existing solutions to this problem seem to be good enough; we can text easily to set up these plans. But we’ll keep meeting founders trying to solve this problem and who knows, maybe someone will finally be able to figure it out.

Eva Casanova, Day One Ventures

What trends are you most excited about in social from an investing perspective?

Death of the attention economy and a focus on the betterment of users. Platforms that focus on fostering meaningful connections and are founded on principles that champion our mental health, personal growth and happiness.

From 1 to 10, how likely is it that each of these will spawn a major social network or social app in the next two years:

  • Voice – 1
  • Augmented reality – 2
  • Offline socializing – 7
  • Online gaming – 4
  • Virtual reality – 5
  • Anonymity – 10
  • Financial advice – 3
  • Art – 6
  • Shopping – 9
  • Fitness – 8

What social startup ideas do you see too often that repeatedly fail?

Anonymity — leads to bullying. We’re dealing with a loneliness epidemic — as much as people want to hide behind their screens it brings no real happiness or connection and often ends in bullying/hurt.

Dan Ciporin, Canaan

What trends are you most excited in social from an investing perspective?

The ongoing verticalization of social media. Once you get a group together — like immigrants, parenting, etc — people can self identify and/or interact in very interesting ways. Obviously the key is to have a vertical that’s big enough to be meaningful. A lot of people think Facebook took the whole opportunity but I think people are tired of interacting too broadly. Even Facebook gets that — they’ve put a real emphasis on Facebook Groups. But I think that’s not nearly as effective as building a product experience that’s responsible and unique to a particular community.

From 1 to 10, how likely is it that each of these will spawn a major social network or social app in the next two years:

I took a different approach here — gave each a positive, neutral or negative rating. With everything in flux, it’s hard to do otherwise at this point.

  • Voice – Neutral
  • Augmented reality – Neutral
  • Offline socializing – Positive
  • Online gaming – Positive
  • Virtual reality – Neutral
  • Anonymity – Positive
  • Financial advice – Positive
  • Art – Neutral
  • Shopping – Negative
  • Fitness – Positive

What social startup ideas do you see too often that repeatedly fail?

Shopping. I am pessimistic about it because I’ve seen so many companies try and fail. I just don’t think it works.