3 opinions on why math for startups could soon get a lot more creative – TechCrunch

Seen from this year With the changing venture capital environment, it’s not hard to imagine we’ll see a lot more of the following: downside rounds disguised as expansion rounds, recapitalization events mixed with secondary activities, and vaguely defined references to growth, burn, and other key startup metrics.

As the downturn threatens companies’ ability to meet growth targets, while highlighting the need to get there faster and not lose too much money, we expect more creative math from the founders.

We’re kind of used to founders amplifying their profits and twisting their losses, but such sins can turn into heresies during a recession. Of course, it’s not all out of malice. For decades, those within startup land have been unable to agree on a definition for recapitalization or, well, even bootstrapping, because the terms themselves are so vague.

Every few months, Tech Twitter wants to rethink what we call rounds, for example. But the terms are relative, and a journalist’s job is to get as close to the truth as possible (and push back when using fluff as a substitute for the truth).

In this column, Natasha Mascarenhas Haje Jan Kamps and Alex Wilhelm discuss what the year’s data reporting might look like and what they expect to see or, perhaps more precisely, what they do not want to see it. The column is sort of an accompanying piece to a recent Equity podcast that debates the same topic. Check out the pod, then dive into the in-depth takes below!

It’s probably not surprising that as a journalist I enjoy clarity from the companies I speak with on a daily basis. I’m talking details over generalizations, data over drama, and evidence that you grow versus promises that you are. As a result, it’s both an annoyance and a matter of inaccuracy when a startup exhibits an allergy to being placed in a very plain box – as easy as having a Series A.

Why? Growth is, unfortunately, subjective, meaning that private companies (that don’t have to share their financial data publicly) can often spread a semblance of it without much repercussion. For example, a startup’s revenue may have grown 100% year over year, but that could be from $1 to $2, thanks to the first customer, or $5 million to $10 million; who will say? Sometimes that example in itself can lead a founder to tell me the true range of their growth, but it often means putting an asterisk next to any vague growth metric I include in stories.

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