3 Views on Why Startup Math Could Soon Get Much More Creative – TechCrunch


Given this year changing venture capital climate, it’s no stretch to imagine we’re going to see a lot more of the following: down cycles disguised as extend cycles, recapitalization events mistaken for side business and benchmarks loosely defined growth, combustion and other key metric starts.

As the downturn threatens companies’ ability to meet their growth goals, while underscoring the need for them to get there faster without losing too much money, we expect to see more mathematical creativity from founders. .

We are somewhat accustomed to founders magnifying their gains and racking up their losses, but such sins can threaten to become heresies in their own right during a recession. Of course, it’s not all malice. For decades, those in the startup world haven’t been able to agree on a definition of recapitalization or, heck, even startup, because the terms themselves are so vague.

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

In this column, Natasha Mascarenhas, Haje Jan Kamps and Alex William talk about what the year’s data reports might look like and what they expect to see or, perhaps more specifically, what they don’t want to see. The column is sort of an add-on to a recent Equity podcast discussing the same topic. Check out the pod, then dive into the extended holds below!

It’s probably no surprise that as a journalist, I appreciate the clarity of the companies I speak with on a daily basis. I’m talking about specifics over generalizations, data over drama, and evidence that you’re growing from the promises you are. As a result, any time a startup shows an allergy to being placed in a very clear box — as simple as having raised a Series A — it’s both a pet peeve and a matter of inaccuracy.

Why? Growth is unfortunately subjective, which means that often private companies (which aren’t required to publicly share their finances) can come up with a semblance of it without much repercussion. For example, a startup’s revenue may have increased 100% year-over-year, but it could be either $1-$2, thanks to its first customer, or $5 million. dollars to $10 million; who to say? Sometimes this example by itself can cause a founder to tell me the true range of their growth, but that often means I have to put an asterisk next to any vague growth metrics I include in stories.

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