7 Years to 100M ARR Used to Be Gold Now Its Bronze

7 years to $100M ARR used to be the startup gold standard. Now it’s maybe bronze.

Some good data here from Janelle Teng at Bessemer on the new standards for AI cloud companies.

I think the distinction below between supernovas and shooting stars, if only to give founder in the latter category a tiny bit of relief 😅.

Here’s the thing, though - see the little * next to gross margins for the supernovas?

That leads to footnote, which indicates many (most?) of these speed racers have negative margins and usually heavily so.

Easy to sell dollars for 90 cents, as the saying goes.

So why do so many VCs fund cash-burning companies?

1) Growth is the primary hurdle for venture. It’s impossible to be venture scale without rapid growth - so proving that first is a plus in their eyes.

2) Many believe the software space is wide open again. Mature categories will get reimagined by young companies at wild pace. True or not, that’s the underlying belief.

Now the shooting stars are also growing quickly but typically have to prove more capital efficiency than the supernovas.

Which tells us something important:

In VC, it’s always growth > everything.

Is this good? Is this right? Is it even smart?

No, not always. But it is the game of today.

Read the full Bessemer report, definitely worth your time!

#startups #founders #growth #AI