Funding-round stories are TechCrunch bread and butter.
Big news for early stage companies is the fact that an investor has put thousands, millions (or billions) into an idea that is likely to fail and possibly never make money. It's a story we can tell every day.
From time to time a debate arises about the role of stories about funding rounds: is funding the right metric to focus on? Should the trend be scratched and reinvented? After all, raising money does not mean making money. Let's be real: news needs news to be published. There has to be a tension or a surprise, but above all a reason for the reader to read on.
It's a healthy conversation the Equity crew talked about last Friday:
Alex Wilhelm: Funding rounds are mostly pink specialist journalists, but they are worth writing
Danny Crichton: I hate funding announcements, but I write them anyway
Natasha Mascarenhas: The stories are so much more than the dollar signs
Alex: Funding rounds are pink trade journalists, but they are worth covering
It's easy to make fun of funding round coverage: there are far more rounds than hands to write them, so coverage is inherently partial. They're a bad milestone as a benchmark for growth. The coverage of the startup in question is almost always too positive as the piece in question revolves around something that is profitable for the company.
Even so, I still think they're worth writing and try to reach a few every week.
There are good reasons for this that run counter to the obvious complaints. Sure, there are more rounds than we could ever cover, but in theory we're filtering as best we can for the most interesting, most distant, and trending rounds that we can use as lights to better illuminate such broader startup and technology worlds change.
I think TechCrunch does a reasonable job of helping select the right companies, and we spend a lot of time rounding up discrete funding events into trends. It's super hard work as covering a single round is time consuming and ultimately not particularly well read.
And yes, funding rounds are not really milestones to celebrate. The startup is not suddenly destined to win. Capital just means that the risk class increased their bets on the startup to create more wealth for themselves and their supporters, most of whom are already rich.
However, trying to leverage information from private companies is an exercise in sadistic dentistry, and startups typically open most rounds of funding. So if you want to chat with a CEO on file for half an hour, the next time the startup is raised is probably your best chance.
And there is a signal in a venture round. Someone felt strong enough about the company's prospects to raise more capital and made a fundraising event a reasonable signal that something was going on in the company.
Then there is the problem of positive bias. All publications are biased. TechCrunch has a lot of prejudices, the most important and healing of which is that we think startups are cool. We do! Fast growing private companies are intrinsically interesting, and I came back to this publication in part so I can keep writing about it. I am never bored.
Yes, the coverage of the funding round tends to be a bit more positive than I would like, but I balance that by becoming more and more orthodox as a startup scale. When a young company collects its first millions, she tells me in conversation with the CEO about her small team, the first customers and the restless progress.
By the time she picks up a $ 50 million Series C, let's talk about gross margin expansion, year-over-year ARR growth, and diversity metrics. Before she brings her unicorn out there, I ask urgent questions about GAAP results, public markets, and outside offerings for the entire company.
Being a little optimistic about startups when they are young is tempered by increased control as the company grows. That seems like a fair balance for the company and our readers.
So I will not stop covering funding rounds. Even if I didn't have this job, I would probably still use it on my personal blog. I always learn from high-growth companies. You have a window into the market that is dynamic and anything but ossified. And early-stage founders tend not to be overly media-trained, so they're still interesting.
And sometimes something you write changes the direction of a startup. It's always a very strange and unsettling feeling. Since these effects are almost always good for the company in question, you only accidentally made the lives of others a little better for a short time. It's not that hard a sentence.
Danny: I hate funding announcements, but I write them anyway
Startups coverage is one of the toughest news (trust me, I'm open-minded – I cover startups for a living).
When you cover the Senate, you regularly report on 100 people, their staff and interactions. If your into banking, watch a handful of banks as no one is a flying rat worrying about the middle class in the industry. In general, in political and general business reporting, there is a limited amount of knowledge to which you know the key players and top news makers.
In startups you cover … everything. There are a couple of hot sectors that everyone is talking about … and then there is every other sector that might be the next hot sector, but no one has ever heard of it. It probably doesn't matter. But it could be easy. The startup you spoke to this week sounds boring. Four years later, it sells for $ 20 billion. The startup world is constantly changing and if you don't blow up your entire worldview on a regular basis, you will never keep up.