As the private fundraising market grows more frugal, firms that were previously valued only on growth and had no regard for running costs will be forced to deal with the market’s shift in opinion in their next round of funding, and startups that aren’t growing well and are burning a lot of money? They’re probably in a lot more danger now. It’s unclear how many firms who rose in the aggressive fundraising atmosphere of 2021 will struggle to raise their next round at anything higher than a flat valuation? However, we’re starting to see some early signs.
The topic of discussion on tech Twitter yesterday evening and this morning was a piece of reporting by The Information’s Malique Morris, in which he explored the difficulties of the one-click checkout market. It’s a crowded startup scene, with a lot of well-funded rivals vying for market dominance.
Fast, which was backed by Stripe and reported by TechCrunch during its funding cycles, generated roughly $600,000 in revenue last year, according to Morris. Given that the company’s most recent investment round was worth $102 million in January 2021, it’s a bit of a stretch. Here’s how I talked about the company’s growth figures at the time: Fast was contacted by TechCrunch for comment on its rapid expansion. The gross merchandise volume (GMV) processed by the business’s checkout service has “more than tripled each month,” according to the company, which expects the “pattern to continue and increase.”
We don’t have a baseline from which to scale the growth rate, but we do now have a forecast for future GMV increase from Fast that we can use as a benchmark. Fast today declined to comment on its claimed revenue numbers.
The disparity between the pseudo metrics fast released around the time of its nine-figure Series B and its end-of-year outcome demonstrates why TechCrunch has been working with startups in recent years to gather hard figures. My suspicion has long been that startups which refuse to publish data do so not because they are afraid their competitors will figure out their ARR scale, but because they would find it difficult to justify the huge gap between their operating outcomes and value.
The Fast and Furious franchise has only strengthened my belief in that viewpoint. But I don’t really want to talk about Fast. It’s just one of the businesses that benefited from the cash bonanza that began in late 2020 and lasted through the end of 2021. I’d like to discuss all of the startups who raised money at valuations that their ARR couldn’t support, the startup equivalent of writing checks that your backside can’t cash.
