Why does TechCrunch cover so many early-stage funding rounds? – TechCrunch

Funding-round stories are TechCrunch’s bread and butter.

For early-stage companies, the fact that an investor has put thousands, millions (or billions) into an idea that will likely fail, and might never make money, is big news. That’s a story that we can tell every day.

From time to time, a debate pops up about the role of funding-round stories: Are financings the right metric to focus on? Should the trend be scratched and reinvented? After all, raising money is not indicative of making money. Let’s be real: news needs news to be published. There needs to be a tension, or a surprise, but most of all, a reason for the reader to keep reading.

It’s a healthy conversation, and one the Equity crew decided to discuss last Friday:

  • Alex Wilhelm: Funding rounds are largely rose-tinted trade journalism, but they’re worth writing
  • Danny Crichton: I hate funding announcements but write them anyway
  • Natasha Mascarenhas: The stories are so much more than the dollar signs

Alex: Funding rounds are rose-tinted trade journalism, but they’re worth covering

It’s easy to mock funding-round coverage: There are far more rounds than hands to write them, so the coverage is inherently partial; they are a poor milestone to use as a benchmark for growth; and coverage of the startup in question nearly always has an overly positive tilt, given that the piece in question centers around something that is a win for the company.

Yet, I still think they are worth writing and try to get to a few each week.

There are good reasons for doing so 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, the furthest outlying and the trend-elucidating rounds that we can use as a light to better illuminate how the broader startup and technology worlds are changing.

I think TechCrunch does a reasonable job of picking the right companies to cover and we spend a good amount of time aggregating discrete funding events into trends. It’s super-hard work, as covering a single round is time-consuming and ultimately not incredibly well-read.

And yes, funding rounds are not really milestones to celebrate. The startup isn’t suddenly destined to win. Capital just means that the venture class has increased its wager on the startup generating more wealth for themselves and their backers, whom are largely already rich.

But trying to lever any information from private companies is an exercise in sadistic dentistry, and startups tend to open up the most around funding rounds. So, if you want to chat with a CEO on the record for half an hour, the next time their startup raises is probably your best chance.

And there is signal in a venture round. Someone felt strongly enough about the company’s prospects to inject it with more capital, making a funding event a reasonable signal that something is going on at the company.

Then there’s the issue of positive bias. All publications have a bias. TechCrunch has many biases, the most important and salutary of which is that we think that startups are cool. We do! Quickly-growing, private companies are inherently interesting and I came back to this publication in part so that I could keep writing about them. I am never bored.

So, yes, funding-round coverage tends to be a bit more on the positive side of balanced than I would like, but I balance that by becoming increasingly orthodox as a startup scales. When a young company raises its first few million, the chat with the CEO is her telling me about her small team, first customers and fitful progress.

By the time she raises a $50 million Series C, we’re talking gross margin expansion, YoY ARR growth and diversity metrics. Before she takes her unicorn public, I’m asking pressing questions about GAAP results, the public markets and what sort of external offers are coming in for the whole concern.

Being slightly optimistic about startups when they’re young is, then, tempered by increasing scrutiny as the company grows. That seems like a fair balance for the company and our readers.

So I won’t stop covering funding rounds. Even if I didn’t have this job I probably still would for my personal blog. I always learn something from high-growth companies; they have a window into the market that is dynamic and far from ossified. And early-stage founders tend to not be overly media-trained, so they are still interesting.

And sometimes something you write winds up changing the direction of a startup. That’s always a very weird and disconcerting feeling. But as this impact is nearly always good for the company in question, you’ve only accidentally made the lives of others a bit better for a short while. It’s not so harsh a sentence.

Danny: I hate funding announcements but write them anyway

Covering startups is one of the hardest news beats out there (trust me, I’m unbiased — I cover startups for a living).

If you cover the Senate, you report regularly on 100 individuals, their staffs and interactions. If you cover banking, you watch a handful of banks since no one gives a flying rat’s tushy about the industry’s middle market. There’s generally a limited scope in political and general business reporting where you know the key players and the key newsmakers.

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’s probably not important. But it might just be. That startup you talked to this week sounds boring. Four years later, it sells for $20 billion. The startup world is constantly changing, and unless you blow up your whole worldview on a regular basis, you’ll never keep up.

Source link