Reports on funding events are a core element of TechCrunch’s coverage.

For companies in their initial phases, securing investment – even substantial sums reaching millions or billions – for ventures with a high probability of not succeeding and potentially never generating profit, represents significant news. This is a narrative we are consistently able to present to our audience.

Occasionally, discussions arise concerning the value of reporting on funding rounds: Is focusing on financing the most appropriate measurement? Should this practice be re-evaluated and replaced? It’s important to acknowledge that obtaining funding doesn’t guarantee profitability. However, news organizations require newsworthy content to publish. A compelling story needs an element of conflict, unexpectedness, or, at a minimum, a reason to maintain reader engagement.

This is a worthwhile discussion, and the Equity team addressed it during a conversation last Friday:

• Alex Wilhelm: Reports on funding rounds are generally optimistic pieces of industry reporting, but they remain newsworthy.
• Danny Crichton: I personally dislike covering funding announcements, but I still produce these articles.
• Natasha Mascarenhas: These stories offer value beyond simply the amount of money involved.

Alex: Examining the Value of Funding Round Coverage

Coverage of funding announcements is often viewed critically – it can be considered a form of promotional journalism, given the sheer volume of rounds and the inherent bias towards positive news for the companies involved. Furthermore, these rounds aren’t always the most reliable indicators of genuine growth, and reporting frequently presents an optimistic perspective.

Despite these valid concerns, I continue to believe that reporting on funding rounds is worthwhile and aim to cover several each week.

There are compelling reasons for this approach that counter the common criticisms. While the number of funding rounds exceeds our capacity for comprehensive coverage, we strive to identify and highlight the most noteworthy, innovative, and trendsetting rounds. These selections help us to better understand the evolving landscape of the startup and technology sectors.

I believe TechCrunch effectively identifies companies deserving of coverage, and we dedicate significant effort to consolidating individual funding events into broader industry trends. This process is demanding, as reporting on each round requires considerable time and doesn’t always generate substantial readership.

It’s also important to acknowledge that funding rounds shouldn’t be automatically considered major achievements. Receiving capital doesn’t guarantee success; it simply signifies that investors have increased their investment in the startup’s potential to generate wealth for themselves and their existing investors.

However, obtaining information from privately held companies can be challenging, and startups are generally most forthcoming during and around funding rounds. Therefore, if you seek an on-the-record conversation with a CEO for approximately thirty minutes, the period following a funding announcement is often the most opportune time.

A venture funding round itself provides valuable insight. The decision to invest additional capital indicates a strong belief in the company’s future, suggesting that significant developments are occurring within the organization.

The issue of bias is also relevant. Every publication operates with certain biases, and TechCrunch is no exception. A core and positive bias for us is our belief that startups are exciting. We find quickly expanding, privately held companies inherently interesting, and this is a key reason I returned to this publication.

While funding-round coverage may lean towards a positive tone, I strive for balance by increasing the level of scrutiny as a startup matures. During initial funding stages, conversations with CEOs focus on team size, early customers, and incremental progress.

As a company progresses to a $50 million Series C round, discussions shift to gross margin expansion, year-over-year Annual Recurring Revenue (ARR) growth, and diversity metrics. Prior to a potential public offering, I concentrate on questions regarding Generally Accepted Accounting Principles (GAAP) results, the public markets, and potential acquisition offers.

This initial optimism towards young startups is therefore balanced by more rigorous examination as they grow, which I believe is a fair approach for both the company and our readership.

Consequently, I will continue to cover funding rounds. Even without this position, I would likely pursue this topic on a personal blog. I consistently gain valuable insights from high-growth companies, as they offer a unique perspective on a dynamic and evolving market. Furthermore, early-stage founders are often less polished in their media interactions, making them more engaging subjects.

Occasionally, our reporting can even influence a startup’s trajectory, which can be a surprising experience. However, as this impact is typically beneficial for the company, it ultimately results in a positive outcome for others, even if only temporarily.

Danny: I dislike reporting on funding rounds, but I do it nonetheless

Reporting on startups presents a uniquely challenging assignment for journalists (and I say this as someone who dedicates their work to covering the startup ecosystem).

If your focus is the Senate, your reporting centers on a defined group of 100 individuals, their teams, and their interactions. Similarly, covering the banking sector involves monitoring a limited number of institutions, as public interest generally doesn’t extend to mid-sized players. Political and general business reporting typically have a constrained scope, allowing reporters to readily identify key figures and significant developments.

Startup coverage, however, encompasses… everything. While certain sectors currently attract considerable attention, numerous other areas hold the potential to become the next big thing, even if they remain largely unknown. These seemingly unimportant ventures could prove to be highly significant. A startup that appears unremarkable today might be acquired for $20 billion in just four years. The startup landscape is in constant flux, demanding continuous adaptation to stay informed.

What should be the primary aim of startup journalism? From my perspective, it’s straightforward: to pinpoint “breakouts” – companies that were previously progressing steadily but have now achieved product-market fit and are experiencing rapid growth.

This includes the startup that recently overcame hiring challenges by recruiting two crucial executives, or the company that a venture capitalist believed had monetization potential and has now secured a $1 million contract with upfront payment terms.

Achieving this level of accuracy and discernment across tens of thousands of companies annually is incredibly difficult. This is precisely the task that venture capitalists undertake professionally – identifying startups on the cusp of significant growth – and even the most successful firms and investors struggle to maintain a consistent edge in recognizing these future leaders. Ideally, every startup would share its key performance indicators with publications like TechCrunch in real-time, and I would possess complete knowledge of the field. Unfortunately, that’s not the case.

Therefore, beyond direct sourcing, exclusive reporting, and consistent beat coverage, the traditional funding announcement remains a valuable resource. It signifies progress – an indication that someone has invested real capital in the venture – and provides a useful opportunity to review metrics, understand the company’s narrative, and assess the founder’s vision.

Consider ZenBusiness, a company I’ve covered on three separate occasions over the past three years. These articles include: “ZenBusiness raises $4.5m to help launch one million small businesses by 2023” (February 26, 2018), “ZenBusiness raises $10m to help founders launch and grow “worry-free”” (September 25, 2019) and “ZenBusiness snags $65M Series B for its business formation and growth platform for micro businesses” (November 19, 2020). Examining the details of each funding round reveals how the startup has developed and expanded over time.

We strive to report on these startup stories a few weeks or months before they become public. We sometimes succeed, but as previously mentioned, there are now tens of thousands of venture capital funding rounds and new startups launched each year.

I find funding announcements uninspiring, but they remain essential. Without them, my options would be limited to analyzing Delaware S-corp filings or attempting to access more detailed payments data. At least with funding announcements, I can identify and share the most compelling startup stories from my inbox with a wider audience.

Natasha: The stories are so much more than the dollar signs

I recently engaged in a discussion on Twitter with investors and individuals in the tech industry regarding the declining prevalence of articles announcing funding rounds. One investor articulated that many companies within their portfolio are deliberately choosing not to publicize these rounds, as external validation isn’t a current necessity.

While somewhat unsettling, this perspective holds merit. As Alex pointed out, funding announcements, particularly in a company’s early phases, can be considered a benefit. A mention in a publication like TechCrunch can assist a new founder in demonstrating credibility to potential investors or in attracting talent who might require additional reassurance. However, founders who perceive the press solely as a promotional tool for their business will invariably find that assumption to be incorrect; we report on both successes and setbacks.

Let’s consider the implications if a significant number of founders opted to refrain from disclosing funding rounds. Would news coverage then shift towards reports of revenue or customer acquisition? Would profitability or strategic pivots become the focus?

Likely not. The continued existence of funding round coverage stems from the increasing difficulty in securing founder participation in interviews prior to achieving significant milestones. Those who criticize the emphasis on funding amounts in headlines are often the same individuals who are unwilling to share any other information concerning their companies.

I don’t believe funding rounds are particularly innovative, but they do offer insight into a founder’s mindset. They provide opportunities to explore the competitive landscape, challenge underlying assumptions, and understand the founder’s reaction to public attention.

The overall tech landscape would become less vibrant if we were to stop reporting on new funding rounds. We are already witnessing the effects of founders becoming increasingly reserved with the press: I recently covered a startup that secured substantial funding but declined to reveal its identity, and another that raised a similar amount of capital but withheld details about its product.

I understand the position of early-stage founders. The majority of days at a startup do not necessitate a 500-word article in TechCrunch, and even when a newsworthy event occurs, many companies desire more than a simple recap. Nevertheless, I believe that transparency and openly sharing both successes and challenges from the outset are crucial for the wider tech community.

My enthusiasm for covering the tech industry, and specifically writing the often-structured funding-round story, comes from the opportunity to connect with individuals bold enough to dedicate their careers to an idea that is still in its formative stages. That is the core of the story – the element of surprise and the inherent tension. The funding amount is simply an initial point of entry.

If funding-round stories were solely about the financial investment, platforms like Twitter would be sufficient for disseminating that information. TechCrunch demonstrates that these stories encompass far more than just the dollar amount.