> a lot of theses articles are pretty basic corporate finance
One take: yes, and venture-backed companies often forget or ignore the basics of corporate finance.
Another take: orthodox corporate finance isn’t tailored for start-ups. If you’re developing a product, GAAP income is meaningless. So we bootstrap interim financial metrics, e.g. eyeballs and ARPUs and DAUs (oh my!).
In truth, the latter dominates at the early stage. But firms grow. Some founders and VCs (see: Andreessen) are late to recognise when nontraditional metrics do more harm than good. When that ignorance becomes a point of pride, the former gains explanatory power.
Somewhat. But even if you (perhaps rightfully) roll your eyes at startup growth at all costs approaches, the thinking around cash flow at a VC-backed startup should often be different than that of a florist funded by savings, a bank load, or friends and family.
> they should be acting like a small business e.g. florist
Small businesses and startups are delineated by scaling potential. Running a startup like a florist is ruinously-bad advice. Just as running a small business like a startup is stupid.
And even a florist looks, either explicitly or implicitly, at the same things. As soon as a company reaches a certain size, measured in employees, funding or revenue, you need at least the basics of corporate finance.
I'll add to this a quote that is (purportedly) native to gp's northern EU: "Do you not know, my son, with how very little wisdom the world is governed?"
Difference is that corporate finance is focused on managing a company at its current size while startups are really focused on building a much larger company. Hence why the economics of it make no sense until it hits that mythical future size
> corporate finance is focused on managing a company at its current size while startups are really focused on building a much larger company
Circa 1810, maybe. Since the railroads corporate finance, particularly American finance, has been focussed on growth. Hell, the term venture capital pays homage to the financing of merchant vessels on high risk / high rewards voyages.
One take: yes, and venture-backed companies often forget or ignore the basics of corporate finance.
Another take: orthodox corporate finance isn’t tailored for start-ups. If you’re developing a product, GAAP income is meaningless. So we bootstrap interim financial metrics, e.g. eyeballs and ARPUs and DAUs (oh my!).
In truth, the latter dominates at the early stage. But firms grow. Some founders and VCs (see: Andreessen) are late to recognise when nontraditional metrics do more harm than good. When that ignorance becomes a point of pride, the former gains explanatory power.