Equity We're entering an era of, um, creative accounting in startups
Jun 15, 2022
Haje Jan Kamps, a TechCrunch reporter and former founder turned venture capitalist, joins the hosts for an engaging discussion on startup finances. They dive into the rising trend of 'creative accounting' and its implications for transparency as market pressures mount. Haje emphasizes the need for clear financial reporting to build trust, while addressing the ethical lines between creative accounting and fraud. The trio also tackles the impact of misinformation in startup financing terminology, highlighting its significance for both entrepreneurs and investors.
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Down Round Deception
- Haje Jan Kamps encountered a founder who tried to misrepresent a down round as a Series A.
- The founder abruptly ended the interview when Kamps challenged this narrative.
Transparency in Fundraising
- Be transparent about down rounds; raising capital in a difficult market is a strength.
- Hiding a down round is worse than admitting to it, as it erodes trust.
Downturn Struggles
- Founders struggle in downturns, especially first-timers who have only experienced boom times.
- Inexperienced VCs giving wrong advice worsens the situation.