/tech

Cash burn and revenue multiples in AI startup valuations

The Information says Gokul Rajaram, founding partner at Marathon Management Partners, warns against evaluating AI startups on revenue alone without considering cash burn.

TI

1 Source, 19h ago, first seen 19h ago

TLDR

The Information describes Gokul Rajaram’s argument that annual recurring revenue (ARR) multiples are “basically irrelevant” without considering cash burn. The Marathon Management Partners founding partner says he wants companies that can keep growing efficiently and raise another funding round even in a bad market.

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@theinformationHigh ARR multiples won't save an AI startup with runaway burn rates. Gokul Rajaram @gokulr, Founding Partner at Marathon Management Partners, explains why evaluating companies on revenue alone is a major risk: "The ARR multiple in isolation without looking at the burn is basically irrelevant…What I want is a company that when the markets turn, they can still keep growing efficiently and they can raise a round even in a bad market."

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1 Source, first seen 19h ago

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37 likes4 comments17 saves6 reposts

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4 comments

17 saves

6 reposts

Sentiment

Positive——Negative

Summary

Not enough discussion yet.

No sentiment analysis available yet.

Sentiment

Positive——Negative

Summary

Not enough discussion yet.

No sentiment analysis available yet.

1 Source

@theinformationHigh ARR multiples won't save an AI startup with runaway burn rates. Gokul Rajaram @gokulr, Founding Partner at Marathon Management Partners, explains why evaluating companies on revenue alone is a major risk: "The ARR multiple in isolation without looking at the burn is basically irrelevant…What I want is a company that when the markets turn, they can still keep growing efficiently and they can raise a round even in a bad market."