Venture Capital
Tech Startups Come Up With Some Creative Definitions for ‘Profitable’
Facing a tougher fundraising environment, on-demand companies are touting financial metrics to show the health of their businesses—using whichever definition looks rosiest.
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Last September, SpoonRocket was running out of money. Founders of the Berkeley, Calif., meal-delivery company had initially sold investors on aggressive expansion plans and the promises of a high-growth business. By the time it completed a planned rollout to San Diego and Seattle early last year, the funding environment had changed. Venture capitalists had begun to prioritize profit over growth.
After just a few months, SpoonRocket retreated from its new markets and focused on improving the economics of its business. "For a long time, we were like, 'Let's get profitable; let's get profitable; let's show the margin can get profitable,'" said Anson Tsui, co-founder and chief technical officer.