Charles HudsonFounder and Managing Partner, Precursor Ventures

The Danger of Chasing Fake Growth 📉

12 Aug 2026 · 1 min

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In this segment, Charles Hudson explains how the startup‑investor ecosystem creates a feedback loop that pressures companies to display ever‑higher growth numbers. While some founders can achieve such growth honestly, many rationalize inflating metrics to secure funding, promising to “fix it later.” Hudson warns that this collective chase of unrealistic targets leads to widespread misreporting of ARR and revenue, and that future retrospectives will likely reveal many companies’ growth figures were fabricated, highlighting the systemic danger of chasing fake growth.

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Founders and investors exist in this ecosystem, which is a feedback loop. If investors are like, I want to see more growth, some businesses can really achieve that growth through honest means. And other people say, look, they rationalize, if I can just get this round done, and if we fudge the growth, we'll go back to doing it the right way on the other side. And I think we generally know how that happens. I do think the pressure right now that companies are under to show these crazy growth rates, and the irony is sometimes you learn after the fact that the crazy growth rate was never real, or the crazy growth rate itself was a product of dodgy processes, and suddenly everybody has engaged in collective bad behavior chasing a target that was never real. I'm 100% certain there will be companies whose ARR, revenue, reported growth ramps, we will look back on them and say, oh, that wasn't what we thought it was, and maybe we shouldn't have all been chasing that.