Jason M. Lemkin explains why venture investors now reject 3x annual revenue growth as too slow. Startups like Higgs Field and Figma face pressure to hit 100x returns in a year, making solid companies suddenly unfundable. There's no clear fix for this hyper-aggressive growth expectation.
Look, here's the challenge. The challenge isn't even all the clones. I think we've accepted there's a lot of clones. I think we've accepted there's a thousand competitors. Now the challenge that, that, I mean you guys know from the show, but not all founders have internalized. It's just investors are expecting insane levels of growth. Insane levels of growth. Right. They want like the idea that you could go from 1 to 100 in a year is now seen as what you want to invest in. That used to be almost unprecedented. It did happen in the old, old. Now there's, there's companies that like I invested in early, like Higgs Field for, for video. People never even heard of Higgs field. And it's 100 and something million. Right?
It's over 200 now.
Yeah, yeah. But that's not like Harvey which we're talking about every week. Right. Or lovable or replit. And so you, and then, and then the problem guys is you look at Figma and it's terrible. But figma, figma is almost soul crushing for investing because you can't get much better than Figma. It's down from its IPO, it's trading less than 10 times revenue and that's forget owning and creating a category who's invested in something much better than figma? I mean not me. Sure. So on the one hand it's great. The best times of others. On the other hand it's like figma isn't good enough. Like let's call it a day guys and do media companies because it's just too hard.
Yeah. I mean I've had at least a couple times over the last year where portfolio company is like a company that there's maybe a pre seed company trying to go out and raise a seed or maybe an A. And they're, they're like hey, can you look at, can you look at my deck? And I'm like, the deck is beautiful. But you're projecting to grow 3x this year and that's going to be a nightmare for you because it just doesn't look like, it just doesn't look like the business is best in class anymore. Even though you're like wait, I'm like I'm going to 3x revenue this year.
Yeah, it's. And unfortunately there's no great answers to this. Right. There's no great answers to the question that some great businesses will compound to epic rates. But they're unfundable now and they would have been fundable two years ago. There's no. There's literally, I don't know what the answer is today, right?
