December 3, 2023

incapable or unwilling The process of going public for many venture-backed startups is starting to become painful.

The backers of venture funds are growing suspicious Putting more money into startups without recouping some of the previous cash; but with IPO numbers not expected to pick up for several quarters, and with a backlog of expensive startups that has been around for a long time, no relief is expected.

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but that doesn’t mean Some The company will not go public. they are! Some newly public entities are even backed by venture capital, or at least adopt the language of tech companies. Their IPO was a huge success. It’s a bit of an embarrassment for what we call traditional tech and startup hubs: software companies.

This week, in addition to the amazing public launch of Cava (privately backed fast-casual food with an e-commerce element), Oddity Tech debuted, a beauty-focused company that scream about It utilizes modern technological tools to create its products. Strange, like kava, Priced above final IPO price range And soared after it started trading.

food? beauty? Of course, these consumer categories can build big brands, big businesses, and physical cash flow in some cases. But you know, their growth and gross margins don’t match the technical quality, right?

do i have news for you

Maybe some of the questions in today’s tech internal conversations are asking why software companies aren’t getting more profit. After all, if you have high-margin recurring revenue and can’t make ends meet, are you really that business-savvy?

lesson, lesson

have Technical discussions The idea that software companies grow and become more profitable over time is at least partially false. While the most valuable companies in the world sell software products, smaller companies selling SaaS products are often unprofitable and cannot really demonstrate operating leverage.