AI startups are under a lot of pressure to prove they can scale quickly. That’s because some truly have grown at an unprecedented rate, thanks to market conditions that VC firm Andreessen Horowitz has dubbed “the great expansion.”
The hottest startup metric for flaunting fast growth is ARR (annual recurring revenue). But some founders are getting creative about how they’re accounting for ARR as they attempt to raise new rounds of financing.
One VC told Fortune’s Allie Garfinkle that what he’s seeing more closely resembles “vibe revenue” than truly recurring deals.
Said another: “There is all this pressure from companies like Decagon, Cursor, and Cognition that are just crushing it. There’s so much pressure to be the company that went from zero to $100 million in X days.”
Pressure or not, there’s a fine line between incompetence and fraud, as Allie wrote this week. Needless to say, we’ll be on the lookout here at Fortune, and you can ping any tips to Allie here.
While it’s important to keep a close watch on potential bad actors, it’s also important to recognize those who are implementing AI well.
On Tuesday, Fortune launched a new ranking, the Fortune AIQ 50, in partnership with ServiceNow and Enterprise Technology Research. It’s designed to show which of America’s largest companies are best prepared to effectively deploy and scale AI—and, yes, turn it into real revenue.
Our ranking is a record of how companies in 18 sectors across the Fortune 500, including financials, health care, and retailing, are using AI to personalize customer experiences, provide groundbreaking data analysis, optimize supply chains, and more.
Alphabet, Visa, and JPMorgan Chase came out on top. You can check out the full ranking and methodology here.
