From Startup Fortune · · 1m
Revenue Numbers Misreported by Startups
Startups mislabel contracted revenue as real ARR, risking investor trust.
In brief
Startups mislabel contracted revenue as real ARR, risking investor trust. AI startups report inflated revenue numbers by using contracted deals instead of live payments, misleading investors and customers. Originally reported by Startup Fortune.
Startups Mislabel Revenue
Founders post revenue numbers that may not be real revenue at all.
TechCrunch Report Finds Issue
May 2026 TechCrunch report found AI startups label contracted ARR as plain ARR.
Dishonest Metric Called Out
Spellbook CEO Scott Stevenson called it a dishonest metric and a huge scam.
“a dishonest metric”
Investor Concerns
An unnamed investor said startups report CARR as ARR, causing inflated numbers.
“for sure they are reporting CARR”
70% Inflation Example
One VC reported companies with contracted figures 70% above real annual recurring revenue.
“70% higher”
Other Tricks
Startups count free pilots and extrapolate short periods into full years.
Public Screenshots Problem
Public revenue screenshots are easy to fake without context.
Fix for Transparency
Ask which metric you mean and show payment processor or audit behind it.
In short
AI startups report inflated revenue numbers by using contracted deals instead of live payments, misleading investors and customers.
