VC REFRESHER COURSE: EBITDA FOR DUMMIES

In a seismic shift within the venture capital world, investors are now being forced to reckon with the archaic concept of profitability. The days of pouring money into companies with perpetual high burn rates and endless funding rounds seem to be coming to an end.?

In an interview, Mark Henderson, a venture capital partner, lamented the new reality, saying, "It's just not as fun as it used to be. We used to throw money at startups like confetti, fueled by the promise of disruption and future valuations."

"Now we have to crunch numbers, pay attention to cash flow, and worry about pesky little things like making a profit. It's a real buzzkill."

For years, VCs reveled in the thrill of funding startups with grand visions and limitless potential, blissfully disregarding pesky concerns like profitability. However, the current energy crisis and skyrocketing cost of living have shattered the high burn rollercoaster, leaving VCs scrambling to adjust.

Investment managers and associates echoed Henderson's sentiment, struggling to adapt to this brave new world of financial responsibility. Sarah Thompson, an investment manager, confessed, "I miss the days of flashy pitches and charismatic founders. Now I find myself drowning in spreadsheets and financial projections."

"Who knew I'd need to brush up on my accounting skills to be a VC?"

The struggle is real, as VCs find themselves grappling with unfamiliar concepts like EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). The once-ignored metric has become a crucial factor in investment decisions, causing confusion and frustration among the investor community.

"EBITDA? It sounds like an exotic disease or an acronym for a secret society," joked James Reynolds, an associate at a prominent VC firm.

Reynolds added, "We used to laugh at those who cared about profitability. Now, we're scrambling to figure out what these numbers mean and how they affect our precious portfolios."

Help is at hand. Publishers and online learning platforms have produced books and courses to help VCs look like they know what they are talking about. One publishing company editor noted that “It’s a boon for us. These VC folks will spend a lot on a course. They have more disposable income than they have sense.” He added, “One of the most common searches we get now is ‘What is EBITDA?’ Amazing!”.