Aug. 8, 2022

‘Growth at All Costs’ is Dead

How the startup fundraising landscape is changing

Nora chats with Crunchbase CEO Jager McConnell about the increasingly difficult funding environment for late stage startups, and why some companies who raised at massive valuations last year are running into trouble. Jager also offers insight into the industries that are taking a beating in the startup world, and explains why biotech and cybersecurity are thriving. For more info on our presenting sponsor, check out


Host: Nora Ali

Producer: Bella Hutchins 

Video Editors: McKenzie Marshall and Christie Muldoon

Production, Mixing & Sound Design: Daniel Markus

Music: Daniel Markus & Breakmaster Cylinder

Fact Checker: Kate Brandt 

Senior Producer: Katherine Milsop

VP, Head of Multimedia: Sarah Singer 


Full transcripts for all Business Casual episodes available at


Nora Ali: For Morning Brew, this is Business Casual, bringing you conversations with people you know, and some you may not know yet, to make business less intimidating. Because money talks, but it does not have to be dull. I'm your host, Nora Ali. Now, let's get down to business. Jager McConnell is the CEO of Crunchbase, which he transformed into the go-to resource for startup and venture capital data. TechCrunch's cofounder, Michael Arrington, started Crunchbase in 2007 to supplement TechCrunch's reporting. But the data happens to be community driven, bare, and often quite out of date.

When Jager took over in 2015, he had a vision to turn Crunchbase into the Spotify of the enterprise world, allowing companies to find and connect with one another. In order to do so, Crunchbase built a sales prospecting software that uses information from its own database to make it easier for business-to-business companies to find potential customers. It also beefed up its data, offering metrics that show which companies are growing and which aren't, through their funding rounds, layoffs, and other stats that are otherwise hard to find for private companies. Crunchbase now boasts tens of thousands of paying subscribers and 75 million unique annual visitors. And they recently raised $50 million in series D funding. Based on his analysis of Crunchbase's data, Jager spoke with us about major startup trends, including why it's increasingly difficult for late-stage startups to find funding, and why some companies who raised at massive valuations last year are running into trouble as they try to scale. "Growth at all costs," he said, "is dead." Now it's more, "What's your burn efficiency?" And these are convos venture capitalists haven't had in a decade. But Jager thinks it's a good thing, and a necessary shift in the startup fundraising landscape. All that is next, after the break.

Okay, well, Jager, before we jump into Crunchbase, I'd love to start with a little icebreaker for a segment called Professional Pet Peeves. So if you had a magic wand and you could wave away any commonly held professional courtesy, a thing we do at work that annoys you and you could get rid of it, what would that thing be?

Jager McConnell: It was super relevant prior to our conversation, but it's celebrating valuations. It's the craziest thing that we do, where people raise money and they're like, "Yay! We've got some artificial valuation. And now we're all fake billionaires, millionaires." And everyone's celebrating. And it didn't mean anything. And it's been ingrained in founders' minds that that's what's important. And the reality is the only exit that matters is when you exit, when you actually go public or sell.

Nora Ali: Yep. Yep. That's a good point. It doesn't actually mean anything until you have that exit. And it's also just so celebrated to raise large funding rounds too, and that's what tends to get published. And that's not always the biggest milestone a founder can hit. So I think that's good perspective.

Jager McConnell: And it's even worse, because people start operating their business as if they are a billionaire. They have $10 million in revenue. They raise it a billion dollars, like, "Well, we must be like the next Uber," or whatever it is. And the reality is, they built a kind of weak business because of it. And they sort of emphasize growth at all costs. And that's just a bad approach.

Nora Ali: And that's what grabs the headlines. But Crunchbase is, in many ways, trying to bring people back to earth, and really focusing on the real data behind startups and investments in the venture landscape. But I know Crunchbase, because every time I Google any company, Crunchbase comes up, the Crunchbase profile. You guys are winning on the SEO front, at least. But just for our listeners, very basic terms: What exactly is Crunchbase? And what is the service that it provides?

Jager McConnell: Fundamentally, we help people find and learn about private companies. So private companies are hard, because they're private. There's not a lot of information out there about them. Whereas public companies, like you might find on a stock market, you know everything about them, because they have to report everything. So we do our best to figure out what's going on in these private companies, which private companies matter, which ones are growing. And as a user, so we have about 75 million people that use Crunchbase, those users are either trying to figure out "Who should I invest in, partner with, sell to, which company I should work at?" All of those questions we can help answer, because we know so much about the strength and efficiency of those businesses.

Nora Ali: Where do you get that info from, if it's not public? That's probably the secret sauce of Crunchbase, but what can you share?

Jager McConnell: I could probably ramble for two hours here, so I'll try to keep it relatively brief. The short answer is we have a huge community of users. And those users see the benefit of updating their own company information in Crunchbase. So we have about a million contributors that go and update information about companies. We have about 4,000 partnerships with governments, accelerators, VCs all over the world that provide us data, because of our brand. Our brand is so strong that they want to be well represented on our platform. And we also have a ton of automation. We're pulling data from a bunch of different legal sources for us to go get that data. And then we create our own data. So based on what we learn, we can actually go and extrapolate other pieces of information. So we create a lot of data that way as well. And then finally, we have about a team of 250 people that are going and finding information out in the world and going and adding it into Crunchbase as employees at Crunchbase or consultants of Crunchbase.

Nora Ali: And that's not something I really would've thought of. It is in the favor of these companies to make sure that the information is accurate. So they perhaps will volunteer information to make sure that it is up to date for those looking.

Jager McConnell: Yeah, you're absolutely right. If you don't update your information on Crunchbase, a future employee might think that you're kind of stagnant, or nothing's really happening at that company, or an investor might pass on you because it looks like you haven't really done much. So there's incentives, to your point, to go and get that information up to date.

Nora Ali: Just like an individual updating their LinkedIn. You want it to remain like you are active and you're doing lots of different things. So you joined Crunchbase in 2015. It was founded in 2007. What was the state of Crunchbase? What was the strategy when you joined? And we'll get into how that's transformed over time.

Jager McConnell: I'm the first CEO of Crunchbase. So before I joined, it was actually a part of Verizon slash America Online, believe it or not, slash TechCrunch. And so it was kind of a project on the side, where it wasn't really focused on too much. So it was really about selling advertising actually back then. Now we have no advertising on this site. So that was its focus. It was "Get a lot of eyeballs, sell ads," which was kind of Verizon's motive. But I joined and brought a number of people with me. We said, "We think we can build incredible software on top of this platform. Let's change it to a subscription SAS model rather than advertising, because there's a lot of value if you can help people find these companies that matter, to build a true prospecting tool on top of that awesome data." And that's what we did.

Nora Ali: And you've used an analogy in the past, which I think is easy to understand. You wanted to make the Spotify of the enterprise world, where you're sort of bunching things that are similar to each other, making recommendations, making the sort of B2B relationship a little bit more seamless. So how did you go about putting that together and moving away from the advertising model to ensure that everyone is on the same page in this new frontier for Crunchbase?

Jager McConnell: And I love that Spotify analogy, because what they do is they take all of their user data and they figure out, "Well, what do you listen to that these groups of people listen to? And what are they listening to that you're not listening to?" And they recommend it back to you. The whole theory is, let's go use that same metaphor, or technology, in a way, and apply it to companies. So let's see who people like you, what companies they're looking at that you're not looking at, and recommend that back. And we thought that that could build some sort of prospecting tool that no one else has seen before, no one else actually can build, because to do it, you need to have 75 million users using your product to form the decisions. So we felt that was our competitive advantage, and we're capitalizing on that.

Nora Ali: Can you walk me through what some of the main use cases are for companies who use your SAS products, whether it is for sales prospecting, as you mentioned, or otherwise?

Jager McConnell: So sales is the easy one to understand, where it's just, "Look, I need to go and find great companies to go and talk to. I want to talk to companies that are growing, that are funded, that need my technology, that match who I typically sell to." And the smarter we can do that the more magical it will feel to those prospectors. But sales is a use case. Job seekers are a use case. "I want to work at companies that haven't had layoffs in the last year." That's actually a search that you could do. Investors finding companies they want to invest in. All of those are people trying to find private companies.

Nora Ali: Is there also qualitative data where, for example, Glassdoor has reviews from employees. Is that something that Crunchbase has as well?

Jager McConnell: We've thought about that. Not today. The data that we capture is we put scores on these things. And so we say, "Look, this company is a trending company." So if you want to say, "Look, what are the hottest cannabis companies that are private right now?" That decision of what's hot, what's not, is actually something that our systems can do and create ranks and trend scores.

Nora Ali: Is there a reason you're not allowing reviews from employees? I know it's tricky waters, because there's issues of moderating and all that, and verifying, but...

Jager McConnell: I mean, Glassdoor has built a whole business around doing that. And Glassdoor has its own set of issues. That's a whole company, obviously, that I'm not quite ready for us to digest. I'd rather absorb Glassdoor data into Crunchbase and display it, rather than us trying to reinvent the wheel here.

Nora Ali: Totally. All right, we're going to take a very quick break. More with Jager when we come back. Okay. Let's get into some of the data, and the trends and learnings that you're seeing with Crunchbase. Obviously, the past year or so has been a little bit more challenging for the startup landscape, obviously. Maybe VC money isn't as easy as it was. Companies that have hit unicorn status are running into trouble. Do you have any hypotheses as to why this is, and any learnings on this pattern of struggle at this point for startups?

Jager McConnell: The private markets tend to lag behind and follow the public markets. So if you see big, scary things happening there, that eventually will trickle into the VC world as well. So obviously, valuations in the public market are going down. Now we're seeing massive valuation deflation in the VC world. And you're right, the funding is being pulled back as all these investors are saying, "Look, yes, we still have billions of dollars in the bank that we want to deploy, but should we wait a minute?" So I think that we're getting over that initial thing. Right now we're down 27% year over year in funding. So it's a big decrease, after quarter after quarter of it going up and up and up. And it's starting to pick up again. And I think that's VCs saying, "This is the new normal. We can't just sit on the sidelines." And actually, there's discounts. These companies are at a discount now. So I can get those strong, efficient building businesses. And they're avoiding the high flying, growth at all costs, inefficient businesses in favor of those stronger businesses.

Nora Ali: Yeah. I mean, it almost feels like it's a necessary turning point or a correction, where investors are focused on actual businesses that are running efficiently, to your point. And it's not just about projecting huge growth. But, I guess, what does that mean from the entrepreneur perspective? If you're now just entering the market, pitching to investors for the first time, what should you be focusing on, if not projecting super high-growth metrics over the next 5, 10, 20 years?

Jager McConnell: Growth at all costs, I think, is dead. So people going in and saying just that, "We're going to triple, triple, double, double, double." That used to be a thing that people would say. Now it's more around, "What is your burn efficiency?" So what that means is for every dollar of ARR, or recurring revenue, how much did you spend to go and get that dollar? In our case, in the first half of the year, we did $9 million in adding ARR, adding that $9 million of recurring revenue. And we always burn $2 million. So that's a good efficiency ratio. It's about 2.22%. Those are conversations that VCs haven't had in a decade. It usually is always like, "What is your growth rate? That's all I care about. And great. You just tripled last year? You're getting funding." And now it's a lot deeper. It's a lot more intelligent. To your point, it's a lot better for the business, the founders, what's getting founded. It's a good thing. It's just that it's a hard transition and shift to make that change.

Nora Ali: In your LinkedIn profile, you have #diversity as one of the things that you like to talk about, which is great. And as we know, the numbers are kind of abysmal when it comes to representation of who gets funded. Women, for example, I think it's around 2% of VC funding goes to them. What are you seeing now? Do you think the picture is getting better? I know more investors have specific groups that are focused on diversity and inclusion, and specific VC firms that are squarely focused on that. Are you seeing an improvement when it comes to diversity in investments?

Jager McConnell: Unfortunately, no. So yeah, in the last couple years we rolled out something called Diversity Spotlight, which allows us to go and track gender and race of founders, with the explicit goal of figuring out, are things getting better or worse? Let's use data to shine a spotlight on these issues. The bad news is it was getting a little better for a minute. But with the downturn, things have now gotten worse again. So it looks like VCs are backing away from Black founders, or walking away from women founders in these sorts of times, which is not good. And the numbers are abysmal, 2.2% for women founders. Are you kidding me? That's just insane. 1.1%, 1.2% for Black founders. There's something horribly wrong there. And unfortunately, the pressure needs to be put on VCs who are doing the investment, and actually forcing them to also have diverse partners on their own boards and on their own employment rolls. It's proven that when VCs are diverse, they invest diversely. That's where I think the easiest accountability is. You'll hear people say, "We think the boards of the companies should be diverse." And I think that makes sense at a certain stage. It's a little tricky as a founder. You can't really sometimes choose who your investors are going to be, because you only got one term sheet. So it's hard to make them super accountable on that, in my opinion. But in the later stage companies, it becomes easier and easier to do so. Those are kind of the big three.

Nora Ali: Yeah, that makes sense. I want to touch on some other trends that you're seeing. We've had various conversations on this podcast about the different routes that founders can go when it comes to raising funds. There's obviously crowdfunding. There's equity crowdfunding. There's VCs. There's friends of family. There's angels. There's so many things. Anything that you're seeing that people are leaning into more, especially in this new environment where maybe the traditional VC money isn't quite as easy to come by as it was in the last, say, few years?

Jager McConnell: Honestly, any of those are good options. And I think the difference now is when they get those dollars, what do they do with them? It's now a question of, how long can you make those dollars last to prove your thesis or even get to a profitable company? Whereas before, it was, look, you just have to get 18 months of showing great growth, and then the funding's going to be there if you could show that growth. So that's changed now. So crowdsourcing is great. It depends on how you do it. But typically, there's not a lot of equity that you lose along the way. So people are trying to hoard onto their equity a little bit harder than before, raise only what they need, versus these huge funding rounds. And I think that's, again, really good for the world. It's going to be a bit more like Shark Tank in a lot of ways, where you find that one angel who makes a difference. And you take that small amount of money and make it last.

Nora Ali: Exactly. Any particular categories that you've seen do well? Obviously, a lot of talk about NFTs, and blockchain, and Web3 related companies popping up. What are you seeing that's really working so far in the startup world?

Jager McConnell: Yeah. I mean, unfortunately, the data says that crypto, and cannabis, and Web3 right now is not doing very well. The buzzwords are kind of taking a beating. And the tried and true, like cyber security, that is still an important thing of the day. The more complicated the world gets, the more important that is. So you see companies like Bishop Fox just raised recently. That's a function of what's important right now in this world that we're living in. Biotech is another example. Eon Therapeutics, I think, they just raised a big round. Yes, biotech is super important. Let's help people live longer and live healthier lives. That's an area and a category that will keep getting funding. It takes a lot of money to make that all work. That's not going to go away. But again, there's a lot of unknowns in NFT marketplaces and in what crypto's going to matter right now. And that's where VCs are just taking a step back and saying, "Let's wait and see a little bit."

Nora Ali: We'll take a quick break. More with Jager when we come back. Do you feel like you get a sense of what's flailing, what's not doing well, before the general public does? Did you see it coming, where the NFT related companies were not doing so hot?

Jager McConnell: Hundred percent. It is very easy for us to track, and actually any of our users to track, how is funding into these and industries decreasing or increasing over time? And which ones are trending? And if you combine those together, an industry is trending, but their funding is going down, that's a bad sign, because a lot of people are looking and not really figuring out why they're investing. So it plays very well. And then of course, you can layer in layoffs, which industries are doing more layoffs than others? And you'll see, again, these high flyers that didn't have a lot of business sense yet, are being outstripped on how much impact they've had.

Nora Ali: Yeah. I mean, you mentioned that non-investors, like regular employees, will look at Crunchbase to see what kinds of companies are trending, the layoff trends, as you mentioned. But do retail investors look at Crunchbase data to determine where they should be investing? It just seems like there's so much robust data on what's doing well and what's not.

Jager McConnell: That's right. So there's a feature called Hubs, where you can go in and again, just look at industries and sort of say, "Look, I want to see how robotics is doing in Europe." And there's a Hub page just for that, which will go and tell you what the trends are. And as a retail investor, that might actually help you make some informed decisions on even what's happening in the public markets. What's kind of the up and coming stuff might be, like, you can find the signals that give you some hints over in the public markets as well.

Nora Ali: I feel like you should make your own Robinhood on Crunchbase. Is that—

Jager McConnell: I love that idea. Yeah.

Nora Ali: I mean, will you anything like that in the works? Has it been floated internally?

Jager McConnell: It's certainly been floated, this sort of secondary market, where you could go and invest in private companies early. There's a few companies that do that, that are out there. There's something called LTSE, which is a great firm. Again, we have a lot of optionality as Crunchbase. And we kind of have to pick our direction. We're only about 220 employees now. So we still have to be really focused on our big wins. But when you think about a long-term vision of what Crunchbase could look like, that's certainly interesting.

Nora Ali: Amazing. What are some of the metrics that investors are most focused on right now, that maybe the detailed data that Crunchbase tracks that is harder to get elsewhere, that people are more interested in now?

Jager McConnell: Again, that growth rate is less important. The burn efficiency is super important. Things like, I mean, from how are you using Crunchbase data, it's have you done layoffs lately? What is your growth score? Are you a trending company? When was the last time you did funding? All those sorts of things we could help you figure out. And if you sort of parse those things out, you can kind of figure out which industry, company should those VCs be paying attention to—which is, again, another reason why those companies should keep their information up to date, because it helps them find those connections, those opportunities.

Nora Ali: Totally. Totally. Well, Jager, before we let you go, we have a fun segment called Shoot Your Shot. So this is when I would love to hear what your moonshot idea is. This is your biggest dream, your wildest ambition. It could be personal, Crunchbase related, life related, world related. It's your chance to shoot your shot.

Jager McConnell: So when I was in college, I was like, "Which way am I going to go? Am I going to go into tech? Or am I going to go into film?" So I always wanted to be a film guy. So I actually started a company a while back called Scary Cow, which was a co-op film company. All of it was this long-term vision of, I want to make this feature film idea that I've had ever since I was in my teens. Still have it today. Still my moonshot. Still something I want to do. And right now, it's kind of more of a retirement plan, where, hopefully, I'll make a lot of money, retire from tech, and then hire all these amazing actors and directors and make this film.

Nora Ali: Oh, my gosh! So self-funded? Is that what I'm hearing? You'll fund your own film?

Jager McConnell: Self-funding is the way to go, for all things, startups, films, everything. Self-funded.

Nora Ali: There you go. I love that. That's awesome. Okay, awesome. Final segment, Jager. We have a game for you. And it's called Two Beats and a Miss. And that's just our business way of saying two truths and a lie. So I'm going to make three statements. One of them is false. Two of them are true. You got to let me know which one is false. Okay, so here we go. Number one, and I'll read them all to you and you can tell me at the end which one is false. Number one, Uber was originally called UberCar. Number two, Airbnb is active in all but four countries in the world. Number three, SpaceX has a spacecraft named Dragon. So these are tech forward, startup forward statements.

Jager McConnell: I don't think it was called UberCar. It had another name, but I don't think it was UberCar. So I'm going to say that's false.

Nora Ali: You are absolutely correct. It was UberCab. Very close. Just one letter off. I did not know this about Airbnb, active in all but four countries in the world. That is absolutely incredible. Are there any startups that you wish you had invested in when it was the early days of it? Like an Airbnb or an Uber? Anything you feel like you totally missed out on and you had thought about it at the time and you decided no?

Jager McConnell: I mean, any company that went public that I didn't invest in the beginning is probably a—

Nora Ali: Envy of the unicorns.

Jager McConnell: Yeah, exactly. The big miss, and I'm dating myself and that's okay, way back before Chrome and all these things, there was Netscape. And I was 10 years old. And it was going public. And I told my mom, I was like, "Invest in this company." I was 10. My mom was like, "Shut up, kid." But had she done it, that would've been a really good decision. So, I guess, I would love the age restriction of stock purchasing to drop lower than what it is today.

Nora Ali: Or listen to your kids. They know what's cool. They know what's up and coming.

Jager McConnell: That's right.

Nora Ali: Yeah, awesome. All right. Well, Jager, we're going to leave things there. We appreciate your time. Thanks for playing along, and thanks for joining us on Business Casual.

Jager McConnell: It's great to be here. Thank you.

Nora Ali: This is Business Casual and I'm Nora Ali. You can follow me on Twitter @NoraKAli. And I would love to hear from you. If you have ideas for episodes, comments, thoughts on episodes you loved, even fun segment ideas, feel free to shoot me a DM and I will do my very best to respond. You can also reach the BC team by emailing Or call us. The number is (862) 295-1135. And if you haven't already, be sure to subscribe to Business Casual on Spotify, Apple Podcasts, or wherever you listen. And if you like the show, please leave us a rating and review. It really, really helps us. Business Casual is produced by Katherine Milsop and Bella Hutchins, with special production help on this episode from Olivia Mead. Additional production, sound design and mixing by Daniel Markus. Kate Brandt is our fact checker. Sarah Singer is our VP of multimedia. Music in this episode from Daniel Markus and The Mysterious Breakmaster Cylinder. Thanks for listening to Business Casual. I'm Nora Ali. Keep it business, and keep it casual.