The new math for tech startups

• For context: Craft also held a virtual call on February 1, warning that the environment was changing, but that one was attended by 60 fewer execs.

This is a sea change. Growth at almost any cost has been the private tech market's north star for nearly a decade.

• Having 600 employees was better than having 500 employees, even if you couldn't quite explain how those extra 100 positions were accretive. Being a unicorn was better than not, even if it required so much funding as to be extra dilutive. Burn hot now and become profitable a few years after that massive IPO.
• In short, size was sex. Now it can be an STD.

"If a company needs to raise, they need >2x growth to attract capital," argues Craft Ventures general partner Jeff Fluhr. "But it's even better if you don't have to raise for the next 24 months. So if growing 3x means you will have only 12 months of runway, but you can extend runway to 24+ months by only growing 2x YOY, I would strongly encourage the latter."

• Craft believes a recession is more likely than not over the next two years, but this is more about prudence than prediction.

• As another Silicon Valley investor said to me: Worst case scenario of slowing growth is that there's no recession and you end up a year behind schedule. Worst case of not slowing growth and there being a recession is that you're bankrupt.

Caveat: None of this really applies to companies flush with cash that have relatively slow burn rates; and those companies could end up being huge beneficiaries of the new math.

The bottom line: VC consensus is building that "wait and see" is no longer a reasonable posture.