Founders are using creative accounting to boost lofty ‘ARR’—the hottest startup metric in Silicon Valley

(Credit: Getty Images)

The numbers are eye-popping. 

Beginning in 2024, a stream of “holy shit” growth metrics from VC-backed startups began to pop up on X (formerly Twitter). In less than three years, Midjourney’s ARR went from zero to $200 million. In 20 months, ElevenLabs, a voice AI startup, saw its ARR soar from zero to near $100 million. In three months, vibe coding darling Lovable went from zero to $17 million in ARR, this summer hitting $100 million in ARR. In its first six months, Decagon hit “seven figures” in ARR, the company reported. The most famous example: AI coding tool Cursor went from nada to $100 million in ARR in a year. But who needs a year, anyway? Two VCs Fortune spoke to highlighted the announcement made by Andreessen Horowitz–backed AI “cheat on everything” tool Cluely, which claimed over the summer to have doubled ARR to $7 million over a week.