'There's no accountability;' AI startups keep claiming huge revenue. VCs say the math is getting 'murky.'

Cluely CEO Roy Lee raised eyebrows earlier this year when he admitted to misstating his startup's ARR to a TechCrunch reporter. Kimberly White/Getty Images for TechCrunch VCs love surging annual recurring revenue (ARR). It's often how they value startups. But in the AI boom, VCs are increasingly skeptical of what that number actually represents. In short, recurring revenue is often not recurring. "There's no accountability right now," said one VC. Few metrics thrill Silicon Valley investors more than surging annual recurring revenue (ARR). In the AI boom, however, VCs are increasingly skeptical of what that number actually represents. "The amount of VC-backed AI companies lying about their ARR publicly is absolutely unsettling," Greg Isenberg, CEO of Late Checkout, wrote in a post that went viral for saying something out loud that has been whispered about, but rarely said publicly in tech circles.