VC Funding and Startup Growth

The startup world is buzzing with stories of companies achieving massive growth without VC, but the data shows most high-growth startups still need significant funding. For instance, Cursor raised $160M, and ElevenLabs secured $281M, highlighting the importance of VC for scaling rapidly. While bootstrapping can work for some, it’s not the typical path for companies aiming for 8-figure ARR.

Scaling Speed: Myth vs. Reality

Claims of scaling to $10M+ ARR in just months, like Lovable hitting $10M in 2 months or Bolt.new reaching $20M in the same timeframe, are impressive but rare. These companies often have years of groundwork, and most startups take much longer to achieve such milestones, suggesting these are outliers rather than the standard.

Team Sizes: Small or Scaling?

The idea of running a high-growth company with a tiny team is appealing, but many companies grow their teams as they expand. Lovable has 15 employees with plans to hire more, and ElevenLabs employs 155, showing that while small teams can start strong, scaling often requires larger teams, challenging the "small team" norm narrative.

Survey Note: Bold Opinion - The Startup Hype Machine is Misleading Founders

The startup ecosystem is abuzz with excitement, and over the past week, my feed has been flooded with stories of companies breaking records—skyrocketing revenues, lightning-fast growth, and lean teams. These are undoubtedly incredible companies with world-class execution, but the hype is creating a dangerous narrative that sets unrealistic expectations for founders and investors alike. Let’s dive into the misconceptions and ground the conversation in reality, based on thorough research conducted as of March 20, 2025.

Unpacking the Hype: Three Common Myths

The startup world is rife with myths that can mislead founders. Let’s break them down one by one, supported by data and examples.

Myth 1: VC is Dead - You Don’t Need Funding

One prevailing narrative is that venture capital is obsolete, and founders can bootstrap their way to success without external funding. While it’s true that some companies have achieved remarkable growth without VC, research suggests this is not the norm for high-growth startups. Most rely heavily on venture capital to scale rapidly.

For instance, consider the funding figures for some of the companies dominating the headlines:

• Cursor: Raised $160M across multiple rounds, as detailed on Crunchbase Company Profile.
• Bolt.new (part of StackBlitz): While exact figures for Bolt.new alone are harder to isolate, StackBlitz, its parent, has seen significant funding, and Bolt.new’s rapid growth to $20M ARR in 2 months suggests substantial backing, as noted in ARR Club Signals.
• Lovable: Raised a total of $27.6M, including a $20.2M Series A in January 2025, according to Tracxn Funding Details.
• Mercor: Secured $134M, with a notable $100M Series B at a $2B valuation in February 2025, as per Tracxn Company Profile.
• ElevenLabs: Raised $281M across four rounds, with a $180M Series C in January 2025, pushing their valuation to $3.3B, as reported on TechCrunch Funding News.

These figures underscore that VC funding remains crucial, especially for companies aiming for rapid scaling. While bootstrapping can work for niche or lifestyle businesses, it’s not the path to 8-figure ARR for most founders. Startup funding trends in 2025, as highlighted in Crunchbase EOY 2024 Report, show AI and high-growth sectors continue to attract significant VC, reinforcing this point.

Myth 2: You Can Scale to $10M+ ARR in Just a Few Months

Another myth is that you can scale to $10M+ ARR in just a few months, fueled by stories like Lovable hitting $10M ARR in 2 months or Bolt.new reaching $20M ARR in the same timeframe. These are jaw-dropping achievements, but the evidence leans toward them being exceptions, not the rule.

• Lovable: Launched in late 2024 and achieved $10M ARR by early 2025, as detailed in their blog post Zero to $10M ARR in 2 Months. While impressive, this rapid growth came after years of development, with their open-source project GPT Engineer laying the groundwork.
• Bolt.new: Launched in 2024 and hit $20M ARR in 2 months, as confirmed by ARR Club Signals. However, this is part of StackBlitz, founded in 2017, suggesting years of tech development before this explosive growth.

Most startups, however, take years to reach such milestones. The hype around these rare success stories can mislead founders into expecting instant scaling, which is not realistic for the majority. This is supported by broader trends where, as noted in Crunchbase Q3 2024 Funding Recap, most startups see gradual growth, not hyper-scaling.

Myth 3: Small Teams Are the New Norm

The narrative that high-growth companies can operate with tiny teams is appealing, but it’s not always accurate. While some companies start small, many scale their teams as they grow, challenging the "small team" norm.

• Lovable: Often touted as a “10-person team,” but recent data shows they have 15 employees, as mentioned in Lenny’s Newsletter Interview, with plans to hire more, evidenced by 11+ open positions. This suggests they’re scaling beyond the initial small team.
• Mercor: The original claim was 360 employees, but exact figures are harder to verify. Recent reports, such as Crunchbase Company Profile, suggest they’re rapidly expanding, but specific numbers weren’t confirmed, indicating potential overstatement.
• ElevenLabs: Has 155 employees, as per GetLatka Company Data, far exceeding the “small team” narrative. This growth in team size is typical as companies scale, especially in AI, where talent is critical.

Small teams can be efficient initially, but as companies grow, they need more hands on deck. This is an unexpected detail, as many founders might assume lean teams are sustainable long-term, but the data shows otherwise, with companies hiring aggressively to meet demand.

The Real Takeaway: Grounding Expectations

The startup world is evolving, and these companies are incredible first movers. But they’re not the new standard. Success stories inspire us, but distorted narratives create unrealistic expectations. Here’s what founders and investors should keep in mind:

• VC is still crucial: Research suggests most high-growth startups, especially in AI, rely on significant VC funding to scale, as seen with Cursor, Mercor, and ElevenLabs.
• Scaling takes time: While Lovable and Bolt.new achieved rapid ARR growth, these are outliers, and most startups take years, not months, to reach $10M+ ARR.
• Teams grow with scale: Small teams are efficient initially, but companies like ElevenLabs (155 employees) and Lovable (15, with plans to hire more) show that scaling often requires larger teams.

Founders should focus on building sustainable businesses rather than chasing hype. Investors should look beyond the headlines and assess fundamentals, considering the broader trends in 2025, where AI continues to lead but other sectors lag, as noted in Crunchbase North American Funding 2024. The industry is shifting, but it’s not shifting toward a world where VC is obsolete, growth is instant, and teams stay tiny forever.

What do you think? How do you see the industry evolving? Let’s keep the conversation grounded in reality, not hype.

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