How VCs and founders use inflated ‘ARR’ to crown AI startups

Last month, Scott Stevenson, co-founder and CEO of the legal AI startup Spellbook, took to X in an effort to expose what he called a “ huge scam ” among AI startups: inflation of the revenue figures that they announce publicly. “The reason many AI startups are crushing revenue records is because they are using a dishonest metric. The biggest funds in the world are supporting this and misleading journalists for PR coverage,” he wrote in his tweet. …