Transparency in Startup Financials

One of the biggest market shifts in my professional career has been the role of transparency in startups. Back in ’05 when I was working inside the ATDC almost every hot startup was in “stealth-mode” and wouldn’t even tell you their idea. Now if you say that around the startup community, most will think you just don’t know what you’re doing.

Take a look at SEOMoz’s financing round last Spring as example. It’s pure transparency…and I imagine we’ll see more stories like it in the future.

All this got me thinking about startup financials. If the majority of tech startups disclosed their financials what would be the effect? Would it improve entrepreneurship? Boost competition? Give CEO’s benchmarks and friendly rivalries? It would definitely jeopardize privacy…but would that be so bad?

Heck, every publicly traded company in the world does it, so what’s the big deal?

I envision a community with a group of startups who opt in to share their financials. Kind of like an Entrepreneurs Organization peer group but public. I could see this as something done out of the Atlanta Startup Village or popular accelerators. We’ve kind of already started it with the metrics dashboard inside the office of Atlanta Ventures.

One could make a strong argument that more transparency in startups could be great for not only the individual companies, but the startup community itself.  Do you agree? What are the biggest downsides of startup transparency?

  1. Excellent post Kyle. Agree that being transparent is the only way to go and personally dont see any downside. Truthfully, there needs to be more transparency in the Investing (VC) world too.

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