Investors have raised expectations around SaaS profitability and growth because the downturn began.
In consequence, it’s much more necessary for founders to have a firm handle on the important thing metrics VCs are likely to contemplate before saying “yes” or “no.”
In his latest TC+ article, Paris Heymann (partner, Index Ventures), shares formulas for calculating Gross Dollar Retention and Net Dollar Retention, two KPIs that provide deep insights into the health of your online business. For context, he also included GDR and NDR benchmarks for enterprise and SMB.
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“Predictable businesses are more durable, easier to administer, and typically rewarded with higher valuations than unpredictable ones,” writes Heymann.
Depending in the marketplace, landing a recent customer will be 5-25 times costlier than retaining an existing one.
Bearing that in mind, listing more logos in your customer page isn’t just good for morale: it also creates “increased conviction around investing to fuel future growth.”
Thanks for reading,
Editorial Manager, TechCrunch+
Down rounds are a ‘ticket to try again,’ says founder who raised 3 in a row
Just as a rising tide lifts all boats, a sustained drought is an exercise in humility for yacht owners and kayakers alike.
In response to Carta, “the variety of down rounds had nearly quadrupled in Q1 2023 in comparison with the identical time last 12 months,” writes Rebecca Szkutak.
With valuations falling, founders who accept down rounds now not have the taint of failure, said Russ Wilcox, a partner at Pillar VC.
“Whenever you set a $700 million valuation, it looks such as you’re winning one way or the other and also you’re not being diluted, but actually, you simply raised the bar so high,” he said.
4 investors explain why AI ethics can’t be an afterthought
Because AI requires human input, it’s inherently vulnerable to bias.
Given its potential to remodel so many facets of how we work and live, “some onus lies on investors to be sure these recent technologies are being built by founders with ethics in mind,” writes Dominic-Madori Davis.
She interviewed 4 investors to get their thoughts on empathy, constructing equitable systems and “how founders will be encouraged to think more about… doing the proper thing.”
- Alexis Alston, principal, Lightship Capital
- Justyn Hornor, angel investor and serial founder
- Deep Nishar, managing director, General Catalyst
- Henri Pierre-Jacques, co-founder and managing partner, Harlem Capital
Pitch Deck Teardown: The Perfect Pitch Deck
In his latest outing, Haje Jan Kamps revisited a seed deck he covered last 12 months by Supliful to see the way it may be improved.
“Okay, we didn’t quite get it 100% perfect,” he writes. “There are still some issues, and on this post, we are going to take them apart to learn what could possibly be improved and the way we’d try this.”
Slides 1-5 are in front of the paywall:
- What makes an excellent CPG brand
- Case study
- Business model
- Predicate businesses
- Operating plan
Ask Sophie: Will I be allowed into the U.S. if my passport expires in 5 months?
I founded a startup in Zimbabwe a number of years ago. I planned to go to the US for the primary time next month to examine out the market and applied for a visitor visa.
I’m planning to remain within the U.S. for a few months, but I just realized that my passport expires in September. I understand that I want to have no less than six months left on my passport so as to travel to the US.
Is that (still) true? Do I want to delay my trip?
— Hopeful in Harare
Have seed deals come back all the way down to earth? It’s hard to inform.
There’s statistical data, after which there’s anecdotal evidence.
In response to PitchBook and Carta, median seed-stage pre-money valuations and deal sizes grew between Q4 2022 and Q1 2023, though it “was the slowest period for seed deals in 10 quarters,” reports Rebecca Szkutak.
At the identical time, “several seed investors have told TechCrunch+ they’ve seen a drop in outreach for seed deals and have seen valuations soften.”
This week on Equity
On Wednesday’s Equity episode, Natasha Mascarenhas interviewed ClassDojo founder Sam Chaudhary and Chris Farmer, the founder and CEO of SignalFire, a enterprise firm that recently announced a $900 million fund.
Topics they discussed include:
- What an outsider advantage looks like in startups
- Why ClassDojo doesn’t see itself as an edtech company
- How Sam landed early traction with a difficult-to-capture consumer
Down rounds are prevailing as power shifts to VCs again
My hot tackle down rounds: when you think about the choice, they’re just positive.
Reasonable people can agree that startup valuations have been overvalued for years. I’m not an economist, but this seems more like a market correction than the beginning of a bleak winter.
Even so, Alex Wilhelm reports that down rounds “accounted for nearly one-fifth of all enterprise investments Carta saw in the primary quarter.”
“I don’t see any reason for this trend to suddenly arrest, let alone reverse,” he writes.