Frequent readers know I enjoy using similes, so I won’t disappoint:

SaaS companies are like leaky rowboats. If retention rates aren’t strong enough to overcome customer churn, they’ll take on water until they sink to the bottom.

Sid Jain, a senior analyst with ChartMogul, researched 2,100 companies and found that “more than half of SaaS businesses had lower retention in 2022 when compared to 2021.”

Full TechCrunch+ articles are only available to members.
Use discount code TCPLUSROUNDUP to save 20% off a one- or two-year subscription.

In this detailed breakdown, he compares net revenue retention rates by ARR range and identifies benchmarks for companies that have yet to reach product-market fit.

“What is considered a good net retention rate differs by the stage of your business,” advises Jain. “When benchmarking, always keep the stage of your business in mind.”

Thanks for reading TC+!

Walter Thompson
Editorial Manager, TechCrunch+
@yourprotagonist

3 ways to step up your short-form video and TikTok growth strategy

Image Credits: SOPA Images (opens in a new window) / Getty Images

With more than one billion active monthly users, brands of every size are using TikTok to drive engagement.

But simply having a presence on the platform isn’t sufficient, writes growth expert Jonathan Martinez. To give readers ideas for honing short-form video strategy, he wrote a guide that “distilled it down to three easy steps:”

• Competitor analysis
• Ideate on content pillars
• Hire creator talent

You’re not raising money to increase your runway

Image Credits: Siriporn Kaenseeya / EyeEm (opens in a new window) / Getty Images

Raising funds for an early-stage startup based on your projected burn rate is short-sighted — and it’s unlikely to spark investor confidence, says Haje Jan Kamps.

“Having clear KPIs that show progress toward the metrics you believe in (and, importantly, your board and future investors believe in) will unlock your next round of funding,” he writes.

Investors prefer debt over equity (but not venture debt)

Image Credits: Toshiro Shimada (opens in a new window) / Getty Images

According to Jeremy Abelson and Jacob Sonnenberg of Irving Investors, sharp drops in both VC activity and venture debt are the two main factors limiting fundraising and exit opportunities today.

“Waiting for a rebound in public market multiples in order to preserve previous valuations has not proven to be a good strategy, and now an increasingly larger group of companies are competing for a smaller pool of VC and crossover capital,” they write.

Vote for TechCrunch in the Webby Awards!

Image Credits: Michael Loccisano (opens in a new window) / Getty Images (Image has been modified)

Two TechCrunch podcasts, Chain Reaction and Found, have each been nominated for Webby Awards in the Best Technology Podcast category.

Cast your vote before Thursday, April 20!

Tech investors’ obsession over profit is already waning

Image Credits: z_wei (opens in a new window) / Getty Images

Bessemer Venture Partners’ State of the Cloud 2023 report suggests that investors who turned from focusing on growth to profitability are “already looking for growth again,” writes Alex Wilhelm in TC+.

“For startup founders, the rapid change in investor preferences may feel like a whipsaw,” he writes.

“But such an evolution in market preferences is actually rather logical and, frankly, somewhat boring in how it plays out.”