TechCrunch+ Roundup: AI Ethics Investor Survey, SaaS B2B KPIs, Don’t frown on negative rounds

Investors have raised expectations around SaaS profitability and growth since the recession began.

As a result, it’s even more important that founders have a firm grip on key metrics that VCs are likely to consider before saying “yes” or “no.”

In her latest TC+ article, Paris Heymann (Partner at Index Ventures) shares formulas for calculating gross dollar retention and net dollar retention. two KPIs that provide insight into the health of your business. For context, it also included GDR and NDR benchmarks for enterprises and SMEs.

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“Predictable businesses are more durable, easier to manage, and are generally rewarded with higher valuations than unpredictable ones,” Heymann writes.

Depending on the market, getting a new customer can be 5 to 25 times more expensive than retaining an existing one.

With that in mind, including more logos on your client page isn’t just good for morale — it also creates “greater investment conviction to fuel future growth.”

Thank you for reading,

walter thompson
Editorial Manager, TechCrunch+
@yourprotagonist

Negative rounds are a ‘ticket to try again,’ says founder who went up 3 in a row

Just as a high tide lifts all boats, a sustained drought is a humbling exercise for yachtsmen and kayakers alike.

According to Carta, “the number of negative rounds almost quadrupled in the first quarter of 2023 compared to the same period last year,” writes Rebecca Szkutak.

With falling valuations, founders who accept downside rounds no longer have the stain of failure, said Russ Wilcox, a partner at Pillar VC.

“When you set a valuation of $700 million, it sounds like you’re winning in a way and you’re not diluting yourself, but really, you just raised the bar pretty high,” he said.

Four investors explain why AI ethics can’t be an afterthought

Because AI requires human input, it is inherently susceptible to bias.

Given their potential to transform so many aspects of the way we work and live, “investors have a responsibility to make sure founders build these new technologies with ethics in mind,” writes Dominic-Madori Davis.

He interviewed four investors to get their thoughts on empathy, building equitable systems, and “how founders can be encouraged to think more about…doing the right thing.”

• Alexis Alston, Director, 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 last outing, Haje Jan Kamps reviewed a seed deck he covered last year for Supliful to see how it could be improved.

“Okay, we didn’t quite get it 100% perfect,” he writes. “There are still a few issues, and in this post, we will take them apart to see what could be improved and how we would go about it.”

Slides 1-5 are in front of the paywall:

• Cover
• Traction
• Summary
• Problem
• What makes a great CPG brand
• Solution
• Product
• Case study
• business model
• Market
• Predicated business
• Competitor
• Testimonial
• Equipment
• Ask
• operation plan
• Closure

Ask Sophie: Will I be allowed to enter the US if my passport expires in 5 months?

Dear Sophie,

I founded a startup in Zimbabwe a few years ago. I planned to visit the United States for the first time next month to see the market and applied for a visitor’s visa.

I plan to stay in the US for a couple of months, but I just found out that my passport expires in September. I understand that I need to have at least six months left on my passport in order to travel to the United States.

Is that (still) true? Do I need to delay my trip?

—Hopeful in Harare

Have the seed offerings returned to the ground? It’s hard to count.

There’s statistical data, and then there’s anecdotal evidence.

According to PitchBook and Carta, median pre-money seed-stage valuations and deal sizes grew between Q4 2022 and Q1 2023, even though it “was the slowest period for transactions.” seed in 10 quarters,” reports Rebecca Szkutak.

At the same time, “several seed investors have told TechCrunch+ that they have seen the scope of seed deals drop and valuations have weakened.”

This week in Equity

In Wednesday’s Equity episodeNatasha Mascarenhas interviewed ClassDojo founder Sam Chaudhary and Chris Farmer, founder and CEO of SignalFire, a venture firm that recently announced a $900 million fund.

Topics they discussed include:

• What an external advantage looks like in startups
• Why ClassDojo doesn’t see itself as an edtech company
• How Sam got early traction with a hard-to-capture consumer

New episodes drop at 7:00am PT every Monday, Wednesday and Friday – subscribe at Apple Podcasts, Cloudy either Spotify.

Negative rounds prevail as power shifts back to VCs

My take on low rounds: When you consider the alternative, they’re fine.

Reasonable people can agree that startup valuations have been overvalued for years. I’m no economist, but this looks more like a market correction than the start of a bleak winter.

Even so, Alex Wilhelm reports that downside rounds “accounted for almost a fifth of all venture investments Carta saw in the first quarter.”

“I see no reason for this trend to stop suddenly, let alone reverse it,” he writes.