Should early-stage startups join the cloud market fun?

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For SaaS companies, net dollar retention is on investors’ radar more than ever. But that shouldn’t overshadow gross retention dollars: If you’re not tracking both metrics, you may struggle to add new customers to a leaky bucket. Let’s explore. — Anna

Gross dollar retention is ‘what protects you during really tough times’

“Gross retention really speaks to the true agility and health of your customer base. That’s what protects you during really tough times,” growth stage VC Rene Stewart said in a sponsored talk at TechCrunch Disrupt in 2021

And yet, co-head of Vista Equity Partners Endeavor Fund added that most venture capitalists it spoke to “are probably only interested in net retention.” However, her comments were made in 2021, not 2022. Since then, there have been “challenging times” that have made investors and founders more attentive to business fundamentals.

Alex and I already wrote about the importance of net dollar retention when efficient growth is the new holy grail. But how does it differ from gross dollar retention, and how does the latter fare in most tech companies? Let’s dive in.

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