VC Funded companies seeing more churn than bootstrapped companies?
by Pruthvi RajSomething very interesting caught my eye today while I was going through an article on Profitwell's blog.
VC Funded SaaS companies at early stage saw 20 - 30% higher churn rate compared to bootstrapped companies.
Is it coz of companies becoming complacent post funding and not optimizing for churn or is there a strong sense of loyalty that bootstrappers build with audience that VC funded companies are missing?
What are your thoughts?
Here’s the full article link
https://www.profitwell.com/recur/all/churn-benchmarks-mrr-churn-reduce-churn
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I think is because VC Funded companies optimize for growth (acquisition) due to its incentives to show massive user numbers in order to delight investors. Bootstrapped companies in the other hand, MUST optimize for retention, in order to be profitable.
TLDR: VC-Funded: Investor-Centric, Bootstrapped: User-Centric
Simple! because they are looking for unicorns and if you dont become one than your intersts are not aligned anymore.
VC's looking for unicorns doesn't explain why they have a higher customer churn rate.