Cohort Retention Benchmarks for Fundraising: SaaS and E-commerce Targets by Funding Stage

The Two Retention Metrics That Matter for Fundraising

When investors analyze your company's health, they primarily look at two distinct cohort retention metrics for startup fundraising. Understanding the difference is crucial because they tell different parts of your growth story.

The first is Logo Retention, which measures customer stickiness. It asks: of the customers who signed up in a specific period, how many are still with you? A high logo retention rate proves the product is 'sticky' and solves a real problem. The calculation is (Starting Customers - Churned Customers) / Starting Customers.

The second is Net Revenue Retention (NRR), which measures the financial health of your customer base. NRR answers a more sophisticated question: how much is your starting revenue growing or shrinking from a given cohort? An NRR over 100% is a powerful signal that your business can grow from its existing customers alone. Its formula is (Starting MRR + Expansion - Downgrades - Churn) / Starting MRR.

SaaS Retention Benchmarks: What 'Good' Looks Like for Your Fundraise

Knowing your numbers is one thing; knowing if they meet investor expectations is another. While every business is unique, benchmarks provide a clear target for fundraising due diligence. These standards evolve as a company matures, with expectations increasing at each funding stage. Data sources for these benchmarks include influential reports from Bessemer Venture Partners, SaaS Capital, and KeyBanc Capital Markets, offering a reliable guide to what 'good' actually looks like.

Benchmarks by Fundraising Stage

• Seed Stage: Investors understand you are still refining your ideal customer profile, leading to some natural churn.
  • Logo Retention: A target of >80% is considered strong.
  • NRR: Achieving >100% demonstrates early signs of product-market fit and a healthy expansion model.
• Series A: As you scale, expectations rise, showing you are consistently acquiring and retaining the right customers.
  • Logo Retention: A goal of 85-90% is typical.
  • NRR: A range of 100-120% indicates that expansion revenue is outpacing churn and downgrades.
• Series B: At this stage, retention metrics signal a durable business with a loyal customer base and an efficient growth engine.
  • Logo Retention: An expectation of >90% is common.
  • NRR: Top-performing companies often show 120% or more.

Benchmarks by Customer Segment (ACV)

Your customer base also dictates appropriate revenue retention metrics. Selling to small businesses is different from selling to large enterprises, and your NRR should reflect that reality.

• Good NRR for SMB (e.g., <$2k ACV): 90-100%. Higher logo churn is common and expected in this segment.
• Good NRR for Mid-Market (e.g., $10k-$50k ACV): 100-115%. These customers are typically more stable and offer solid opportunities for expansion.
• Good NRR for Enterprise (e.g., >$100k ACV): 115-130%+. Enterprise customers have high switching costs and significant expansion potential.

A Note on E-commerce Churn Rates

For E-commerce businesses, retention is framed differently but is just as critical. Instead of MRR-based NRR, investors will look at customer-level repeat purchase behavior. Key metrics include the repeat purchase rate for a given cohort (e.g., what percentage of customers from Q1 made a second purchase within six months?) and the net revenue per customer over time. Strong E-commerce retention shows that you have built a brand, not just a product, and that your customer acquisition costs will pay back over multiple purchases.

How to Calculate Cohort Retention Metrics Accurately

The reality for most early-stage startups is pragmatic: there is no dedicated finance team, and analysis happens in spreadsheets using exports from Stripe or QuickBooks. The key is not sophisticated tooling but a clean, repeatable process. You should start with cohort analysis, which means grouping customers by the month or quarter of their first purchase. This allows you to track the behavior of each group over time, independent of new customer acquisition.

Here’s a simple workflow:

1. Export Your Data: From a system like Stripe, export a list of all subscriptions or transactions. Include a customer identifier, start date, and monthly recurring revenue (MRR) or transaction value for every month they have been a customer.
2. Define Cohorts: In your spreadsheet, create a 'Cohort' column. For each customer, assign them to their sign-up month (e.g., “Jan-2023”).
3. Map Monthly Performance: Create a timeline across your columns (Month 1, Month 2, etc.). For each cohort row, track the total number of customers (for logo retention) and total revenue (for NRR) over their lifecycle.
4. Calculate Retention: To find the 12-month logo retention for your Jan-2023 cohort, divide the number of customers still active in Jan-2024 by the starting number. For NRR, divide the cohort's total MRR in Jan-2024 by its MRR from Jan-2023.

While tools like ChartMogul or Baremetrics can automate this, a clean spreadsheet is enough to pass fundraising due diligence.

Translating Retention Into a Compelling Valuation Story

Your retention metrics are more than just numbers on a slide; they are proof of your business’s fundamental strength. Presenting this data tells a story about product-market fit, capital efficiency, and future growth potential, all of which directly impact your valuation.

An NRR consistently above 100% is a powerful narrative. It demonstrates a “negative churn” model where revenue from existing customers grows over time, offsetting any losses from churned customers. This means your business can grow even if you stop acquiring new customers, a compelling point for any investor.

In your pitch deck, avoid just listing the final percentages. Instead, show your work with a clear visual.

[Insert a simple visual example of a cohort retention table/chart.]

A cohort chart visually demonstrates the health of your business model. It can show if retention is improving with newer cohorts as you refine your product and targeting. This visual transparency builds immense credibility during fundraising due diligence.

Context is also your most powerful tool. If your overall NRR is 105%, but it’s 130% for customers in a specific industry, highlight that. This shows you have identified a highly profitable niche and have a clear strategy for deploying new capital effectively. This transforms a good metric into a compelling story about scalable, predictable growth.

Common Mistakes to Avoid When Presenting Retention KPIs

When preparing your retention analysis for investors, founders can sometimes make simple errors that undermine credibility. Be sure to avoid these common pitfalls:

• Ignoring One-Time Fees: Including implementation, training, or other one-off fees in your recurring revenue calculations can artificially inflate your NRR. Isolate these from true recurring revenue for an accurate picture.
• Blending All Segments Together: A single, blended NRR can hide important truths. If you serve both SMB and Enterprise clients, present their retention separately. A high Enterprise NRR can be masked by higher churn in a small SMB segment.
• Using Inconsistent Cohort Definitions: Define your cohorts clearly and stick to the definition. Whether you use a monthly or quarterly basis, apply it consistently across all your calculations to ensure the data is comparable over time.

Frequently Asked Questions

Q: What is the difference between logo churn and revenue churn?
A: Logo churn measures the percentage of customers who cancel their subscriptions in a period. Revenue churn measures the percentage of revenue lost from those cancellations and from downgrades. A company can have 5% logo churn but only 2% revenue churn if smaller customers are the ones leaving.

Q: How do retention metrics for startup fundraising differ for E-commerce vs. SaaS?
A: SaaS startups focus on Logo Retention and Net Revenue Retention (NRR) from recurring subscriptions. E-commerce businesses focus on customer retention rates, analyzing repeat purchase frequency and the growth in lifetime value (LTV) for specific cohorts. The goal is the same: proving customers stick around and spend more over time.

Q: Can I still raise funds if my NRR is below 100%?
A: Yes, especially at earlier stages or if you primarily serve SMBs where some churn is expected. If your NRR is below 100%, you must have a clear story explaining why. This could involve showing improving trends in recent cohorts or a strategic plan to increase expansion revenue.

Q: How far back should my cohort analysis go?
A: For a Series A or B fundraise, investors typically want to see at least 18 to 24 months of cohort data. This provides enough history to demonstrate stable trends and prove that your retention is durable. For a Seed round, 12 months of data is often sufficient if the trend is positive.