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Seven years of churn at once
No churn line
Benchling sells software to life sciences companies, and it absolutely crushed it. Every SaaS company reports the same breakdown: gross ARR added, churn, and net ARR added. Benchling never reported a churn line for the first six years or so, because there was nothing to put in it.
The biotech crash
Then the biotech crash arrived. The company took seven years of churn in twelve months. The business turned grindy, and the goalposts moved: something different had to be done.
Keeping on AI
Through the grind, the company kept working on how to apply AI for its biotech and pharma customers, whom it is very close to. The question was how to apply these models in those customers' world so they were excited about it, and the company kept iterating on it.
How big was the biotech crash?
The SPDR S&P Biotech ETF, known as XBI, peaked in early 2021 and had lost more than half its value by mid-2022. New biotech IPOs slowed sharply, and many listed companies cut staff. Venture funding for private biotechs fell too. The slowdown ran through 2022 and into 2023.
Why did biotech startups cut software budgets?
Most early biotechs have no revenue and live on money raised from investors. The Tufts Center for the Study of Drug Development has estimated that bringing a new drug to market commonly takes a decade or more. When funding dries up, companies extend runway by cutting costs and sometimes shut down. Software subscriptions are among the line items that go, or that get renegotiated downward.
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