You are a Product Growth Analyst at a venture-backed B2B workflow software company preparing to scale a newly launched product built with BCG Digital Ventures. The product has reached $1.8M ARR, serves mid-market operations teams, and needs to hit $4M ARR within 12 months without increasing the annual growth budget above $1.2M. Leadership is debating two acquisition channels for the next investment cycle: paid search, which can be launched quickly through the venture's existing growth stack but is getting more expensive as larger competitors bid aggressively, and channel partnerships, which require longer setup through integration and co-marketing work but may bring higher-intent leads and stronger retention. Current data shows paid search CAC at $4,200 with 8% visitor-to-demo and 18% demo-to-close conversion, while partnerships CAC is estimated at $6,500 initially with 22% lead-to-demo and 28% demo-to-close conversion; annual gross retention is 78% for paid search customers versus 88% for partner-sourced customers, and average first-year gross margin is 80% in both channels.
How would you compare these two growth channels and decide where to invest first? What would you recommend to leadership and why?