Founders often ask me whether I think they’ll be able to raise their pre-seed round. “I’ve been trying for this long” or “I’m in this state,” they ask. “What would you recommend? Is fundraising going to work out for me?” While there’s no crystal ball that would allow us to predict fundraising outcomes, we do have some data on how long successful pre-seed fundraising takes and what variables are at play.
The Role of Gender in Pre-Seed Fundraising
The makeup of your team can affect your likelihood of raising and what that raise might look like. This includes a team’s gender mix. DocSend’s research uncovers trends on how all-male, all-female, and mixed-gender teams raise their rounds, and our data helps to establish a baseline for measuring progress on addressing the funding divide. According to our 2021 pre-seed report, all-male teams raised about $500,000 on average for their round, all-female teams raised about $200,000, and mixed-gender teams the most at about $766,000. Relatedly, all-female teams got the fewest amount of meetings and mixed-gender teams got the most meetings.
It’s clear that gender plays a notable role in fundraising. In 2019, all-female teams raised about 30% less than all-male teams. This gap widened in 2020, growing to 60% less than all-male teams. It’s important to keep in mind, though, that mixed-gender teams do raise more than either of these categories. If you’re still at the stage where you’re putting your founding team together, it will be helpful to ensure that there’s a gender mix. However, if you do have your founding team in place, there’s no need to go back to the drawing board and add a new co-founder or two.
Shifting Geographies: Is Opportunity More Equally Distributed?
In terms of where pre-seed fundraising is taking place, our data shows that it’s moving away from the traditional hotspots of the West Coast of the United States (primarily Silicon Valley, Los Angeles, Seattle). This can only be a good thing: we’re seeing more founding teams get funded from other parts of the country. For example, the New York startup scene has been taking off for quite a while, and that growth definitely accelerated in 2020. Overall, the Northeast went up by 23% in 2020, the South by 10%, and the Midwest by 7%. The rest of the world increased by an impressive 40%!
As companies exit and go public, that money flows back into the ecosystem and typically it stays in the geography it came from. New York and Boston are both growing as ecosystems; in the South, areas like Atlanta are really taking off. Founders should be encouraged by this data: it means you don’t have to move to Silicon Valley to get funded. I’ve always said that although talent may be equally distributed, opportunity is not. With this new data, however, it looks like opportunity may be getting more equally distributed, which is awesome. Talent may be equally distributed, opportunity is not. With this new data, however, it looks like opportunity may be getting more equally distributed, which is awesome. Click To Tweet
It’s also worth noting that if you’re, say, in Atlanta, your cost basis as a company and as you hire people is way better than your cost basis in San Francisco. You can make money go further outside Silicon Valley. That said, it also depends on what specialties your company needs. If you’re an AI company and you need ex-Google machine learning engineers, then you might indeed need to go to Menlo Park or the Bay Area. But for a lot of companies, you can get started anywhere, and investors are increasingly willing to fund good companies independent of geography.
Watch the video segment of our recent pre-seed fundraising webinar on this topic for more context and information.
To learn more about raising your pre-seed round, read our other post in this series about how to structure your pre-seed pitch deck.
Watch the panel discussion on early-stage fundraising.Watch Here