When pandemic lockdowns began in March, 2020, they all but brought fundraising to its knees. As founders and investors hit the pause button on pitches and negotiations, Silicon Valley watched grimly as market optimism tumbled below previous years’ sentiments.
Luckily, any concerns foreshadowing permanent declines in fundraising were short-lived. Not only did pitch-deck supply and investor demand rebound to pre-pandemic levels by late April 2020, they actually flourished throughout the pandemic.
The latest market analysis from DocSend indicates this trajectory shows little signs of stopping. Here, we look at market influences over the past year, how recent trends compare to previous years, and what the data means for the industry.
As disruption and uncertainty hit, Silicon Valley leaned in
A blink-and-you-miss-it dip on the radar, fundraising didn’t simply weather the worst of the pandemic—it charted the course to all-time fundraising highs. Efficiency gains and time savings gleaned from virtual-first fundraising were one reason why. If the pandemic gave Silicon Valley any kind of silver lining, virtual fundraising was it.
Founders and investors rallied around tools such as Zoom, quickly resolving friction points people didn’t know previously existed. For example, while founders had tools like DocSend to send out pitch decks before the pandemic, investors didn’t have such time-saving luxuries for scheduling in-person meetings with founders.
Fundraising, compressed into 30-minute chunks of virtual Zoom meetings, showed investors just how much easier, faster, and productive it can be, simultaneously letting them raise their demand levels to where they wanted them to be. As a result, investor demand and activities increased unremittingly throughout 2020 and 2021.
Similar behaviors in supply and demand point to healthy market conditions
As founders and VCs adapted to the industry’s new normal with ease, investor dollars and market health grew steadily. After rebounding in late April, 2020, investor demand increased throughout the year, outpacing 2018-2019 levels and up 22% by the second half of 2020. By the end of H1 2021, investor demand was up 65% over the previous year’s baseline.
Trends in founder supply also point to improved, growing market health. Aggregate pitch deck averages outpaced investor demand by 3% during H1 2021, with current trends further indicating net-positive health. While supply waned slightly during the peak of the summer, it’s since ramped back up to robust levels, despite historical declines heading into the fall and holiday season.
Bottom line: Similar behaviors observed across supply and demand in the fundraising marketplace indicate that both founders and investors adapted easily to the new normal: both groups have been looking eagerly to make deals. They’ve acclimated so well, in fact, that record VC funding continues to flow into the startup ecosystem.
Fluctuating market trends point to a return to normalcy
Founder supply climbed higher in 2021 than any of the summer spikes in 2020. Additionally, these high levels were sustained throughout the year, with the exception of a dip in founder supply in August—a decrease that could represent the return to normal behavior in the marketplace, albeit at a significantly higher activity level.
Market data historically show slowdowns in fundraising activities in late August as folks go on vacations and take fundraising breaks. (The exception to this being in 2020.) The 2021 market, while at a higher activity baseline, is behaving similarly to market fluctuations in 2018 and 2019, underlining that market behavior in 2020 remains the exception and not the norm.
Mirroring previous years’ trends, investor demand also signals upcoming end-of-quarter slowdowns in 2021. These swings in demand, aligned with the time periods in which they occur, also reinforce a return to normal market behavior at more active baselines than years past.
Although demand has slowed at normal quarterly rhythms heading into Q4, high overall activity levels herald strong investor activity in the weeks ahead. Relatedly, we’ve observed an uptick in supply toward the end of Q3 2021. This suggests that the supply of pitch decks will remain high throughout most of Q4, save for the typical holiday slowdowns. Despite some noise in the system, the outlook for Q4 remains positive.
What recent market trends mean for fundraising
What do the recent supply and demand trends tell us about where fundraising is headed? These findings reveal two key takeaways for founders and VCs.
As trends come and go, it’s safe to say virtual-first fundraising is here to stay. In-person meetings are certainly not dead—situations where in-person meetings make the most sense will always exist. But investors and founders agree: Virtual fundraising isn’t going anywhere—it makes doing business easier for everyone.
There’s also no better time than now to raise funding. Or to invest dollars, for that matter. Our data indicates that founder supply and investor demand are likely to remain constant for the foreseeable future, so now is the time to be raising or deploying capital.
Interested in more fundraising insights? These data points are just the tip of the iceberg. Dig deeper into fundraising trends across pre-seed, seed and Series A.
