The Startup Fundraising Playbook
DocSend Startup Index provides data-driven insights into what the latest fundraising trends are and how to succeed.
About Our Research
DocSend’s fundraising research, the DocSend Startup Index, provides insights into how startups raise capital at various stages in their lifecycle. We study how founders craft their pitch decks, seek meetings, and pitch investors in order to uncover fundraising trends and evaluate changing investor behaviors.
Our data-driven research demystifies the startup fundraising process and answers many questions founders have about what goes into a venture-backed raise.
Dive into fundraising trends & advice our research uncovers:
Our Approach to Research
We combine survey data on elements like demographic trends and investor outreach strategies with proprietary data from DocSend’s platform that reveals how pitch decks are structured and consumed. We also use qualitative data from industry experts that highlights lived experiences behind the numbers.
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Pre-Seed Startup Fundraising Trends
This year, we found that amid the pandemic and market uncertainty, pre-seed startups were held to new expectations of monetization and competition. There are three key trends that emerged.
Increased pitch deck scrutiny works in the founder’s favor
Unlike 2019, in 2020 investors spent more time on decks they were interested in, quickly passing over decks that didn’t make the cut. This means that VCs are quick to judge and a pitch deck must catch their interest in the first couple slides.
Our data also shows that first impressions matter: venture capitalists spent less time on subsequent visits to successful decks but more time on subsequent visits to unsuccessful decks. A company narrative that doesn’t stand out may yield a more critical second look from investors.
3 shifts in pre-seed pitch deck scrutiny
Three key pitch deck elements came into sharp focus for pre-seed companies. Compared to 2019, investors in 2020 spent 51% more time on the competitive landscape section, 46% more time on the product section, and 28% more time on the business model section. These shifts indicate that investors expect pre-seed stage companies to look like fully-fledged businesses: companies need detailed monetization plans, a product at least in the alpha or beta stage, and a keen understanding of where they fit in a competitive marketplace.Pre-seed pitch deck trends: Compared to 2019, investors in 2020 spent 51% more time on the competitive landscape section, 46% more time on the product section, and 28% more time on the business model section. Click To Tweet
Pre-seed founders move out of Silicon Valley
All regions except the Western United States saw an increase in representation in 2020 compared to 2019. With startup fundraising going virtual due to the pandemic, more founders are starting companies from outside the traditional Silicon Valley hub. But a skills gap still persists, though, since founders from the Northeast and Western United States tend to be more successful in raising their pre-seed rounds.
Pre-Seed Pitch Deck Analysis
By contrast, founders should cut from their deck sections that do not immediately advance the narrative: for instance, none of the successful decks in our survey used a table of content.
Seed Startup Fundraising Trends
In 2020-21, two key factors emerged as “make or break” factors of seed fundraising pitches. Highly engaged investors look for robust business models and compelling traction in the seed stage companies they ultimately fund.
Monetization plans and market traction are key differentiators
The focus on monetization plans has become heightened among seed stage companies. Investors require thorough-yet-realistic business models in pitch decks, and they spent 94% more time scrutinizing these sections among decks that got funding.
Seed startups must also succinctly demonstrate their market traction. VCs will give extra scrutiny to companies whose traction results are limited or unconvincing. In fact, investors spent 78% more time on the market traction sections of decks that didn’t receive funding.Seed fundraising trend: Investors spent 94% more time on the business model sections of decks in @DocSend’s data set that ultimately received funding. Click To Tweet
A fully-launched product is becoming the norm for seed startups
Product readiness has become essential at the seed stage. Across all the decks in our data set, the product section had the second-longest viewing time on average. But companies need more than just a slick product deck section: they should have their product as close to launch as possible before even attempting a fundraise. A majority (58%) of the companies in our data set had already launched their product at the time of fundraising. This signals that the GA launch of a product is becoming the norm, a step companies must take to even be considered “fundable.”
Contacting more investors doesn’t yield better results
For your seed round, contacting a healthy number of investors can yield more meetings. However, diminishing returns kick in after about 100 investor contacts, and many companies in our survey secured meetings from less expansive investor outreach strategies. Further, our data shows no clear trend between the number of investors contacted and the amount of funding raised. Persistence doesn’t necessarily pay off: seed founders should focus on contacting investors who 1) fund companies in their field and 2) write checks in the amount they’re looking for.
Seed Pitch Deck Analysis
The order of sections in successful and unsuccessful decks was similar: where both groups had a certain section, that section was in roughly the same place. With the exception of a small minority of companies that included a table of contents, almost all decks put their nucleus of Company Purpose, Problem, Solution, and Market Size sections up front. This similarity suggests that what’s likely to catch investors’ attention in a pitch deck is becoming uniform: these four sections are essential just to get your foot in the door with VCs.
Series A Startup Fundraising Trends
Succeeding in Series A fundraise calls for a more forward-looking approach. The rounds are much bigger and the meeting acceptance rate is much higher. Investors want to see scalability and positioning for the future.
Successful Series A decks focus on the future
Traction needs to be repeatable and varied
One of the reasons Series A fundraising decks are longer is because companies need robust traction sections. Earlier-stage companies might show only one type of traction, whereas Series A companies need to show multiple forms of traction–such as awards or profit/loss metrics–to indicate to VCs the strength of the product/market fit. Further, companies need to show that these types of traction are repeatable over the long term.
Choose your lead investor carefully
Nearly all (88%) of the companies that successfully raised had previous investors participate in their Series A round. But how do companies choose who leads the round? Only 8% of companies reported choosing a lead based on a brand name; by contrast, 30% chose their lead because they had industry-specific experience, and 23% because their lead offered the best terms. These figures show that the name on the check matters less than the type of deal being made or the sector expertise and connections a lead investor can offer.
Series A Pitch Deck AnalysisSeries A pitch deck trend: Investors at the Series A round tend to spend more time on three key sections: product, business model, and solution vs. purpose, why now, and competition in seed decks. Click To Tweet
Gender & Race Bias in Startup Fundraising
Mixed progress for diverse and underrepresented founding teams
2020 was a year when diversity and representation became prominent issues, and our data showed mixed fundraising progress for early-stage (pre-seed and seed) founding teams. On the one hand, teams with minority members raised 42% more than teams with no minority members.*
On the other hand, though, some groups fell further behind: all-female teams raised 70% less than all-male teams and averaged fewer investor meetings.
*In this data set, “minority” refers to survey respondents who self-identified as members of nonwhite racial groups.
Pitch deck scrutiny changes with team gender demographics
At the pre-seed stage, investors spent the most time on the business model sections of decks by all-female teams, spending nearly 20% longer on these sections than on those in all-male decks. They also spent over 58% less time on the product sections of all-female decks than they did on all-male decks. This is significant because the product section became one of the most important pre-seed deck sections last year.
By contrast, the fundraising ask section was viewed very differently when it came to male and female teams, implying that venture capitalists were more seriously considering investment in all-male teams. This implication is borne out by overall success rates (79% for all-male teams versus 75% for all-female teams). Further, the fundraising ask section was the longest-viewed section of all-male decks in our survey but investors spent almost 55% less time on this section when it came to all-female decks.
At the seed stage, the business model garnered the most scrutiny for both all-male and all-female teams. However, VCs spent 48% longer on this section in all-female decks. They also spent 77% longer on the traction section.
The greater discrepancy is in market size: this section was one of the least important for investors looking at all-male seed decks, while it was crucial for all-female decks. Investors spent 200% more time on the market size section in all-female decks. Combined with the business model and traction discrepancies, the relative importance of the market size section for all-female teams suggests that VCs were more concerned about how these teams could monetize a product-market fit than they were for all-male teams.Gender bias in pre-seed fundraising: The fundraising 'ask' section was the longest-viewed section of all-male decks in our survey but investors spent almost 55% less time on this section when it came to all-female decks. Click To Tweet
Scrutiny changes with racial demographics, too
Like all-female teams, founding teams with minority members had their business model sections scrutinized much more closely than teams with no minority members.
As with the gender deck scrutiny breakdown, the business model and product sections are key differentiators: investors spent 140% longer on the business model sections of decks by founding teams with minority members and over 78% longer on the product sections.
Investors also spent 146% longer on the fundraising goal section. Teams with minority members in our data set tended to raise more, so more time spent on the fundraising section might indicate favorable scrutiny. This trend also holds true for the all-male/all-female deck breakdown, since the fundraising section garnered the most scrutiny for all-male teams who, in turn, raised more than all-female teams.
At the seed stage, there were many similarities in the scrutiny faced by teams with and without minority members. The business model, product, and traction sections were important for both groups, although investors spent 48.5% more time on the financials section for teams without a minority member.
The biggest disparity was in the “why now?” slides: VCs spent 177% longer on this section in decks of teams without minority members. VCs attributed more weight to the timing of a potential investment depending on the ethnic makeup of a team: for more diverse teams, a compelling “why now?” case was actually far less important.
Pitch Deck Interest Metrics
- Founder links created: Number of pitch deck links founders send out
- Investor deck interactions: How actively VCs are on those decks
- Investor time spent: Average time investors spend reading decks
To learn more about our Pitch Deck Interest metrics and follow our regular analyses of fundraising activity, check out our weekly fundraising trends tracker.