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.
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: All You Need To Know
Pre-Seed 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.
Pre-Seed Pitch Deck Template
To help pre-seed founders create effective pitch decks, we launched a section-by-section guide to the art and science of pitch deck construction. This guide builds on our pre-seed research and highlights what’s unique about pre-seed decks compared to later rounds. We also created deck templates that founders can customize with their unique company stories.
Seed Startup Fundraising: All You Need To Know
Seed 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.
Seed Pitch Deck Template
To help seed stage founders build effective pitch decks, we launched a section-by-section guide to the art and science of pitch deck construction. The guide builds on our seed research and shows how seed decks differ from pre-seed decks. We also created deck templates that founders can customize with their unique company stories.
Series A Startup Fundraising: All You Need To Know
Series A 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
Absolute gains, relative disparities
VC interest in funding startups skyrocketed in 2021, but a rising tide has not lifted all boats equally. On the one hand, our data showed that all early-stage (pre-seed and seed) teams raised more thanks to record-setting amounts of available capital. On the other hand, disparities remain for all-female teams and teams with minority members.* For example, all-female teams raised 25% less than all-male teams on average.
Some underrepresented founders saw much more VC engagement early on in the fundraising process, but that initial interest didn’t translate into funding commitments. All-female teams with minority members averaged 57% more meetings than their peers while raising less than any other demographic.
Pitch deck scrutiny and gender
Investors spent the most time overall scrutinizing the team sections for all-female decks, averaging 130% more time on this section than for all-male teams and 157% more time than for mixed-gender teams. For all-male teams, the team slide had one of the lowest viewing times.
By contrast, the disparity went the other way when it came to the product section. VCs spent 105% more time scrutinizing the product sections of all-male decks than all-female decks (and 78% more time than mixed-gender product sections). For all-female teams, the product section was one of the least-scrutinized.
VCs spent about the same amount of time scrutinizing the business models of all-male and mixed-gender teams. However, investors averaged 43% more time on this section for all-female teams. The relative importance of the team and business model sections for all-female teams suggests that investors were especially concerned about whether these teams had the right members to monetize a product.
Pitch deck scrutiny and race
When we break down deck scrutiny by racial demographics, several sections stand out in particular. Investors spent 20% more time on the product sections of decks by teams with minority member(s) and 67% more time on the market size sections for these teams. By contrast, investors spent nearly 50% more time scrutinizing the business model sections of all-white teams.
The competition section shows the largest discrepancy between all-white and diverse teams. Investors spent 78% more time on this section for teams with minority member(s). These discrepancies indicate that for diverse teams, VCs focused on whether a company’s product-market fit stood out from other players in that company’s sector. This focus may have been more critical, since diverse teams in our dataset raised less than teams without minority member(s).
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.