SAN FRANCISCO, July 13, 2021 /PRNewswire/ -- Dropbox (NASDAQ: DBX) announced today that DocSend, a secure document sharing platform, released new data analysis based on its Pitch Deck Interest metrics showing significant and sustained growth in startup fundraising activity over the last 15 months. After a month-long slump in March of 2020, when the pandemic first impacted the market, the amount of founder activity increased by 45% and investor engagement with those pitch decks increased by 39%. Not only has the fundraising market grown since the pandemic first took hold, it is outperforming pre-pandemic market levels measured in 2018 and 2019.
The DocSend Startup Index: Investor Deck Interactions show a 41% year-over-year (YOY) increase in investor interest and engagement with startup pitch decks
Additionally, new Q2 2021 data from DocSend's Startup Index shows a 41% year-over-year (YOY) increase in investor interest and engagement (a proxy for demand) with startup pitch decks. Links created by founders actively fundraising with their pitch decks (an indicator of supply) were up 36% YOY in Q2 2021.
Pandemic and Recovery Fundraising Outpaces Pre-Pandemic Activity
To better understand how the fundraising environment has shifted prior to the pandemic, DocSend examined a 15-month period, April 1, 2020 to June 30, 2021, and compared this data to a baseline developed from data averages aggregated across calendar years 2018 and 2019.
As the pandemic rocked the market in March of 2020, founder and investor activity dropped precipitously, but it rebounded quickly starting in early April 2020. Since then, startup founders have sent out pitch decks 18% faster than the pace at which investors are reviewing and engaging with those decks. This metric indicates that more founders were actively seeking funding during this time, either for a first-time startup or for an existing startup. It also suggests that the supply of startups is outpacing demand from investors.
The trend mirrors an overall boom in new business startups in 2020, a year that saw a 24% increase in business startups – an all-time high according to the Peterson Institute for International Economics.
"The fundraising landscape continues to boom in the second quarter, showing even greater investor confidence and overall health than the pre-pandemic market. The business startup activity during and following an economic crisis is often a time of increased innovation, and the past year is no exception," said Russ Heddleston, Head of Commercial, DocSend at Dropbox. "With time spent reviewing decks clocking in at less than three minutes, VCs also continue to be very efficient at reviewing pitch decks online. This adds pressure on startups to optimize their pitch deck content: based on our data, on average, 5 seconds of an investor's attention can equate to approximately $655,000 in funding."
Startups Compete for Mere Seconds of Investor Attention in 2021
DocSend tracks the interest and interactions for documents securely shared through its platform. As opposed to data on funding events already completed, the DocSend Startup Index provides valuable insight into the current climate for dealmaking and serves as an early barometer for future funding outcomes.
The first quarter of 2021 saw very strong fundraising activity. However, activity leveled off somewhat in the following quarter: when comparing Q2 to Q1, pitch deck interactions only increased 8% and the quantity of founder links remained flat.
The amount of VC time spent on decks continues to decrease, indicating increasing efficiency on the part of investors when it comes to reviewing startup pitch decks. Time spent on pitch decks in Q2 was down 13% year-over-year, averaging 2 minutes, 46 seconds. Time spent can also demonstrate an eagerness to make deals as well as a need for faster decision-making amidst an abundant supply of startups.
"Our pipeline is larger than it has ever been with high-quality founders," said Joanna Lee Shevelenko, General Partner, F7 Ventures. "We did not see a slowdown going into the summer and expect the current pace to continue. There's incredible energy and increased innovation stemming from the behavior changes of the past 18+ months. We're seeing an increase in new founders and perspectives – people are redefining their own work life and contributions to the world as well as creating exciting new solutions for the post-COVID era."
Heddleston agreed with this optimistic outlook: "As businesses continue to open up and meet pent-up market demand, and as leisure and business travel pick up, I think we'll see healthy fundraising activity for the foreseeable future. The pandemic began as a dark time for many industries, startups included, but with the consistent growth we have seen thus far, 2021 is looking very promising for both founders and investors."
Key Leading Indicators of VC Fundraising Activity
The Pitch Deck Interest metrics are part of the DocSend Startup Index (DSI) and measure activity via three key indicators of founder and investor engagement. The insights help startup founders better understand fundraising conditions, especially in the recovering yet still volatile COVID-19 landscape. The DSI anonymizes, aggregates and compiles Pitch Deck Interest metrics in real-time and reports on changes on a weekly basis and is a leading indicator of future deal flow and fundings.
There are three core metrics. First, a "link" refers to the unique URL a founder creates with DocSend to share their pitch deck with investors. Each investor should get a unique presentation with the most pertinent and up-to-date information, so every time a founder sends a new pitch, they generate a new link.
- Investor deck interactions - the average number of investor interactions for each pitch deck link created by founders on the DocSend platform, which can serve as a proxy for demand for investments. The higher the interaction metric, the more often decks are viewed, shared and revisited by potential investors.
- Founder links created - the average number of pitch deck links each founder is creating on the DocSend platform, which serves as a proxy for supply of startups seeking funding. A "link" refers to the unique URL a founder creates with DocSend to share their pitch deck with investors. Each investor should get a unique presentation with the most pertinent and up-to-date information. When the average number of links increases, it means that founders are sending their decks out to more investors.
- Investor time spent - the average time spent per pitch deck by potential investors. This metric offers a look at how long VCs are spending reviewing deals. More time spent per deck could mean investors are more closely scrutinizing deals.
DocSend continuously releases quarterly reports via the DocSend Startup Index to track and predict the investment landscape and better inform founders about the volatility/stability of the venture capital environment.
Follow Russ Heddleston on Twitter for a synopsis of each week's fundraising data.
DocSend enables companies to share business-critical documents with ease and get real-time actionable feedback. With DocSend's security and control, startup founders, investors, executives, and business development professionals can build business partnerships that have a lasting impact. Over 21,000 customers of all sizes use DocSend today. Learn more at docsend.com.
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