Founders seeking capital see limited
opportunities as investors take their time – and their summer
vacations
SAN
FRANCISCO, July 13, 2023 /PRNewswire/ -- DocSend, a
secure document sharing platform and Dropbox (NASDAQ: DBX) company,
released a new data analysis of its Pitch Deck Interest (PDI)
metrics showing lukewarm investor engagement is signaling continued
diligence and selectivity in fund deployment. Despite this ongoing
pullback, startup founders continued to seek out funding in Q2
2023. The amount of pitch decks sent out by founders in Q2
increased 4.0% year-over-year (YoY), but investors' engagement with
those decks decreased both quarter-over-quarter (QoQ), and YoY by
roughly the same amount. The widening gap punctuates the struggles
founders face this year in their fundraising.
Early Summer Slowdown Keeps Investors in Control
Seasonality, which refers to the typical slowdown in activity
during the summer months and other holiday time frames, may already
be impacting the early-stage fundraising marketplace.
QoQ analysis shows that founder activity, which serves as a
gauge for fundraising market supply, increased 4.0%, while investor
activity, a gauge for market demand, decreased 4.6%. Similarly, YoY
analysis saw a 4.0% increase in pitch decks sent out, with a 5.7%
decrease in pitch decks reviewed by investors.
Year-to-date (YTD) data shows that this trend has been a
constant in the first half of 2023. Founder activity decreased less
than 1% in 2023, but investor activity decreased by nearly 12%,
implying that investors are on the advantageous side of the
deal-making table, and have been all year. YTD analysis is still
impacted by 2021's end-of-year momentum, accounting for founders'
strong start in 2022.
Additionally, while investors are reviewing fewer pitch decks
from founders, they are spending less time reviewing them when they
do. In Q2, investor time spent reviewing pitch decks decreased
4% QoQ, while decreasing 7.7% YoY and 7.7% YTD. These are
all-time lows for investor time spent on deck, showing that
founders have less time than ever to grab potential investors'
attention.
"All three of DocSend's historical metrics point clearly to an
investor-friendly marketplace at this time," said Justin Izzo, data and trends analyst at Dropbox
DocSend. "Due to continued macro concerns as well as the usual
seasonal lull, fundraising dollars may be challenging for
fundraising founders to come across in the near future."
2023 vs. 2021 Analysis Reveals Uphill Battle for
Founders
In venture capital, 2021 is a year that has been hailed as one
of the most founder-friendly climates in recent history. 2023 is
clearly a different picture, but analyzing these two years shows
that founders have continued to aggressively pursue fundraising,
but in two entirely different climates.
When comparing the percentage change from Q2 2021 to Q2 2023,
founder activity increased by 15.9%, while investors slowed their
pace by 11.5%. YTD analysis between the two years shows a slightly
lower, but similar contrast, with a 13.6% increase and a 7.9%
decrease for founders and investors, respectively. The 14.3% and
10.7% decreases in time spent by investors reviewing pitch decks in
Q2 and YTD, respectively, further proves that founders looking to
raise money in today's market are experiencing a starkly different
marketplace than two years ago.
In Q1 of 2023, VC investment in early stage companies totaled
$9.6 billion dollars, down
significantly from Q1 of 2021's $16.4
billion, according to Crunchbase. Despite discouraging
fundraising dollars, investors are still reviewing pitch decks at a
relatively steadier pace than capital invested.
"Since 2021, there has been a consistent shift in valuations and
some founders and investors aren't seeing eye-to-eye on company
valuations," said Winter Mead,
founder and Chief Executive Officer at Coolwater Capital. "Private
markets usually take a few quarters to catch up to the public
markets. The price correction can take a little longer to reach
early-stage than late-stage and these dynamics are currently
playing out in the market today."
DocSend releases quarterly data analyses via the Pitch Deck
Interest metrics to track and predict the investment landscape,
informing founders of volatility or stability in the venture
capital environment.
Key Leading Indicators of Fundraising Activity
There are three core metrics unique to DocSend for tracking
investors' hunger for deals and founders' quest for capital.
- Founder links created - the average number of pitch
deck links each founder is creating via DocSend. This serves as a
proxy for the supply of startups seeking funding. A "link" refers
to the unique URL a founder creates using DocSend to share their
pitch deck with investors. When the average number of links
increases, it means that founders are sending their decks out to
more investors.
- Investor deck interactions - the average number of
investor interactions for each pitch deck link. This serves as a
proxy for demand for investments. The higher the interaction
metric, the more often decks are viewed, shared, and revisited by
potential 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.
About DocSend
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 30,000
customers of all sizes use DocSend today. Learn more at
docsend.com.
About Dropbox
Dropbox is one place to keep life
organized and keep work moving. With more than 700 million
registered users across 180 countries, we're on a mission to design
a more enlightened way of working. Dropbox is headquartered in
San Francisco, CA. For more
information on our mission and products, visit dropbox.com.
Media Contact:
Carol
Boyko
104 West for DocSend
carol.boyko@104west.com
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SOURCE DocSend