Is Your Startup Fundraising in 2021? This Is Your Time.

Here are the trends shaping a record year for founders — and the tools that will help them seize the moment.

Written by Russ Heddleston
Published on Sep. 13, 2021
Is Your Startup Fundraising in 2021? This Is Your Time.
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There’s never been a better time to start a company — or for entrepreneurs to get out there and raise money.

The pace for growth within fundraising is set to break records for the second consecutive year, and the second quarter of 2021 has seen a healthy amount of dollars go to early stage startups worldwide.

The pandemic jumpstarted sectors focused on helping the world transition into and out of quarantine. And as we have seen in the past, any dip or major shift in the economy often results in new business opportunities. Last year alone saw a 24 percent increase in the total number of active startups, and some of those companies moved into this year seeking their first fundraise.

At DocSend, we track indicators of the fundraising process that founders go through. One big trend we’re seeing during the economic recovery is that VC demand for deals continues to outpace supply (read: founders looking for funding). VCs are expanding their search and getting more efficient at how they evaluate earlier stage companies.

This is driving the sustained and substantial growth we are seeing across the fundraising landscape, and things don’t seem to be slowing down.

Get More Fundraising Insights From Russ HeddlestonPitching VCs in 2021? These 3 Trends Could Make or Break Your Fundraising Plans.

 

A Closer Look at the Fundraising Landscape

With so many startups seeking fundraising, your pitch deck is more important than ever.

How Founders Can Make Their Pitch Decks Stand Out

Make sure your pitch deck tells investors exactly how your business is unique, why now is the right time to solve your problem and why you’re the one to do it. 

Why? Because fundraising dollars are not in short supply. Already, investors have spent more than $6 billion in more than 3,500 seed-stage startups in the first half of 2021 according to Crunchbase News.

As with all dramatic economic upswings, this trend demands answers about sustainability: Will it last? Fundraising can take months, and startup founders want to feel confident that the current market momentum will still be there half a year from now. 

In some ways, these concerns are warranted, considering we are still emerging from a global pandemic and there’s always a chance of lockdown again. We’ve seen great recoveries in solutions aimed at remote work, cybersecurity and the use of data.

The surge in investor dollars heading toward early stage companies reflects more than just a feeding frenzy. Pre-seed rounds are beginning to mature more quickly: DocSend found that 89 percent of pre-seed companies had a product at least in the alpha stage when fundraising. In this climate, founders are adhering to best practices sooner with more access to information about the fundraising process.

 

Supporting Founders

Understanding the current climate for deal-making is critical for early stage founders looking to capitalize on this booming VC market. This reality underpins our efforts at DocSend to create more transparency in the fundraising process and provide founders with the data they need to stay ahead of the trends influencing the future of their business.

Our DocSend Startup Index (DSI), researches and measures pitch deck activity via key indicators of founder and investor engagement. 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.

To better understand how the fundraising environment has shifted prior to the pandemic, we 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.

founder-activity-investor-egnagement

We found that founder fundraising activity (supply) increased by 45 percent while investor engagement with pitch decks (demand) also increased by 39 percent. This signifies sustained growth within venture fundraising, surpassing even the pre-pandemic market.

 

Looking Ahead

Back to the question, will it last? While other data looks back at closed deals in the previous quarter, our data looks at actual fundraising activity on a week to week basis.

Since the start of Q3, investor interest and engagement with pitch decks has already risen by 16 percent. Founders have been even busier: Links created by founders actively fundraising has jumped by 17 percent. Using these recent spikes in supply and demand as a barometer, we can expect the deal-closing in Q3 to be as busy — or perhaps even busier — than Q2.

The pandemic has helped to redefine where and how VCs view investment opportunities, and the estimated 1,733 new deals completed in Q2 alone from angel- to seed-stage are proof that opportunities are continuing to become available earlier in the fundraising lifecycle for founders with a compelling narrative and pitch deck.

At DocSend our goal is to connect you to the resources you need to succeed. If you are raising a Pre-Seed, Seed or Series A round, check out the DocSend Fundraising Network for an opportunity to connect with actively investing  VCs. And for even more of our fundraising research check out DocSend’s Fundraising Playbook.

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