New Report on Startup Fundraising in a Pandemic: Optimism is High, But Runways are Short

Startup Founders Forced to Accelerate, Pivot Fundraising Strategies in Volatile Market Conditions

News provided by

Jun 03, 2020, 08:00 ET

SAN FRANCISCO, June 3, 2020 /PRNewswire/ -- DocSend, a secure document sharing platform, today released a report exploring how startup founders are navigating the new realities of early-stage fundraising as a result of the recent economic downturn. Of the 250 startup founders in its customer community that were surveyed, most appeared optimistic about their business prospects, yet more than half (55%) of those actively fundraising said they have less than six months of runway at their current funding levels.

The report, DocSend Startup Index: The COVID Impact, provides a snapshot from April 2020 and uncovers the make-or-break decisions startup founders are being forced to make to adapt to the COVID-19 pandemic and shifting global circumstances. These decisions range from modifying company valuations and fundraising timelines to reducing headcount and operational costs.

According to the report, 65% of fundraising startups report that they are either maintaining (38%) or growing (27%) their business — an optimistic and positive outlook in the face of a pandemic and market downturn. Sixty percent of non-fundraising startups reported the same confident outlook. But the report also points out a stark reality — only nine percent of fundraising startups say they have more than a year of runway with current funding.

In spite of the short runways, 64% of fundraising startups have not changed their target valuations. But half (50%) of founders actively fundraising said that they have shifted the timing of their fundraising pursuits due to current market conditions.

In some cases, the pandemic is creating new demand opportunities for startups — 40% of fundraising founders and 33% of non-fundraising founders said the current economic climate has accelerated their product release timeline because they have seen increased demand for their products or technology.

For many, fundraising is critical for survival and more challenging in a virtual business world. The pitch deck, which is now primarily presented via conference call or secure document sharing, is becoming even more crucial. Compared to just three months ago, founders are reporting that VCs are asking for different information in pitch decks before they accept a (virtual) meeting:

32% said they are asking for more information on the company's market opportunity and "why now?" proposition
24% said investors are asking for more information on the startup's business model
23% said investors are asking for more information on finances

"One of the hardest parts of running a startup business – fundraising – has become protracted, unpredictable and almost completely virtual overnight," Russ Heddleston, co-founder and CEO of DocSend said. "Without the benefit of an in-person meeting, founders are challenged with forging new relationships online, and through pitch decks communicating their business opportunity, strength of their team and product, and most importantly, 'why now'."

"For founders that face an uncertain future and still have some runway left, now may be a good time to step back and re-trench," continued Heddleston. "Instead of trying to raise money against serious headwinds, rethink your product plans, business model and other aspects of your business, and then wait for the market to improve."

The new report is part of the DocSend Startup Index, an ongoing series of proprietary data and insights on startups and fundraising progress at different stages of the startup journey, from pre-seed to seed to series A and beyond. To view the full results, download the report at docsend.com.

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 12,000 customers of all sizes use DocSend today. Learn more at docsend.com.

Contact:

Laura Kubitz
104 West Partners for DocSend
[email protected]

SOURCE DocSend