2020 DocSend Startup Index Shows Increased Q3 Investor Activity, Bucking Seasonal Trends

SAN FRANCISCO, Oct. 6, 2020 /PRNewswire/ -- DocSend, a secure document sharing platform, today released third-quarter 2020 data based on its Pitch Deck Interest metrics that report venture capital investor interest and engagement in startup pitch decks was 40% higher than the same period in 2019 and 28.2% higher than Q3 2018. Through its platform, DocSend is continually measuring the quality and engagement of venture capital investors that are reviewing pitch decks from startups around the world.

The highest week of VC interest in the quarter was August 17 to 23, a time of year that is seasonally slower for VC activity. Data from this same week also showed the least amount of time spent on decks; investors never spent more than three minutes on average on a deck during Q3 and overall averaged 2:51 minutes. Investors are increasingly efficient in their pitch deck reviews: time spent on pitch decks was 18.3% lower than in Q3 2019 and 21.2% lower than in Q3 2018.

Links to pitch decks created by startup founders — indicating the supply of potential investments — also saw a spike in Q3 compared to previous years, with 18.8% more links created per pitch deck than in Q3 2019 and 51.3% more than in Q3 2018.

"We saw an abnormally active summer for the fundraising marketplace," said Russ Heddleston, co-founder and CEO of DocSend. "After an abrupt halt to fundraising in March, founders were eager to get their decks in the hands of VCs during a time when we usually see a seasonal slowdown in interest and engagement. However, data from September is showing signs of a possible market correction."

Key Leading Indicators of VC Fundraising Activity

The Pitch Deck Interest metrics are part of the DocSend Startup Index and measure activity via three key indicators of founder and investor engagement. The insights help startup founders better understand fundraising conditions, especially in the volatile COVID-19 landscape. The Index anonymizes, aggregates and compiles metrics in real-time and reports on changes via interactive charts on a weekly basis, focusing on three core metrics. The Pitch Deck Interest metrics are a leading indicator of future deal flow and fundings.

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.

• Pitch Deck Interest - the average number of interactions for each pitch deck link created by founders on the DocSend platform, which can serve as a proxy for demand. The higher the interest metric, the more often decks are being 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 can serve as a proxy for supply. When the average number of links increases, it means that founders are creating and sharing more unique links to their pitch decks, meaning they're sending their decks out to more people.
• 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.

Market is Due for a Correction and Possible Volatility

While week 37 (Sept. 9-15) usually kicks off the fall rush, VC interest was down 6%. For comparison, in 2019 VC interest was up 16.7% and in 2018 the jump between week 36 and week 38 was 22.3%. 

"While interest rebounded in the last two weeks of the quarter, it hasn't yet reached back up to the Q3 average. This leads us to believe that VCs' interest will slowly decline for the rest of the season, and we won't see a typical fall rush as in previous years," Heddleston added.

Founders are following a similar trend. While the number of links created by founders stays far more steady throughout the year, the last six weeks of the quarter showed steady or declining numbers for founder links created.

"This is the longest stretch of slow or declining activity from founders since February and March. While the decline earlier this year resulted in a post-pandemic spike, an end of year spike from founders is unlikely," Heddleston continued.

Expect to See Spur of Activity in Q2 2021

With an election on the immediate horizon, we can expect to see some volatility in the fundraising marketplace in November and early December regardless of the outcome of the election. In 2016, in the three weeks following the election, there was a decline in both VC interest (33.7%) as well as founder links created (22.3%). But starting the week of November 28, both rebounded over the next three weeks.

"Coming into 2021, brace yourself for a superstorm of activity, especially in Q2 of 2021. Often there is a surge of new businesses starting amid an economic downturn, so many of those companies that started during the pandemic will be entering the pre-seed stage in Q2 of next year," said Heddleston. "We are expecting a substantial uptick in activity after what is usually a quiet Q1 while businesses navigate a post-election market and economic landscape."

DocSend will continue releasing quarterly reports via the 2020 DocSend Startup Index to track the investment landscape and better inform startup founders as the business and venture capital environment continues to change.

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 13,000 customers of all sizes use DocSend today. Learn more at docsend.com.

Media Contact: 
Laura Kubitz
104 West for DocSend
[email protected]  

SOURCE DocSend

Related Links

docsend.com