DocSend Mid-Year Pitch Deck Interest Data Shows VC Engagement Stabilizes Following Record Year of Funding Startups

Rhea-AI Summary

DocSend, a Dropbox company, reported a decline in Q2 2022 activity for both founders and investors, with founder pitch activity down by 6% and investor engagement by 12% compared to Q1. Despite this, pitch decks sent by founders rose nearly 11% YoY, indicating increased supply amidst decreased demand. The analysis suggests a shift towards early-stage investments, as seed-stage deal counts surpassed previous records with over 1,300 deals closed. Investor efficiency improved, reducing time spent reviewing decks by 10 seconds YoY, reflecting a more discerning fundraising environment.

Positive

• Seed-stage deal count surpassed 1,300 in Q2, indicating strong investor interest in early-stage startups.
• Founder pitch deck submissions increased by nearly 11% YoY, suggesting growing entrepreneurial activity.
• VC engagement with pitch decks rose 3% YoY in the first half of 2022, indicating a resilient fundraising environment.

Negative

• Investor activity decreased by 12% in Q2 compared to Q1, suggesting a cooling in funding interest.
• VC interactions with pitch decks dropped 7% YoY, indicating reduced demand for funding.
• The gap between pitch supply and demand is approximately 16%, reflecting market imbalance.

 VCs slow down pace of investing activity while early-stage founders still busy seeking funding

SAN FRANCISCO, July 13, 2022 /PRNewswire/ -- DocSend, a secure document sharing platform and Dropbox (NASDAQ: DBX) company, today released new data based on its Pitch Deck Interest metrics showing Q2 founder and investor activity declined 6% and 12%, respectively, in comparison to Q1. However, the year-over-year (YoY) comparison for Q2 reveals a divergence between a slower pace of VC engagement and higher rate of founder pitch activity.

After a record year of fundraising in 2021, investor activity has cooled. Startups are still actively pitching for more funding, though: the supply of founder pitch decks being sent to VCs is up nearly 11% compared to the same time last year. Founders are now facing a more temperate audience as VC interaction with pitch decks, a proxy for demand, is down 7% YoY. This equates to a gap between supply and demand of approximately 16%.

While the new Q2 data paints a somewhat sobering picture, the mid-year analysis of the same data shows a healthy, if not more balanced, fundraising marketplace. In the first six months of 2022, VC engagement with startup pitch decks increased 3% YoY. During the same time, founders increased the average number of pitch decks sent to investors by almost 14%.

As more founders clamor for the increasingly discerning attention of VCs, investors continue to become more efficient in their evaluation of pitch decks – shaving off 10 seconds (2:46 - 2:36) on average in Q2 of this year compared to last. This speaks to an overall trend of efficiency in the marketplace, characterized by the need to manage high-volume deal making in a remote environment.

DocSend's Pitch Deck Interest data primarily reflects early-stage fundraising activity – from pre-seed to Series A. Additional market data on funding outcomes indicates that many investors are wary of betting big money on late-stage startups following declining valuations in the public and private markets. Instead, they have shifted their focus to smaller, early-stage bets. For example, seed-stage deal count is estimated to be over 1,300 deals closed in Q2 – surpassing the highest mark set during all of last year's frenzied VC activity, according to Pitchbook data.

"Early-stage investing is operating like business as usual, and that's a trend I anticipate will continue in the second half of the year," said Russ Heddleston, DocSend co-founder and head of commercial, DocSend at Dropbox. "A number of funds were raised over the past couple of years and investors are still sitting on a lot of dry powder. The wise VC is looking at opportunities in pre-seed and seed stage startups with strong fundamentals. As the marketplace settles, investors are looking to get in early on a larger number of small bets, and that's keeping this section of the landscape healthy."

Key Leading Indicators of VC 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 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.

DocSend releases quarterly analyses via the Pitch Deck Interest metrics to track and predict the investment landscape and better inform founders about the volatility or stability of the venture capital environment.

Follow Russ Heddleston on Twitter for a synopsis of each week's fundraising data.

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 the 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, and has offices around the world. For more information on our mission and products, visit http://dropbox.com.

Media Contact:
Carol Boyko
104 West for DocSend
carol.boyko@104west.com 

View original content to download multimedia:https://www.prnewswire.com/news-releases/docsend-mid-year-pitch-deck-interest-data-shows-vc-engagement-stabilizes-following-record-year-of-funding-startups-301585203.html

SOURCE DocSend

FAQ

What were the key findings from DocSend's Q2 2022 Pitch Deck Interest report?

DocSend reported a 6% decline in founder activity and a 12% decrease in investor engagement compared to Q1 2022, while pitch deck submissions increased nearly 11% YoY.

How did seed-stage investment activity change in Q2 2022?

Seed-stage deal count exceeded 1,300 in Q2 2022, surpassing the prior year's record, indicating strong interest in early-stage startups.

What does the decline in VC engagement indicate for Dropbox (DBX)?

The decline in VC engagement suggests a cooling in investment activity, which could impact future fundraising opportunities for startups using Dropbox's DocSend.

What are the implications of the 16% gap between pitch supply and demand?

The 16% gap indicates an imbalance where founders are actively seeking funding while investors are more selective, potentially leading to challenges in securing capital.