(click to view a larger version in our seed report)

Based on the DocSend Startup Index metrics, founder supply and investor demand were above 2019 levels before the pandemic lockdowns started in March 2020. At the beginning of the pandemic, there was optimism and enthusiasm in the fundraising marketplace. However, both of those metrics took a nosedive in mid to late March to below 2019 levels. By late April, the founder supply of pitch decks and investor demand for reviewing pitch decks were back to pre-March 2020 activity levels. At this point, when the markets shifted from the industry standard of in-person meetings to a new world of virtual first meetings via Zoom, the story wasn’t just a recovery story but a thriving story.

If we only look at investor demand, for example, that continued to grow throughout the year and steadily outpaced 2018-2019 levels. By the second half of 2020, investor demand was up 22%. Nearly a year later, by the end of the first half of 2021, investor demand was up 65% over the 2018-2019 baseline. We saw not merely a quick recovery as folks adapted to life under the pandemic, but we also saw much more money coming into the system, with investors having dollars that they needed to allocate immediately. 

The founder’s supply of pitch decks was right in line with investor demand. The founder supply metric is, by nature, more volatile with a bit more movement up and down from these metrics. However, overall, if we look at an aggregate average, founder supply slightly outpaced investor demand through the first half of 2021 by 3%. The fact that these are very similar should show you that both founders and investors have learned to thrive in this new normal and are looking to make deals. Now breaking this down a little more, we saw some volatility between these points of late April / early May 2020 and the end of H2 2020. The founder supply of pitch deck slowed during the height of summer and into August but went on to stay healthy throughout the fall. This reinforces the notion that the market was healthy as founder supply historically would have tailed off going into fall and the holiday season. The last ten weeks in 2020 were outpacing founder supply in 2019 by a moderately healthy margin, which continued into 2021.

The New Normal in 2021

In 2021, founder supply reached more all-time highs than what we saw in any of the spikes during the summer of 2020. This high amount of activity has stayed that way throughout much of the year so far. We saw a dip in founder supply around late August this year. And that is pretty normal based on historical data. This sense of normalcy in market activity in August underlines the point that whatever happened last year was more out of the ordinary. Except for 2020, the data tends to slow down around late August as founders take a vacation or break from fundraising. This year, the market slowed down from a higher baseline than ever before, with the same sense of normal market fluctuations as 2018 and 2019.

For investor demand in 2021, we see activity slows down at the end of quarters now, which it has done in the past. The fundraising market is behaving “normally,” but at a baseline that’s still much more active than ever before. This still holds true through Q3 2021. One notable observation toward the end of Q3 ’21 is that we saw a sustained increase and, crucially, no end-of-quarter decreases for founder supply. This steady increase suggests that the supply side of pitch decks will be pretty active throughout much of Q4. We anticipate a holiday slowdown, but that slowdown will come from a higher relative baseline. Founder supply and investor demand are likely to remain reasonably constant overall. According to our data and analysis, now is the time to raise or deploy capital into the fundraising market. 

A key change that’s happened since the start of the pandemic is the industry’s new standard of virtual first meetings vs. in-person first meetings. Pre-pandemic, of course there were some virtual meetings, but the default was for founders to make the effort to meet with a potential investor in real life to pitch their startup. This was essentially a bottleneck to the speed of making a deal. Now that virtual first meetings are the default in the fundraising process, both sides of the table can move faster. Virtual first or "Zoom culture" has made it easier for investors to act on their demand and go through pitch decks more quickly. A byproduct of this new reality is evident in the data with a higher baseline for both pitch deck supply and especially investor demand. Being able to do everything virtually makes things a lot easier and this may be the default way for founders and investors to hold the initial vetting process for some time to come.

To dig deeper into seed fundraising trends from 2020-2021, read our new 20-page report. You can keep up with these trends with our weekly Pitch Deck Metrics updates. What are your thoughts on the current fundraising market? Let me know at jizzo@dropbox.com or reply to this email.