Female and minority founders spent the most
time fundraising to raise the least amount of money
SAN
FRANCISCO, June 5, 2024 /PRNewswire/ -- Racially
diverse, all-female startup founding teams spent the longest time
fundraising in 2023 at an average of 25 weeks — a 75%
increase year-over-year (YoY) — raising the least money of all
demographics, an average of $460K.
Although all demographics raised less in 2023 than years prior,
underrepresented founders faced the most adversity.
The fifth annual Funding Divide report, "Turned Down in the
Downturn: Funding Gap Grows for Underrepresented Founders,"
measures and analyzes fundraising success and effort from startup
founding teams of all demographics, and is published by DocSend, a
secure document-sharing platform and Dropbox (NASDAQ: DBX)
company.
All startups held fewer investor meetings over longer
fundraising rounds to raise less money compared to 2022, during the
slowest year for VC funding since 2018, but the losses suffered
were disproportionate. All-female teams with minority members had
the biggest drop in investor meetings YoY and earned 43% less
capital than the highest group.
VC Deck Attention Shifts with Less Money to Go
Around
Investor pitch deck total review time averages just
2.5 minutes. Slide-by-slide attention from investors varies greatly
amongst teams of different demographics.
In 2023, VCs spent 66% more time on all-female team sections
compared to all-male team slides. VCs also spent the most time on
minority teams' team slides — 20% more than all-white teams.
"In 2021, underrepresented founders experienced a relative
increase in funding and positive momentum in bridging the funding
gap," said Justin Izzo, senior data
and trends analyst at Dropbox DocSend. "But with less money overall
to go around, this trend was short-lived. The pendulum swung even
further back as VCs cautiously invested in decks that easily
resonated. Investors are missing opportunities for outsized returns
from underrepresented founders and less familiar ideas. Pattern
matching as a form of de-risking has an opportunity cost."
The fundraising goals section stood out in 2023 for all genders
as one of the most viewed sections. This section has not
significantly held VC attention in the past, but in a tighter
economy, investors are analyzing fundraising asks more closely when
making decisions. VCs spent 60% more time YoY on all-male teams'
fundraising goals sections in 2023, and all-male teams also raised
more money on average than all-female teams. VCs spent 14% less
time YoY on the fundraising goals section for all-female teams.
Whether or not a team had minority team members, the business
model slide was among the most scrutinized by investors. Still,
diverse teams received 29% less time on their business model
sections than all-white teams.
All-Female Teams Work Harder for Less
Fundraising
times lengthened as investor meetings decreased in 2023. All-female
teams with minorities spent the longest time fundraising at 25
weeks, followed by all-white female teams at 21 weeks. These
increases are over 50% longer than those experienced by other
demographics. All-male teams without minorities spent the least
time fundraising at 17 weeks.
All-female teams with minority members had the biggest drop
(-36%) in investor meetings YoY but still raised the most dollars
per meeting, an average of $21.9K.
Diverse all-male teams were the only demographic that saw a YoY
increase from 48 to 50 investor meetings held from 2022-2023.
"Fundraising is rarely a quick process, especially for
underrepresented founders," said Victoria
Yampolsky, president and founder of The Startup Station.
"Despite increasing challenges, all-female teams continue to show
unparalleled determination and resourcefulness. It's more than just
fundraising, though: utilize your existing network while you build
a new one, apply to an accelerator, enter a pitch contest and
attend startup conferences. Above all, believe in yourself, your
ability to raise money and your mission. Having an unwavering will
to persevere, and open-mindedness to try all available resources
can make the difference between success and failure."
Methodology
The report, The Funding Divide 2024, is
the fifth annual analysis of how founder team demographics, like
gender and race, can affect the productivity and success of their
early-stage startup fundraising. DocSend gathered data by surveying
over 200 startups at the pre-seed and seed stage and analyzed pitch
decks slide-by-slide to understand how VCs scrutinized pitch decks
across 2022. The team compositions covered in the analysis are:
- All-male, no minority
- All-female, no minority
- Mixed-gender, no minority
- All-male, has minority
- All-female, has minority
- Mixed-gender, no minority
About DocSend
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feedback. With DocSend's security and control, startup founders,
investors, executives, and business development professionals can
build business partnerships that have a lasting impact. 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
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