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DocSend Report Shows Funding Gap Widens, Underrepresented Founders Hit Hardest by the Venture Slowdown

Racially diverse, all-female startup founding teams spent the longest time fundraising in 2023 at an average of 25 weeks — a 75 percent 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.
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.

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 percent less capital than the highest group.

Funding underrepresented founders

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 percent 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 percent 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 percent more time YoY on all-male teams’ fundraising goals sections in 2023. All-male teams also raised more money on average than all-female teams. VCs spent 14 percent 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 percent 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 percent 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 percent) 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

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. 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.

Read more about challenging the funding gap in Speak Out: All Raise Boston Amplifies Our Voices.

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