Female and minority founders experienced fewer
investor meetings and increased startup scrutiny in 2022, as 2021
optimism fades
SAN
FRANCISCO, May 23, 2023 /PRNewswire/ -- DocSend, a
secure document-sharing platform and Dropbox (NASDAQ: DBX) company,
today released a report showing funding opportunities for minority
and all-female teams in 2022 were disproportionately challenging
compared to all-male and/or all-white founder teams. That data
indicates although historically underrepresented startup teams saw
improved investor engagement in 2021, they did not see the same
progress carry over in 2022. In tighter economic conditions,
all-female teams with no minorities had the most meetings in the
least amount of time, raising less money – with 17% more investor
meetings and 48% drop in the amount raised.
Female and minority founders experienced
fewer investor meetings and increased scrutiny in 2022, as 2021
optimism fades
The fourth annual Funding Divide report shows VCs gave fewer
dollars and inconsistent attentiveness to all female teams and
female teams with minority members in 2022, following a year of
positive momentum for underrepresented founders. All teams saw a
steep decline in VC spending, but the cutback inconsistently
affected the amount of time women and minority groups spent
fundraising, as well as the number of meetings held and funding
dollar amounts.
New data shows that all-female teams with minority members were
the only demographic not to exceed $1M per raise. Founding teams of mixed-gender and
racial diversity raised 33% less money on average in 2022 than
mixed-gendered all-white teams, returning to data figures similar
to 2020. Previous DocSend data indicates an increase in funds
devoted to underrepresented founders in 2021, following 2020 United
States activist movements and a greater attentiveness to economic
inequalities when reports show a 7,000% increase in donations to
black-owned businesses.
"With economic headwinds causing an overall decline in VC
spending, we saw the pendulum effect of VC behavior reverting back
to data points we saw in 2020," shared Justin Izzo, senior data and trends analyst.
"Although there is dry powder to be spent, deal-making is met with
caution in the current economy with VCs less likely to spend money
outside of their comfort zone. Although all founders suffered in
opportunity, all-female teams and teams with minority members
received disproportionately more scrutiny but disproportionately
less funding."
VCs deck scrutiny reveals contrasting bottom lines
Investor pitch deck slide-by-slide scrutiny varies greatly
amongst teams of different demographics. In 2022, VCs spent 125%
more time analyzing the team section for all-female teams, whereas
they spent the least amount of time on the team slide for all-male
founding groups.
The business model and market size slides had large
discrepancies for both gender and race. Investors spent the most
time scrutinizing the business model sections for all-female teams,
averaging 45% more time on this section than for all-male teams.
Investors spent 67% more time on the market size slides for teams
with minority members compared to all-white teams.
"By spending more time analyzing a team's business model, market
or team structure, the investors are trying to learn more about an
area they know less about or are most skeptical of ahead of funding
decisions," shared Iynna Halilou, early-stage investing associate
at Moxxie Ventures. "When investors spend more time scrutinizing
these sections it shows that many funding teams lack knowledge of
diverse markets and may be less inclined to fully trust teams with
diverse members."
Competitive fundraising landscape for minority women
Key findings from investor diligence on early-stage founder
teams include:
- Teams of all females with minorities saw a 50% decline in
meetings held year-over-year in 2022
- Minority teams with mixed gender makeup had the longest time
spent in funding rounds, averaging 4 weeks longer than in 2021
-
- Mixed-gendered minority teams spent the most weeks fundraising,
averaging 20 weeks to meet fundraising goals
- Underrepresented founders saw the fewest dollars raised per
meeting
-
- All-female teams raised the lowest average of dollars per
meeting, receiving about $14,259 per
meeting
- All-male teams averaged $25,000
per meeting
The report, The Funding Divide 2023, is the fourth 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.
Media Contact:
Carol
Boyko
104 West for DocSend
carol.boyko@104west.com
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