Russ is co-founder and CEO of DocSend. Previously, he was a product manager at Facebook, where he arrived through the acquisition of his startup Pursuit.com, and held positions at Dropbox, Greystripe and Trulia. Follow him here: @rheddleston and @docsend
Other contributions from this contributor
- Perhaps now is the perfect time to rethink your fundraising approach
- What can you expect when you set up European VCs?
Nobody wants it to prepare for their donation round to fail. Many founders spend months (or even years) getting their companies to the point where they're ready to attract investors. But there are times when, no matter how hard you try, you simply won't be able to make a deal.
With the current COVID-19 pandemic, the entire VC community is in a state of uncertainty and there is no clear answer to the question: "Can I still collect donations for my company?" However, there is hope for early stage startups. We used the DocSend Startup Index 2020 to track investor pitch deck interest and found that pitch deck interest was only 11.6% lower than last week despite seismic changes across the country the same week in 2019.
We will be monitoring the Pitch Deck Interest Metric in the coming weeks. However, if you are an early stage startup and are planning an increase, there is still the option to create a term sheet. But if things don't go as planned, how do you know if it's time to give up or if you just have to assert yourself?
According to the latest DocSend data, you'll know pretty quickly if it's time to quit. While the average founder who successfully raised donations contacted 63 investors during the process, startups that couldn't raise funds stopped at 27. Why stop Because the founder listened to the feedback they received. If you hear the same concern or feedback twice, you should take it to heart, but if you hear it three times, you probably have to stop and think things over.
According to our study on the fundraising process of pre-seed startups, founders whose education was unsuccessful only had nine meetings. That should give you enough feedback to know if you have a deal breaker in your deck.
However, negative feedback does not mean that everything is lost. In fact, 86% of the startups surveyed in the DocSend Startup Index 2020 said they would try to collect donations again after receiving the feedback they received.