Despite sustained interest in AI startups and glimmers of optimism in early-stage valuations, seed funding has continued to drop off in 2023. Seed founders who have managed to secure funding in 2023 have focused on the timeliness of their idea, and investors have responded positively to pitch decks that show recipes for success in the uncertain market and current events. 

Our 2022-23 report shows that although staple deck sections like Product and Business Model remain important, investors have sharpened their focus on sections like Competition and Why now? that speak directly to the current market environment. In addition to these changes in VC scrutiny, fundraising success also varies by demographic and geographic factors.

As VC scrutiny increases and fundraising competition remains fierce, how can early-stage founders thrive in times of uncertainty and rapid change? Here are some key insights from our research to help founders capture VC attention and navigate a successful raise:

Keys to success for seed rounds in 2023

• Cut through the gloom: why are you a good investment today?
  • VCs spent 65% more time on Why now? sections in 2023
  • Successful seed companies foregrounded the Why now? section more prominently than companies that didn’t get funded
• Address your competition head-on
  • Discerning investors gave extra scrutiny to the Competition section in a crowded seed market
  • Traction in a crowded field matters: VCs spent 33% more time on Traction slides and 88% more time on Competition slides in 2023
• Build a tight process, but prepare for the long haul
  • Seed founders contacted more investors but had fewer meetings in 2023 vs. 2022

Download our 2022-23 seed report to get the full scoop into how today’s fundraising climate has changed, and how to adjust your fundraising strategy and pitch deck for maximum success.

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With risk aversion driving VC funding decisions, founders need to sharpen their storytelling and demonstrate traction to instill confidence in VCs and stand out. 

Keep reading: 3 pitch deck changes that make VCs pay closer attention

To succeed in this hyper-competitive landscape, early stage founders need to rethink their approach to the achilles heel of the entire fundraising journey: the pitch deck. 

Here are some key insights from our latest research to give founders a leg up: 

Shift from growth to profitability to minimize risk

VCs lean in on traction, business model, and financials sections in 2023.

Roadmap your product’s path to long-term success

Successful pre-seed companies linked their product and business model sections at the start of their decks, showing how monetization flows from their unique solution.

Show how your traction and monetization plans are integrated

VCs gave more scrutiny to business model and traction sections in decks that didn’t get funded.

Avoid elaborate pre-seed competition sections

Competition section had the biggest year-over-year drop in investor scrutiny.

As investor engagement remains flat in 2023, early stage founders can expect VCs to spend less time than ever reviewing their pitch decks. Your narrative and order of slides—with fewer words saying more—is key.

Given many VCs’ interest in startups’ paths to profitability, highlighting up front how a business model emerges organically from the product may be a winning tactic for pre-seed founders.

Timeliness is also important for pre-seed companies: successful decks put their Why now? Sections at the front of their decks whereas unsuccessful ones buried theirs in the middle.

The successful pitch deck flow

Demonstrate value in your team slide

The team slide is a must-have, no matter what stage you’re at. In early stages, VCs are investing in the teams as much as they are in the business idea, so making a strong impression here is key.

Focus less on big market numbers (and more on the approach behind them)

The market size section outlines your current business conditions and future growth potential. VCs shared that numbers in these sections matter a lot less than the approach a founder took to get to them. Clearly outlining the rationale behind market calculations is an especially important part of establishing trust with investors at the early stages. 

Reviewing your business model section? Say more with less 

Your business model section gives investors a clear understanding of how your company will make money by summing up your monetization plan and go-to-market strategy. Show how you’re going to make money and why you went with the business model you did. But, keep it brief and simple. You want investors to quickly understand how you’re going to make money, so use charts and graphs as helpful ways to explain the flow of money between who’s selling and buying. 

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How to structure a compelling pitch deck is crucial to a successful raise. As the fundraising landscape becomes increasingly competitive, data from our 2023 pre-seed report shows that busy VCs have even less time to look at every pitch deck sent their way. This means founders are under the gun to build engaging decks that quickly command attention from investors amid noisy, crowded markets. Startup founders need to show product readiness at earlier stages, and position their companies with a competitive edge. Even though no two pitch decks will ever look the same, we’ve found that successful startup pitch decks all organize their narratives into a clear and compelling story.

You can also see exactly how your deck stacks up with our Pitch Deck Analyzer tool, or download our free pitch deck template to create yours in minutes.

Tracking investor engagement with your pitch deck

You’ve created a compelling, well-organized pitch deck presentation. You’ve run it through DocSend’s Pitch Deck Analyzer tool with great results. Now, you’re ready to present your pitch deck to investors. Sending out an investor pitch deck is never easy, but having visibility into exactly how investors are engaging with your startup pitch deck shows you exactly where you can improve and add clarity or context.

Actively tracking investor engagement with your pitch deck is essential to a successful raise. It’s frustrating, and common, for founders to hear a lot of ‘no’s’, or even worse, mixed messages, during the fundraising process. If you want to avoid spending much of your fundraising period in an abyss of uncertainty, send your pitch with DocSend.

DocSend’s detailed analytics reveal exactly how VCs  interact with your pitch deck, empowering you to identify which investors are actually interested and craft more impactful follow-up conversations. Instantly see who has viewed each page, when, how many times, and whether your pitch deck was forwarded to anyone else. Actively tracking investor engagement lets you apply what you learn to optimize your pitch deck to give investors exactly the information they want and help increase your chances of getting funded.

Here’s how to use DocSend to track investor engagement and create the most compelling pitch deck possible.

Step one: Upload your startup pitch deck directly to DocSend

Whatever draft of your pitch deck you’re on, start off by uploading it to DocSend. Or, download our done-for-you pitch deck template to save tons of time.

Once you’ve uploaded your pitch deck, you can adjust the name and other document attributes as necessary until it’s presentation-ready.

Step two: Send your pitch deck as a DocSend link

You’ll probably send your startup pitch deck to a few dozen investors, and in order to properly track investor engagement, it’s best to use unique DocSend links for each one. To make this easier, you can install the DocSend plugin for either Gmail or Outlook to send out your pitch deck. Unique links will ensure that you can monitor investor engagement and activity and toggle access on an investor-by-investor basis.

When creating a link to your pitch deck in DocSend, specify the appropriate Account Name (in this case, the name of the firm to which you’ll be sending this deck). You can select from an array of security parameters as needed. The security parameters you select will be applied to the pitch deck on a link-by-link basis. For example, you can gate, password protect, or set a link expiration date for each link. You can even require viewer verification for some investors while enabling or disabling downloading for others.

Pro tip: If you’re set on tracking investor engagement with your pitch deck, disabling the download option when creating a link to your pitch deck is a good idea. If an investor asks you to enable the downloading option, you can always just switch on the ability to allow downloading within their link.

Step three: Invite other users as admin guests

By clicking the User Settings tab and selecting “Add Users,” you can invite other users, such as advisors, as admin guests. These users will automatically have access to the stats and materials they need, and you won’t need to consistently share access or send update summary emails.

If the time comes to remove a user, you can click here to learn how to remove (and, if necessary, reactivate!) an admin guest.

Step four: Optimize your investor pitch deck with analytics

Once you send out your pitch decks with the links you’ve created, you’ll be able to see which investors/VC firms have been engaging with your pitch deck and where they have spent the most time. Here’s what you can track with DocSend, and how to apply those insights to prioritize investor communication.

Who’s actually engaging with your content

During fundraising, new investors can enter the conversation unexpectedly. Knowing who’s actually taking the time to view your shared content is a critical step to strategic investor follow-up. 

Pro tip: Enable the “require email to view” feature to see who your content has been shared with.

How long viewers spend looking at your content

Analyzing how long an investor spends engaging with your content can give you a better gauge of their interest level. You can use this engagement data to prioritize investor outreach during your fundraising process. If an investor is repeatedly accessing your pitch deck and sharing it with his or her colleagues, that investor is likely much more interested than an investor who has never opened your deck.

Which pages are viewed the longest

Measuring time spent per page gives you a clear line of sight into where investors choose to spend their time and what they prioritize. This insight can be used in a variety of ways, such as prepping for a second conversation with a VC who’s looking closely at your business model slide. 

Who’s watching (and rewatching) your videos

Creating a compelling video pitch can be a great way to capture investor attention in less time. With our Dropbox Capture integration, you can record and upload your video in just a few clicks. After you send your video pitch to investors, start using DocSend’s video analytics to optimize your video. You can track:

• Playback time per visit
• Playback percentage per visit
• Playback details during a visit, including pauses, rewinds, and skipped sections of content
• Number of visits to your video file
• The average percent of your video that visitors viewed
• A visit map, providing insight on where your viewers are located

You can also view aggregate viewership stats for multiple versions of your video, to see the most common drop- off points. You can use this intel to eliminate areas of friction or confusion—sharing higher-quality videos that capture investor attention in less time.

There are many helpful ways to use the data you get from tracking investor engagement with your pitch deck. Look at where in your deck investors are bouncing, as well as where they spend more or less time, to optimize your deck for future rounds. With our pitch deck template, you can cross-check these areas with quantitatively-backed best practices in pitch deck creation.

Step five: Version control with DocSend

If you do ultimately decide to make changes, it’s easy to update your pitch deck directly in DocSend. Every link you’ve sent will be automatically updated—no need to send an apologetic email with an updated version of your investor pitch.

You’ll then have access to real-time quantifiable indications of whether a new version of your deck is outperforming the current version of your deck.

Then you can identify which investors viewed the original version of the deck to guide your follow-up process. You can use this data to prioritize investor outreach with pitch deck engagement as a gauge of each investor’s interest.

Step six: Turn off access for investors who say no

Any startup founder will tell you that hearing “no” from investors is more common than hearing “yes.” So when you hear a “no” from a venture capitalist, you can simply disable the link you sent them. All other links will stay fully functional—only investors with disabled links will lose access to your pitch deck.

To disable a link, click the toggle located near the link settings—this will immediately remove viewing access to all recipients. You can also delete a link by accessing the link settings, which will delete all associated visitor data. Since deleted links remove viewing data and are unretrievable, we recommend disabling content instead of deleting whenever possible. Alternatively, you could set the shared link to your startup pitch deck to expire after a specified time period.

Step seven: Respond to investor interest with DocSend Data Rooms

If you have a meeting with an investor and they for additional info, create a Data Room and upload all the relevant assets to it. Relevant assets can include spreadsheets, web links, additional decks, and any other files you have to share. You can customize the Data Room for that specific investor with a personalized viewing experience.

If interest wanes, just turn off access to a Data Room like you would turn off access to a DocSend link. But if interest results in a successful round of fundraising, you can (and should) celebrate!

If you get multiple indications of interest from different investors or VCs, you can duplicate the Data Room you’ve created. Creating a unique Data Room for each interested VC firm lets you restrict access for any investors that don’t pan out. Plus, you can personalize the content you provide to each VC firm. This is helpful if a firm requests a specific document or piece of information.

Use these tips to create a compelling pitch deck on your own, or copy/paste directly from our downloadable, done-for-you pitch deck template. Don’t have a DocSend account? Sign up for a free trial today.

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Market seasonality invites cautious optimism

Quarter-over-quarter investor activity rose by just under 1%. An uptick, albeit slight, isn’t typically expected during the summer months. In the short-term, this shows reason for mild optimism: the increase in VC activity signals that from a demand point of view, investors have been gearing up for the fall rush. 

For the past year and a half, founder activity has been steadily on the rise. This trend continued over the last few months, with founder links seeing a 2% increase, QoQ. Given founder activity levels and the fact that it’s been an investor’s market for some time now, this 2% uptick isn’t especially significant. 

However, the fact that there was an increase in founder and investor activity during the summer months, which are typically quieter, indicates that we may see more activity over the next few weeks, just in time for the seasonal fall rush. However, this year’s ffall rush for investors may be less notable than in previous years. Spikes we’ve seen in previous years may be tempered this year by macroeconomic trends, such as recent news that interest rates will remain higher for longer. 

In the short term, the case for cautious optimism remains. Even if these expected seasonal movements end up being softer than in years past, the very fact that we’re seeing seasonality at all is a sign of relative health in the fundraising marketplace.

2023 vs 2021 analysis reveal a competitive landscape for founders

The longer-term perspective complicates this picture. On the one hand, VC activity in Q3 is down less than 2% year-over-year, which is less than one might have feared given the macro volatility we’ve seen so far this year. Further, it’s encouraging that demand for decks is down less than 4% from 2021 levels in a much hotter fundraising market. 

The YoY increases in founder activity indicate just how much of an investor’s market it is right now: founder activity is up nearly 9% year-over-year and nearly 16% compared to 2021. Although investor activity isn’t down sharply from the hot market of 2021, these two numbers have to be taken together to really understand what the market looks like:  investor activity isn’t significantly down, but founder activity has increased by 16%. This leaves the current market very much in VCs’ favor. Founders are sending out more and more  pitch decks, but investors aren’t looking at them very closely. 

One key takeaway is that even though VC activity isn’t falling too far behind its previous benchmarks, the fact that founder activity continues to heat up means the marketplace will stay extremely tight for founders and tilted toward investors (who may still not be eager to cut checks, anyway).

Looking ahead: macro-economic trends continue to create an investors’ market

What do these takeaways suggest from a forward-looking perspective? At first glance, it might seem like deal volume would be poised to pick up, given the beginning of the fall rush, the Q-Q uptick in investor activity, and the continued high volume of founder decks in the marketplace. However, macro news coming right at the end of Q3 might end up giving investors pause: interest rates that will stay higher for longer are now being priced into equities, and this may dampen private investors’ enthusiasm somewhat through Q4 and into Q1 2024. 

These macroeconomic factors will have a big impact on tech and VCs for the foreseeable future. Despite the cause for short-term optimism, there are still storm clouds indicating that we may see muted versions of past years’  VC behavior patterns going forward. 

DocSend releases quarterly data analyses via our Pitch Deck Interest metrics to track and predict the investment landscape, informing founders of volatility or stability in the venture capital environment.

Key Leading Indicators of Fundraising Activity

There are three core metrics DocSend analyzes to track investors’ hunger for deals and founders’ quest for capital.

• Founder links created – the average number of pitch deck links each founder is creating via DocSend. This serves as a proxy for the supply of startups seeking funding. A “link” refers to the unique URL a founder creates using DocSend to share their pitch deck with investors. When the average number of links increases, it means that founders are sending their decks out to more investors.
• Investor deck interactions – the average number of investor interactions for each pitch deck link. This serves as a proxy for demand for investments. The higher the interaction metric, the more often decks are viewed, shared, and revisited by potential investors. 

Investor time spent – the average time spent per pitch deck by potential investors. This metric offers a look at how long VCs are spending reviewing deals. More time spent per deck could mean investors are more closely scrutinizing deals.

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Except almost as fast as you can pop that bottle, it’s time to be accountable to the people who put their faith in you. As the post-raise glow fades away, what’s revealed underneath is a pressure to spend the money you raised and communicate your decisions to your new bosses: your board of directors and your investors. 

The transition from rogue innovator to accountable business owner can be tough, but it doesn’t have to be. Here are three tips to make sure you have a soft post-raise landing:

1. Personalize consistent communication with your investors and board members

Now is the time to brush up on your communication skills, specifically for investor updates and board meetings. In a survey of 870+ founders, 60% of them said they send investor reports on a monthly basis, and seed investment firm NFX agrees this is a “sweet spot.” 

Here are some best practices to help you brush up on your communication skills:

1. Personalize your emails to investors: It might take a bit more time, but your investors will appreciate a personal email addressed to them rather than a blanket bcc to everyone. Every time you send an update, provide information tailored to their investments or interests. Send your personalized reports via a secure link so you can track whether they’ve opened and read the update.
2. Commit to consistency to soften future bad news: Consistent communication with investors can provide a buffer for bad news during times of crisis. As Erik Berg, investment analyst at Rev1 Ventures, puts it: “Developing a regular cadence with your updates will take a lot of the punch out of anything that is less than perfect. An email received after not hearing from a founder for 6 months saying that a company missed one of their revenue milestones…seems like a catastrophe.” Bad news as part of a regular update, on the other hand, is a launching off point for solutions.
3. Use document analytics to improve communication: You deserve to know who’s actually reading your investor updates—so you can improve them in the future. Document tracking tells you which investors are viewing your update, for how long, which slides and tabs they’re lingering on, etc. You can’t improve what you don’t measure, and paying attention to communication metrics like these can help you build stronger relationships earlier.

2. Spend money based on a plan, not pressure

After a raise, founders can feel a lot of pressure to spend that money quickly on hiring. If you’re still in the early stages, you’ll likely need to hire a chief operating officer if you don’t have one already, but beyond this key hire, it can be tough to quiet the pressure to hire more people without a solid plan, just because you have the money to do it.

David Kenney, corporate advisor and Sydney director of Startup Grind, says “spending priorities always depend on how early stage you are” and encourages founders to ask three questions before they make key resource decisions:

• Is my product ready?
• Are there things I need to build before I can monetize my product?
• Do I know what kind of customers I want to attract?

When you make hiring decisions based on product goals and/or customer goals, you’ll have a solid rationale to educate people who don’t know your business as well as you do.

3. Send more information than you communicate at your board meeting

Three things will make your board meetings run more smoothly:

1. Send detailed material ahead of time: Send a detailed board pack two or three days before your board meeting. It should include financials, any big news, updates from across the business—and more detail than what you’ll actually share at the board meeting. When your board members feel informed with details ahead of the meeting, you can use precious meeting time for ideation and decision making instead of getting stuck in the weeds.
2. Call each board member to discuss what’s coming: If you’re new to having a board and you’re still working out the quirks of your relationships, follow up on your board material with a phone call. Quick conversations can help you anticipate what’s coming, including questions and sticking points that should be addressed up front.
3. Use document analytics to anticipate questions: Similar to your investor report, document analytics can let you know in advance where people spent the most time on your board pack. If you notice people lingering on any slide in particular, you’ll be able to better anticipate questions.

Want a head start on your most important post-raise action items? Download our board meeting minutes template and our investor report template to start your relationships on the right note.

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But what if you’re a founder with a great idea and not much of a network? Where do you start, if not with cold leads and an email template that removes the intimidation of a blank screen? This is what you’ll learn here, so you can skip some of the trial-and-error of investor outreach and raise your round faster.

	Do	Don’t
Perform soft outreach before active fundraising
Stack-rank your outreach list of investors
Show the investor why you chose them
Use meaningful signals in your outreach
Use bullet points in your outreach emails
Mistake fluff for a positive signal
Only go after the big checks
Forget a clear call to action

Investor outreach do’s

Do start outreach before you start outreach

Nathaniel Jewell, founder & CEO of Recess.tv, begins “unofficially” fundraising about three months before he really starts fundraising.

“During this unofficial period,” he says, “I’ll get intros and reach out to the VCs on my list. I tell them that I’d like to meet with them and talk about what we’re doing but that we’re not currently fundraising. The soft raise is all about building relationships: these meetings are a great way to show me which VCs are a personality match.”

Do stack-rank your outreach list of investors

Not all investors are potential investors in your company. You’ll want to come up with your own ranking system for VCs, either based on geography, investment thesis, prestige, LinkedIn network overlap, etc. 

When you’ve ranked your investors, we recommend sending outreach in waves:

1. Wave one: Potential investors you know well, like family members, previous managers and colleagues, and other close connections. Ask them for honest feedback on your pitch deck you can implement for the next two waves.
2. Wave two: People who can lead the round and act as a real-world litmus test for how investors outside of your close network will react to your pitch.
3. Wave three: The “best of the best” list of firms. You reach out to this wave when you’ve incorporated all earlier feedback on your pitch. Hopefully at this stage you’ll also be able to show these big firms that you already have some momentum.

Note: When you send your pitch deck, Nathaniel Jewell recommends uploading it to DocSend to create a secure link and password for each firm. Restrict download access to prevent firms from creating a PDF of the deck, which strips it of the performance analytics you’ll need to improve it for future rounds.

Do show the investor why you chose them

Investors want to know why you want to work with them specifically, for reasons besides the paycheck. Mention companies in their portfolio that are similar to yours, both to show you did your research and to signal you’re not a risk. 

Do use meaningful signals in your outreach

Signals are words that get investors excited about you, your business model, and your product. Some examples of positive signals include:

• You’re an exited founder
• You already have term sheets from a certain fund (name them) 
• You’ve seen significant growth over a certain period of time (be specific)
• You have signed contracts, especially if they’re with big name companies (name them)
• You’re YC-backed

Do use bullet points in your outreach emails

Investors speed-read their emails. Develop bullet points that highlight words and numbers as positive signals. You may want to group your bullet points into three categories: team, product, and growth. 

Investor outreach don’ts

Don’t mistake fluff for a positive signal

You may think certain signals about your business carry depth, but Stéphane Nassa, cofounder of OpenVC, cautions against these “empty” signals that are red flags for investors:

• Mentioning a motivated team—this should be table stakes, and a mention of it may come off as fluffy 
• Mentioning conversations with funds or clients—everybody talks, and your conversations are not substantial enough to count as a signal
• Mockups, MVPs, and waitlists—these are no longer strong differentiators on their own, unless you have active users and user growth to go along with them

Don’t only go after the big checks

If you’re not starting with a large network, don’t overlook the small checks from friends and family. Sometimes the $1,000 checks bring $5,000 checks and those bring $10,000 checks, and so on.

When you view smaller checks as pathways to larger ones, you begin to realize your network is larger than you think. While much of your network won’t be able to invest $50,000, some can probably invest $1,000 or $2,000 and then bring in their uncle, their boss, their colleagues, etc. This is how you can maximize what might be a smaller network compared to other founders.

Don’t forget a clear call to action

Don’t spend so much time on the content of your email that you forget the most important part—a clear call to action. This is where you request a meeting with the investor, whether it’s a call or a face-to-face. 

Some founders prefer to send a Calendly link while others enjoy the cordial back-and-forth of scheduling—the issue is known to be divisive—but either way, make sure to set expectations about when you’d like to meet and for how long, so the investor knows you respect their time.

Want to make sure you’re constantly improving your pitch to investors? Track investor engagement with your pitch deck and securely share files with DocSend.

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Macroeconomic conditions continue to be challenging, and startup founders aiming to raise capital in 2023 face an uphill battle. The data shows that early-stage deals have been hit especially hard: year-over-year funding for these new startups dropped by about half in Q2 2023. Investors making pre-seed deals are focusing intently on long-term profitability over shorter-term growth, and startups at this earliest stage need to show a sustainable path to profitability, decreasing VCs’ investment risk. 

Our 2022-23 report shows that risk aversion is driving VC funding decisions, meaning that founders need to sharpen their storytelling and demonstrate traction to instill confidence in VCs and stand out. 

As investor activity wanes while fundraising competition remains fierce, how can pre-seed founders succeed in a hyper-competitive landscape? Here are some key insights and takeaways from our research to give founders a leg up: 

Pre-seed founders: How to succeed in fundraising

• Shift from growth to profitability to minimize risk
  • Our data shows VCs leaning in on traction, business model, and financials sections in 2023.
• Roadmap your product’s path to long-term success
  • Successful pre-seed companies linked their product and business model sections at the start of their decks, showing how monetization flows from their unique solution.
• Show how your traction and monetization plans are integrated
  • VCs gave more scrutiny to the business model and traction sections in decks that didn’t get funded. Be sure that you’re putting your business’ best foot forward here.
• Avoid elaborate pre-seed competition sections

The competition section saw the biggest year-over-year drop in investor scrutiny. Streamline your efforts on sections that investors care about more.

Download our 2022-23 pre-seed report to get the full scoop into how today’s fundraising climate has changed, and how to adjust your fundraising strategy and pitch deck for maximum success.

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When Marc Penkala initiated his investment fund, āltitude, in collaboration with Videesha Böckle and Ingo Drexlerr, he began with a straightforward question: What is the most challenging aspect of early-stage venture capital? His response: establishing improved and earlier access.

“The angel market in Europe is concentrated in informal networks,” Marc explains. “Consequently, I frequently come across similar deals repeatedly. For myself and my partners at āltitude, we generally invest with a select group of three to five individuals—our small, exclusive network makes it difficult for others to enter. That is precisely why we strive to democratize the long-tail angel segment of investing and tap into these informal networks for the benefit of others. It forms a mission-critical component of our sourcing strategy, as we combine collaborative investing with our lead ticket and follow-on investment approach.”

This necessity prompted āltitude to introduce Open Angel, enabling them to gain early access to deals they would otherwise remain unaware of. I conducted an interview with him to discuss how the model functions and how Limited Partners are responding to it.

How does Open Angel work?

When you’re a Series A investor searching for deals, you typically rely on platforms like PitchBook, Crunchbase, or other similar platforms to find seed investments. After six to nine months, you approach these startups to assess their progress. If you like what you see, you proceed with making an investment decision. The late Seed/Series A market is easily visible and accessible.

However, the process is different for pre-seed investors. In this case, access to informal networks becomes crucial to stay informed about potential deals and their timing. āltitude organizes the European venture capital ecosystem into layers and provides dealflow products like Open Angel (for Angels), Trojan (for VCs), or Maven (for Service Providers). Open Angel allows any angel investor to submit a deal as long as they personally invest a minimum of EUR 5,000. 

We evaluate the deal itself rather than its source. If it meets our criteria and investment thesis, we may invest EUR 100,000 through a trust agreement. The angel investor, however, retains the full carry of our initial investment. By operating discreetly, we avoid signaling risks for the startup and can present a term sheet before they start raising their next funding round.

Why do you think this kind of program is better than the regular scout programs that other funds do?

I wouldn’t necessarily claim that it’s better. We are simply observing a greater influx of unbiased and pre-qualified dealflow from informal networks. When we initially launched, we were inundated with 200 deals in just two weeks—far more than our anticipated 50. However, what we did notice was that the quality of these deals was remarkably high. This was likely because the individuals sending these deals had a personal stake in them; most of the angels were operators, entrepreneurs, or domain experts within specific industries.

Our aim is to find a middle ground and reconsider how deal flow is approached. It may sound disconcerting, but as a venture capitalist, you always expect entrepreneurs to be innovative, to bring forth novel ideas, and to think outside the box. However, having been involved in the VC world myself, I can confidently state that it is one of the most rigid asset classes in existence. Nobody wants to embrace change because you are constantly contending with a single factor: ensuring that the Limited Partners (LPs) approve of the model. If they fail to comprehend it, or if it appears too novel and risky, they question why you are attempting to reinvent the wheel, and they remain on the sidelines until you provide tangible evidence of success.

And what do your LPs think of your model?

Once we assemble the puzzle pieces of our model for them, everything falls into place, and they see the inherent logic in our approach. Our primary objective is to productize dealflow and focus on bridging the SME Tech gap in Europe, thereby creating improved and earlier access for investors.

Our dealflow strategy enables us to integrate collaborative investing with lead ticket investing. In today’s landscape, it’s not sufficient to possess intelligence and an exceptional track record alone. There is a demand for innovative and intelligent models that effectively address market inefficiencies. Thankfully, there are numerous exceptional fund managers available who meet these criteria.

How do you evaluate deals? And does this change when you move from angel investing to VC investing?

My personal investment thesis revolves around investing in people rather than solely focusing on the business model, especially during the pre-seed and seed stages. This is because a company is likely to undergo three to five iterations of its business model before achieving success. Instead of evaluating the business itself, I assess the individuals behind it to determine if they possess the ability to identify market changes and develop customer-centric solutions.

However, as a venture capitalist (VC), I am obligated to approach investments differently. In my role as a VC, I evaluate the market, verticals, and compare them against our thesis and criteria to determine their actual potential and terminal value. Our thesis is centered around addressing the SME Tech gap by focusing on the top ten challenges that SMEs are anticipated to face over the next decade. Our investments are directed towards automation and sustainability B2B software startups that enhance the efficiency, productivity, and profitability of SMEs.

Regarding our criteria, we seek out alpha entrepreneurs who possess specific domain expertise, as well as founding teams with complementary skill sets. These founders must demonstrate the ability to build customer-centric businesses, iterate rapidly, and persevere in the face of adversity.

To streamline our process, we have established a highly efficient pre-qualification structure for Open Angel. This structure allows us to assess deals and angels before delving into them ourselves, preventing us from being overwhelmed by excessive manual work.

What advice would you give to a new angel who wants to start finding deals in today’s economic climate? Where should they begin?

The first advice I would offer is to ensure that you have a diversified portfolio. It is crucial to spread your investments across 10, 15, or even 20 different ventures over a span of several years. Consider including fund investments in your portfolio, as well. Additionally, establish a rulebook for yourself: determine the amount you invest in a specific stage within a vertical that you have a solid understanding of. Don’t be swayed into a deal simply because another VC is involved—keep in mind that VCs are often more incorrect than correct. Don’t rely solely on them.

Furthermore, I strongly advise against going at it alone. Collaborate with others who can help you overcome confirmation bias. Fellow angels will often highlight flaws that you may be hesitant to acknowledge initially. Additionally, build a network of VCs who naturally serve as follow-on investors. In my opinion, every angel investor should cultivate a unique superpower, as money itself has become a commodity.

Lastly, it is essential to make a genuine effort to comprehend the actual economics of angel and VC investing. When you grasp the numbers and base your decisions on them, you will be better equipped to recognize what truly constitutes a good deal. Consequently, you will maximize your returns and leave less money on the table in the long run.

Learn how DocSend can help accelerate your fundraising efforts and give you x-ray vision into exactly how visitors are engaging with your shared content.

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Women-led teams have been hit especially hard by the downturn. With the release of DocSend’s 2023 Funding Divide report, we’re able to quantify this—in 2022, all-female teams raised 36% less than all-male teams, compared to 25% in 2021.

This backsliding isn’t just detrimental to women-led teams. It’s also not in the best interest of investors and the startup ecosystem as a whole. As investors prioritize profitability over unchecked growth, I argue that female founders are in the best position to deliver on this vision.

Women have always built self-sustaining engines of growth—because they had to

In today’s economic climate, it’s no longer acceptable to build businesses that require continuous injections of resources to survive. 

Investors want to put their money into businesses that have self-sustaining engines of growth. Additional capital should be an accelerant, not a requirement for growth. Sustainable and circular models are one of the best ways to achieve this.

Female founders are well positioned to capitalize on this opportunity. We’ve long been building self-sustaining businesses at much higher rates than other groups because we’ve had to. Access to capital for us typically has been much scarcer than it is for men.

Now, as funding rounds are taking longer for everyone—six months on average, compared to two or three months before—investors are finally insisting on the profitability that scrappier businesses tend to produce. I want investors to know that women have historically built businesses that can self-perpetuate because we haven’t been able to rely on the same kinds of investments that all-male teams have taken for granted. 

In my experience, it’s extremely difficult for women to raise any funding  unless their business has a quick path to profitability or is already profitable. We are more than used to the added scrutiny in our go-to-market strategies, business models, and pricing strategies—which, as new data reveals, is a volume dial cranked to its maximum for women-led teams.

Added scrutiny isn’t new for women-led startups

If male founders feel more scrutinized this year, I’d invite them to commiserate with female founders, who have typically fielded more questions and more due diligence during their fundraising rounds. 

According to DocSend’s 2023 Funding Divide report, in 2022 investors spent 45% more time scrutinizing the business model sections for all-female pitch decks than for all-male decks. They also spent 125% more time on the team section for all-female teams, 50% more time on the traction sections, and 41% more time on the market size section. 

This added scrutiny is happening at a time when all-female teams are raising less than any other group (and when these teams are minority women, the numbers become even more embarrassing), so it’s not as if the extra time on decks is leading to more money.

These numbers are shocking, but they’re not surprising. It’s also why in our investment readiness program, we’ve been recommending that founders start their raises much earlier and have longer runways. Before, when fundraising happened more quickly, I’d tell founders that a 15-month runway is fine. Now I’m recommending 18 months minimum.

I’ve always advised women to go into investor meetings extremely prepared. It’s not fair, but as women, we’ve always had to be twice as prepared as men. Here’s what this looks like:

1. Women spend more time evaluating their business critically. They ask others to evaluate their business, so they can eliminate any blind spots or gaps. Then they need to successfully address those gaps in their pitch decks. 
2. Women face more pressure to make sure their pitch is sharp, well-rehearsed, and iterative.
3. Women don’t have the luxury of focusing too much on their product during their pitch. Instead I advise them to think of their product as frosting, and their business as the cake.

Business as cake, product as frosting

It’s not that the product isn’t important during the pitch process for women-led startups—it’s just that it’s more important for female founders to make sure that their business pieces are aligned when funds are scarce.

This means highlighting unit economics during a pitch. Investors love numbers, and I advise women-led teams to really show the traction behind their business. The smartest founders know how to tell a story with numbers.

While investors do invest based on product, they really invest based on market opportunity, and the execution of that market opportunity. That execution is made up of the team, the go-to-market strategy, and the business model. And the reality is that the landscape is just more competitive now, and founders really have to do an outstanding job to stand out. 

So know your numbers well, exude confidence, and you’ll put yourself in a good position. It’s a long game, and it takes a lot of patience to succeed, especially for women-led teams. 

Learn more about the funding discrepancies that still exist in 2023: Download the 2023 Funding Divide report.

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Investors need solid evidence before they can commit to an investment. Even when they love your product or service, they’ll need to review documentation that proves your company will generate a return.

If you haven’t put in the effort to organize your due diligence documents, you could be jeopardizing your raise. Even if you’re not actively fundraising, you’ll need organized due diligence documents if you get hit with a surprise audit or legal action you didn’t anticipate.

This is why it’s so important to invest the time in preparing the right due diligence documents, all stored in one secure location. Keep reading to find out exactly what you need for a complete package of due diligence documents, from the financial to the legal.

What are due diligence documents?

Due diligence documents are the financial, legal, and operational documents reviewed to evaluate the viability of a business before an acquisition, merger, or investment. A team of experts will review due diligence documents as one of the last steps before finalizing a deal. 

Standard due diligence documents are often grouped into five categories: corporate governance, financial, legal, asset, and intellectual property. As an “anchor document,” your balance sheet also provides an overview of what your company owns and owes so investors or buyers can get a good sense of potential return on investment. 

Corporate governance due diligence documents

Corporate governance documents show investors how you govern and manage your company.

After reviewing corporate governance due diligence documents, investors should walk away with complete knowledge of your company’s policies and procedures, risk management processes, and compliance with legal and regulatory requirements. 

Here are five types of corporate governance due diligence documents you should collect:

1. Board minutes: Minutes help investors understand how your board oversees your company’s management, identifies risks, and makes strategic decisions. Board minutes also reveal any conflicts of interest or obstacles that could affect your company’s reputation or financial performance.
2. Corporate structure chart: Your corporate structure chart helps investors understand your company’s ownership and high-level functions like CFOs and CTOs, and their reporting lines, which is crucial for identifying important relationships and accountability.
3. Policies and procedures: Policies and procedures demonstrate how your company abides by laws and regulations, manages employee conduct, and mitigates operational risks. 
4. Employee documents: Employment agreements, benefits plans, and HR policies help investors assess your company’s workforce and any associated risks, like labor disputes or litigation.
5. Environmental documents: As climate regulation becomes more established, investors are beginning to expect companies to disclose their impact on the environment. This will mean a “disclosure of a registrant’s greenhouse gas emissions, which have become a commonly used metric to assess a registrant’s exposure to such risks. In addition, under the proposed rules, certain climate-related financial metrics would be required in a registrant’s audited financial statements.”

Financial due diligence documents

Financial documents inform investors about the financial health and performance of your company. 

After reviewing financial due diligence documents, investors should walk away with complete knowledge of your company’s profitability, liquidity, cash flow, and overall financial risk.

Here are six types of financial due diligence documents you should collect:

1. Financial statements: Investors need these as a snapshot of your company’s financial performance over a specific period of time, including revenue, expenses, assets, and liabilities. 
2. Tax returns: Investors and buyers assess tax returns to understand your company’s tax liabilities and compliance with tax laws and regulations. They use this information to evaluate any potential tax risks or liabilities associated with the business.
3. Accounts receivable and payable: These documents clarify outstanding debts and obligations to your suppliers and customers. Your investors will use these documents to evaluate your company’s cash flow and ability to manage working capital.
4. Capitalization table: Investors will want to know about existing shareholders and the number of shares outstanding, so they understand your company’s ownership and control structure and any potential conflicts of interest.
5. Financial projections: You’ll need to provide a sense of your company’s future financial performance, including revenue, expenses, and cash flow, so investors can use their own models to assess their validity and identify other areas of potential growth.
6. Audit reports: If you’ve done any independent assessments of your company’s financial statements by an external auditor, investors will want to compare these to their own evaluation models.

Legal due diligence documents

Legal documents inform investors of any legal risks associated with your business. After reviewing legal due diligence documents, investors should walk away with complete knowledge of the legal structure of your business, any potential legal liabilities, and your level of compliance with applicable laws and regulations.

Here are five types of financial due diligence documents you should collect:

1. Articles of Incorporation and bylaws: Documents like this clarify the legal structure of your company, including its governance structure, ownership, and management. 
2. Contracts and agreements: Investors want to know about any contractual obligations with customers, suppliers, employees, etc., so they can assess your company’s legal and financial obligations and any associated risks with your contractual relationships.
3. Litigation documents: If you have any ongoing or potential legal disputes, like lawsuits, arbitration, or regulatory investigations, investors want to know about these risks so they can at least have a plan to deal with them.
4. Compliance documents: You’ll need to demonstrate your company is compliant with applicable laws and regulations, like labor laws, environmental regulations, and data privacy laws. This will reveal any potential exposure to regulatory fines or penalties.
5. Permits and licenses: If you need certain permits and licenses to operate your business, investors will want to know you have them in the first place — but they could also help determine the value of your company’s regulatory licenses, which could apply to the deal.

Asset due diligence documents

While there may be some overlap between asset documents and financial/intellectual property documents, these are important for assessing the true value of your company. 

Here are four types of asset due diligence documents you should collect:

1. Real estate documents: Inclusive of your owned or leased real estate assets, real estate documents are titles, deeds, mortgages, and lease agreements. These documents help investors assess the value, condition, and legal status of your real estate assets.
2. Equipment and inventory documents: Inclusive of your company’s owned or leased equipment and inventory, equipment and inventory documents are purchase records, maintenance logs, and lease agreements. 
3. Intangible asset documents: Intangible assets are things like goodwill, brand reputation, and customer relationships. Any documents that demonstrate the potential value of these assets can influence the overall valuation of your company. 
4. Insurance documents: These documents are your insurance policies, including coverage limits and claims history. With these documents, investors can evaluate the adequacy of your insurance coverage and make recommendations on alternatives.

Intellectual property due diligence documents

You’ve worked hard to build your company, but it’s more than just equipment, office space, and people. Your ideas are a part of your company, too, and they require legal protection.

Intellectual property documents prove ownership of your ideas, which influences the value of your business. Here are six types of intellectual property due diligence documents you should collect:

1. Patents: Your company’s patents, including their legal status, scope of protection, and any potential infringement risks, help investors evaluate the value and risks associated with your company’s patent portfolio.
2. Trademarks: Whether they’re existing trademarks or pending trademark applications, include these documents to help investors assess their existing or potential value, in addition to any risk of infringement claims.
3. Copyrights: Your registered copyrights and any pending copyright applications inform investors of the value and scope of your company’s copyright portfolio.
4. Trade secrets: Investors will need to see any confidential or proprietary information, like customer lists, algorithms, or processes. Your investors will be able to advise on the protection of your trade secrets based on any risks they identify based on their experience.
5. Licenses: Your licensed intellectual property, including any license agreements or royalty arrangements, will help investors determine their value and scope.
6. Domain names: Your domain names for your main brand and any subrands are a form of intellectual property, too, so don’t forget to include these as part of your package.

Balance sheet due diligence document

Your balance sheet is one of the most important documents you can provide investors during a raise.

When you give investors a balance sheet during the due diligence process, you’re giving them an overview of the current state of your company’s finances. While your balance sheet doesn’t demonstrate projections or past trends, it does answer the question, “What is the financial health of this business right now?”
To answer that question, the balance sheet weighs assets against liabilities and shareholder value. This includes:

1. Assets: Cash on hand, accounts receivable, property, inventory, 
2. Liabilities: Debt, wages, accounts payable, deferred taxes 
3. Shareholder equity: Total assets minus total liabilities, meaning the amount that would go to shareholders after all debts are settled

The balance sheet takes these values and demonstrates the overall health of the business with this formula:

Assets = Liabilities + Shareholder equity 

Assets should always be equal to liabilities and shareholder equity, because the company has paid for what it owns either by borrowing money or taking it from investors. If the balance sheet doesn’t balance, there’s been an error and the numbers need to be re-examined. 

Investors like to see a balance sheet so they can assess debt-to-equity ratio, which is a company’s total liabilities compared to its shareholder equity. This lets investors know how much your company is reliant on debt — the higher the ratio, the more risky the investment. But at the same time, if your ratio is too low, it could mean your company isn’t taking on enough debt to invest in the future of the business. 

Overall, the balance sheet is a great way to communicate the health of your business in the short term. With a balance sheet, investors will understand whether or not you have enough cash on hand to fulfill short term obligations — which will be your starting point for growth if you investor decides to go ahead with the deal.

A better way to compile due diligence documents

When your due diligence documents are in one secure database, you’ll be saving time for yourself and for your investors. With DocSend’s virtual data rooms, you’ll be sending investors one single link to access all the due diligence documents they need.

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