New Report on Startup Fundraising in a Pandemic: Optimism is High, But Runways are Short
Startup Founders Forced to Accelerate, Pivot Fundraising Strategies in Volatile Market Conditions
DocSend, a secure document sharing platform, released a report exploring how startup founders are navigating the new realities of early-stage fundraising as a result of the recent economic downturn. Of the 250 startup founders in its customer community that were surveyed, most appeared optimistic about their business prospects, yet more than half (55%) of those actively fundraising said they have less than six months of runway at their current funding levels.
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The report, DocSend Startup Index: The COVID Impact, provides a snapshot from April 2020 and uncovers the make-or-break decisions startup founders are being forced to make to adapt to the COVID-19 pandemic and shifting global circumstances. These decisions range from modifying company valuations and fundraising timelines to reducing headcount and operational costs.
According to the report, 65% of fundraising startups report that they are either maintaining (38%) or growing (27%) their business — an optimistic and positive outlook in the face of a pandemic and market downturn. Sixty percent of non-fundraising startups reported the same confident outlook. But the report also points out a stark reality — only nine percent of fundraising startups say they have more than a year of runway with current funding.
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In spite of the short runways, 64% of fundraising startups have not changed their target valuations. But half (50%) of founders actively fundraising said that they have shifted the timing of their fundraising pursuits due to current market conditions.
In some cases, the pandemic is creating new demand opportunities for startups — 40% of fundraising founders and 33% of non-fundraising founders said the current economic climate has accelerated their product release timeline because they have seen increased demand for their products or products .
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