Want a Pre-seed Check? You Better Have a Product Ready
It was not long ago that having a brilliant idea or even a "pre-idea" was sufficient enough to get someone to write you a pre-seed check. Those were the days. Now, according to an analysis released Tuesday of 174 pre-seed companies, founders have to be much more prepared when they're pitching investors.
"The pre-seed round is now more formalized, and investor expectations of pre-seed startups are changing," said Russ Heddleston, co-founder and CEO of DocSend, which released the analysis, in a prepared statement. "Institutional investors are moving downstream and establishing pre-seed funds, and they're bringing their sophisticated and rigorous investment approach with them."
Here are key findings from the report:
- The average amount raised in the U.S. during a pre-seed round is $500,188
- 92% of companies with successful pitch decks in the pre-seed round had either an alpha, beta, or shipping product. This is in contrast with the unsuccessful pitch decks analyzed, where only 68% of companies presented the same type of product readiness
- The average pre-seed pitch deck length is 20 pages.
- Investors spend an average of 3 minutes, 21 seconds reviewing a deck
- Investors spend nearly 50% more time on the product slides in successful pitch decks and over 18% longer on the business model in unsuccessful pitch decks
- Contacting more investors and holding more meetings doesn't yield better results for fundraising in the pre-seed round. The average fundraising round for pre-seed startups lasts 20.5 weeks with an average of 63 investors contacted, which garners 32 investor meetings for successful startups
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The popular podcast mobile app Breaker will get a second life in Los Angeles.
Three-year-old Maple Media will use Breaker - the 10th most-downloaded podcast app on iOS in 2020 - to help amplify its podcasting presence.
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The new year is continuing where 2020 left off, with more L.A. venture firms raising big funds.
Santa Monica-based March Capital announced Thursday it has closed its third fund, a $450 million vehicle to double down on the firm's focus on enterprise software companies in artificial intelligence, industrial technology, cybersecurity, financial technology and cloud infrastructure.
Even a raging pandemic and sagging economy could not slow down startupland, which set new records for deal value, exit value and capital raised.
Investors deployed $156.2 billion into startups, liquidated $290.1 billion of value via exits and closed on $73.6 billion in traditional VC funds, according to the PitchBook-NVCA Venture Monitor released Thursday, which is jointly produced by PitchBook and the National Venture Capital Association (NVCA). Firms are starting this year with $152 billion in dry powder at their disposal.
"The unprecedented macro events of 2020 did not deter the overall VC industry, which reached another banner year across the venture cycle," said Bobby Franklin, president and chief executive of NVCA, in a prepared statement.
At least one out of every 10 venture investment dollars flowed through Los Angeles, which continued to demonstrate its heft as a tech hub, trailing only the Bay Area in total deal value. That was tied with New York, but whereas that city saw a 16.9% decline in deal value, Los Angeles saw a 38.9% increase.
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