The 2022 Early Stage Startup Capital Report is Now Available!

At the end of 2021, Chisos released a public survey of founders, investors, and operators to learn more about the landscape of early stage startup capital. The results of this survey were revealing. 

Our research shows that it’s difficult for founders to access capital, and difficult for investors to access quality deal flow.

Today, we’re diving into the details of our research in this blog. You can also download the full 2022 Early Stage Startup Capital Report for free.

About Our Early Stage Startup Capital Survey

We were motivated to launch this startup capital survey because we perceived a gap in the data available about early stage fundraising, from both the investor and the founder perspective. It’s hard to make good decisions without good data. This lack of insight, especially at the earliest stages, presents strategic challenges for entrepreneurs, as well as startup investors who struggle to source, evaluate, and fund early stage companies.

This is one of the largest, most accessible surveys of the early stage fundraising experience that we’ve seen so far.

In this survey, we gathered data from hundreds of individual and institutional investors, entrepreneurs, aspiring entrepreneurs, and investor-operators. After reviewing the responses to remove likely spam and invalid email addresses, we were left with just over 250 unique responses. 

Our goal was to begin to understand how the experience of fundraising was perceived by different participants in the market. The results paint a fairly clear picture - and clearly point to the need for innovation in funding at the earliest stages of startup growth.

We plan to conduct this survey again in Q4 of 2022, next time with a slightly different focus. (Make sure you’re subscribed to Chisos to make sure you’re part of the next survey!)

Challenges in Accessing Startup Capital Persist

Entrepreneurs struggle to access startup capital, particularly at the earliest stages. 

Founders rated the difficulty of raising capital at almost a 6 on a scale of 10. Unsurprisingly, first-time founders perceived fundraising to be more difficult, rating it at a 6.5 out of 10.

This difficulty was even more pronounced among certain business models.

The data is somewhat consistent with the conventional wisdom that VCs favor SaaS, Marketplaces, FinTech business models because they're built to more quickly scale and therefore project more desirable returns.

Founders building great projects in difficult arenas may be more likely to face rejection from traditional VC funds.

While investing in more of the same might prove beneficial for venture capitalists, it leaves the majority of founders behind, discouraged about their ability to access capital, and forced to turn elsewhere for funding. But where?

This is where alternative startup capital options fit in. They're a good option for founders who don't fit the mold, particularly when other options simply aren't available.

This is just a quick overview of a few key data points. Download the full report here.

Startup Investors Struggle to Access Quality Opportunities, Too

There’s no shortage of entrepreneurial endeavors seeking funding. Unfortunately, investors face challenges when trying to find those quality deals.

In fact, investors reported the difficulty of finding quality deals at about 7.2 out of 10. This is higher than the difficulty of fundraising that was reported by entrepreneurs.

More than 80% of investors we surveyed said that it’s at least somewhat difficult to find quality opportunities. 

There are both short- and long-term implications to would-be investors’ challenges with investing in startups. Startups are the backbone of the American economy, but without access to capital, they’ll struggle to grow. Even investors with the ability and desire to back founders may struggle to do so.

Increasing an investor’s ability to access startup deal flow has positive impacts, too.

More investors means more points of view evaluating startups and their founders. This can, in turn, lead to a more inclusive and diverse startup ecosystem with more individuals able to participate.

Innovation in the early stage funding space needs to consider access to startup capital for investors and founders.

How Chisos Improves Access to Startup Deal Flow for Investors and Startup Capital for Entrepreneurs

Here at Chisos, we’re solving for two key values: impact, and innovation. In essence, we are designing new investment approaches that serve the needs of both entrepreneurs and investors.

Forget what you know about startup capital.

Chisos developed a revolutionary approach to startup capital called the Convertible Income Share Agreement. It blends elements of a SAFE with an ISA to provide radically flexible and accessible capital, while aligning incentives between investors and founders. 

We focus on serving both founders and investors. Why? Because our co-founders are entrepreneurs and seasoned investors. The CISA is a considered solution to challenges they've experienced personally. Our approach is different, for a reason.

For founders, we offer:

• A new approach to funding that’s a clear departure from the traditional - and restrictive - capital options that have traditionally been available.
• Access to funding, even at the earliest stages: idea, pre-seed, and pre-traction.

For investors, we offer:

• The opportunity to invest in a fund that has exposure to a high volume of startup deals.
• An investment that provides downside protection, quarterly cash flow yield and upside equity exposure. 
• Exposure to a high-impact portfolio of founders working to improve their communities, the environment, and society.
• A community of high-potential founders to whom you can provide mentorship, and a network of other experienced investors and advisors.
• Access to an investor syndicate for follow-on opportunities.

Plus, a self-service investment portal for accredited investors to learn more about the opportunity.

The time to innovate in the startup capital space is now.

With creativity, intention, and drive, the Chisos team is working to build pathways for more founders and more investors to participate. Learn more about our CISA approach.

Or, download the complete report, The 2022 Early Stage Startup Capital Report.