Startups are engaging VCs earlier than ever, but investors keep raising the bar for pre-seed funding. This report says these 9 milestones are "must-haves" for young startups.

DocSend

DocSend CEO Russ Heddleston

• DocSend, a cloud-based document sharing startup, released a report Tuesday that revealed what can make or break a pitch deck for early-stage startups.
• The report found that pre-seed funding rounds have gained popularity and influence among startups and investors, but the stakes are higher for both groups as the round becomes a must-have for many companies.
• In a study of 174 pre-seed startups seeking funding, DocSend found that 9 milestones indicated whether or not a company would successfully raise funding.
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Venture capitalists have been pumping billions of dollars into startups over the last five years. Those startups are staying private longer, and investor returns are looking bigger and better by the day.

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The biggest windfalls, however, don't necessarily come when a startup goes public or gets acquired. Those that make it big tend to be investors who wrote the company's first check. In 2014, that was commonly called a seed round. Founders had little more than an idea and a PowerPoint, and investors wrote modest checks to see what the team could produce with a small amount of funding.

Fast forward to 2020, and conventional wisdom is all but thrown out the window. A new report out Tuesday from DocSend, a cloud-based document sharing startup that specializes in things like pitch decks, found that institutional venture capital is trickling down into pre-seed funding rounds that often come in the earliest days of a company.

"Pre-seed isn't the new seed," DocSend CEO Russ Heddleston told Business Insider. "We are seeing that, for a particular range of companies, there is a logical range of money you need if you aren't wealthy enough to prove out the metrics to prove out the company. It's a formalization of the angel round."

The report looked at pitch decks of 174 startups that self-identified as pre-seed stage and sent pitch decks to investors via DocSend. The startup's software tracks how many times an investor opened the files, how long they spend reading the deck, and which parts of the deck they spent the most time reviewing.

These are the 9 key milestones DocSend found could make or break a startup in the earliest days.