The ‘oh no’ spike, and how the 2020 election could affect startup fundraising
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The ‘oh no’ spike, and how the 2020 election could affect startup fundraising

Protocol Pipeline

Hello and welcome to Pipeline. We're 10 days out from the presidential election, so this week, we're taking a look how the election could affect startup funding, Expensify's email to vote for Biden, and the TikTok duets you should watch if you need a break from politics.

Also, join us on Wednesday for our event on the future of TV. Protocol's Janko Roettgers will moderate a panel with Tubi CEO Farhad Massoudi, Cinedigm President Erick Opeka, Wurl CEO Sean Doherty and CBS News Interactive GM Christy Tanner on whether cord-cutting has reached a tipping point in 2020. It'll be a blast. Sign up here.


  • "For the first time in 20 years, I'm confident that no one will ever ask me again what it was like to run engineering at,"tweeted Quibi's (now-former) Chief Product Officer Tony Conrad after the short-form video platform announced it was shutting down. There are plenty of hot take tweets (and there are defenders), but it's not a failure you should blame on Silicon Valley, my colleague Shakeel Hashim argued. If you need a pick-me-up, though, Jeffrey Katzenberg told his staff as they lost their jobs to listen to "Get back up again" from the "Trolls" movie.
  • "Expensify depends on a functioning society and economy; not many expense reports get filed during a civil war," Expensify's CEO David Barrett wrote when he emailed millions of Expensify customers to tell them to vote for Biden to protect democracy. I spoke to him on Thursday night as the presidential debate started about why he chose to send the email. The result is a look into Expensify's flat structure, the Slack rooms to regulate discourse and the team of volunteers now tasked with responding to the hundreds of responses. "This wasn't just me firing off an email out of the blue," Barrett said.
  • The ghost of startups' past. It's always weird when startups shut down, then have their parts sold and come back from the dead. (Just take a look at my former company Gigaom now in 2020). This week, it's the rebirth of Munchery, the high-profile food delivery company that shut down in 2019 and is now back as a recipe website. I guess we'll see what the rebirth of Quibi is a few years down the road.
  • "What's your TAM?" "Anyone with blood." Turner Novak posted a TikTok mocking a VC's behavior in a pitch and asked people to duet it with their own startup pitches. The results have been hilarious, from fake companies like Instaslap to consumer social apps with a TAM of everyone to, my favorite, a Theranos impression.

Biz on Biz

How three election scenarios could change the fundraising landscape

Anyone else look up and realize we're now just 10 days away from the election? I'm glad it's not just me. Right now founders and investors are having the same realization, and we're in the middle of the "oh no" spike, said DocSend's co-founder and CEO, Russ Heddleston.

Unlike in 2016, when the election results caught a lot of investors and startup founders off guard, startups and venture capitalists have already begun to realize that it's time to get out and fundraise before the election. DocSend is seeing a spike in the number of pitch decks being sent out and investor response in engaging with them. And while founders are wisely getting out ahead of the chaos, here's what Heddleston believes will happen depending on the election outcomes.

Election scenario #1: It's a contested election and we don't know the results.

  • Likely outcome: It's "pencils down" for a while, Heddleston said.
  • Any controversy or uncertainty around the election will likely be a major shock to the system, similar to what happened at the start of the pandemic. "Founders weren't sending decks, investors weren't looking at decks. No one was doing anything," he said. He expects similar behavior until the election is resolved.
  • The uncertainty around the uncertainty is likely why DocSend is already seeing that "oh no" spike in fundraising to get out ahead of it. "As a founder, if I am cash out in February, I should probably raise now, or even if I was cash out next summer, I might want to raise now in case there's uncertainty," Heddleston said.
  • But if you're a founder whose business could be affected by Trump or Biden policy decisions, you may already be out of luck trying to raise. "If you're a company where the outcome of the election is going to be a big factor in you being successful or not, you're already not in a spot where you're investable," he said.

Election scenario #2: Trump is reelected and there's no administration change.

  • Likely outcome: Fundraising follows a normal pattern in 2021, including a typical peak in March at the end of Q1.
  • Four more years of Trump will likely not cause as much of a disruption to the funding landscape. Normally, there's a rush at the end of the year to close deals, although it may be less of a jump since there's already been a lift in funding deals, Heddleston said.
  • March tends to be when the next wave of funding comes in, although Heddleston said investors engage a lot with pitch decks in January and February when things are slower.

Election scenario #3: Biden wins and there's an administration change.

  • Likely outcome: It follows the pattern DocSend saw after the 2016 election where it slows way down and takes much longer into 2021 to recover, skipping the rise in March.
  • "What we saw in 2016 was there was a big drop-off in fundraising after," Heddleston said. "In Q4 2016, the numbers went way down, and they stayed way down. It just did not recover in the beginning of the year."
  • Instead of the boost in March, funding activity on DocSend at the start of 2017 remained depressed and ramped up later in the year, Heddleston said. So if there's an administration change, he believes there could be a repeat where there's a slowdown during the change of power and things start gaining momentum when it feels more stable again.

Already it's harder to fundraise with investors spending less time on pitch decks than ever before. But when it comes to Biden vs. Trump, "if you're a founder, you're kind of gambling [with]: Will I be able to raise in March or not," he said.



Join Janko Roettgers on Wednesday at noon ET to answer the question: Has TV reached a tipping point? You will hear from industry experts including Tubi founder and CEO Farhad Massoudi, Cinedigm President Erick Opeka, Wurl CEO Sean Doherty and CBS News Digital EVP and GM Christy Tanner. The event is presented by Roku.

RSVP here.

Inside Track

  • IDEO design lead Ben Syverson asked AI tool GPT-3 to brainstorm some new ideas for a money-saving app. It came up with some truly wild ones, like "have 'clowns' jump out of ATMs, making it less fun to withdraw money," and a few more practical ones, but it definitely changed the rules of brainstorming.
  • Scott Galloway argues that Airbnb will be the most valuable hospitality firm in the world next year or "AirbnbBaller," as he calls it. But that falls into the trap of comparing Airbnb to hotels — two businesses with very different economics and roles in the travel market, wrote Skift analyst Seth Borkoin a counterpoint.
  • Picking a co-founder means you should often go for someone who is complementary to you, but figuring out what that means in practice is hard. Greylock's Reid Hoffman interviewed Entrepreneur First's Alice Bentnick and Matt Clifford on what successful co-founder dynamics actually look like.

Need to Know

  • Google's antitrust case is a big deal, but it may not be a win for startups. Gary Reback, the lawyer who helped take down Microsoft for the DOJ, told Protocol's Emily Birnbaum that he's skeptical the Google case could lead to significant benefits for startups until the government decides on particular remedies.
  • Founder-led companies are winning the markets this year. One argument for being founder-friendly? It may lead to better returns. A Reuters analysis found that "major founder-led tech firms have seen their share prices double so far this year, comfortably beating a 7.8% gain for the S&P 500 index."
  • Nextdoor plans to go public, as Facebook plans to destroy it. Maybe they no longer use phrases like "copy" to talk about challengers, but Facebook is reportedly launching a new neighbor-focused social network that sounds like it's a direct challenge to Nextdoor. Meanwhile, add Nextdoor to your list of IPO candidates, according to Bloomberg.
  • Making moves: Product Hunt changes CEOs. Ryan Hoover started Product Hunt seven years ago as an email newsletter, and now he's synonymous as being the "Product Hunt guy." But he's handing over the reins to someone else: angel investor Josh Buckley.
  • NEA is considering selling a stake. Bloomberg reported that the storied firm may sell a minority stake, following the lead of firms like General Catalyst.
  • From Protocol: With door-to-door canvassing largely out of the question, volunteers are organizing and canvassing on Zoom. It's exhausting, and it's working.
  • This week in VC history: Remember Ello? Six years ago it raised $5.5 million for its ad-free social network that had millions on the waiting list.
  • And your weekend reading: Messaging app Signal evolved from a niche app used by the security-obsessed to becoming part of pop culture and a tool for activists to organize protests. Its founder Moxie Marlinspike is private about his own life, too, which makes this New Yorker profile a fascinating read into Marlinspike's plans for Signal: "In a sense, I feel like Signal is just trying to bring normality to the Internet."

Five Questions With...

FirstMark's Beth Ferreira

The former COO of Fab and an early Etsy employee, Beth Ferreira now invests in consumer companies as a partner. She led investments in Glossier, Daily Harvest and MasterClass while at WME and has invested in companies like Skylar, Tommy Johns and Justworks for FirstMark.

What product or service are you totally, even irrationally, loyal to?

Dunkin' Donuts; use the app every day. Simple, fast and convenient and a liquid cup of New England.

What's a secret obsession of yours that most people don't know about?

DIY home projects. I am constantly coming up with new ideas, from making pillows to stenciling walls, that are generally done in the middle of the night.

What's your favorite piece of advice to give to first-time founders?

There are three jobs of CEO/founder: 1) Keep the vision of the business. 2) Keep the company capitalized. 3) Hire and retain exceptional talent.

What problem do you want to see a startup solve?

I would like to see someone really solve the huge wealth knowledge gap, from managing student loans to mortgages and buying your first home to estate planning.

What's the strangest way you've ever been pitched? And did it work?

Back in 2001, a singing telegram. It did get them a short meeting, but didn't get them an investment.

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