On Tuesday, Durham VC firm Front Porch Venture Partners released its first-ever Southeast Startup Founder Pulse Survey. The project was designed as a “first-of-its-kind, founder-side companion” to the firm’s existing Southeast VC Pulse Survey, which has produced multiple releases over a two-year span.
Where the latter has asked questions of investors concerning their latest views on the region from the capital side, the new survey is designed to delve into founder perspectives.
“We always knew that the funder perspective would just be half the conversation,” said Joe Mancini, Co-Founder and General Partner at Front Porch. “So we decided to ask startup founders a version of the same questions that we asked VCs.”
We’d encourage anyone interested to click over to the full survey right here. It’s a thorough report with a lot of interesting details to parse through.
Below, meanwhile, you can find some information on the survey fundamentals, a few key takeaways, and additional perspective from Mancini.
Fundamentals of the survey
Mancini explained that mechanically, the Founder Pulse Survey worked similarly to the VC Survey. The firm asked questions on a scale of 1-5 and assured respondents—in this case, founders—that all replies would remain anonymous.
Questions were devised based on the existing VC Survey, with subjects pertaining to both sides (Mancini pointed to macro outlook, AI, talent, and the general capital environment as examples) left in place so that the two reports could be read and interpreted in conjunction.
Where existing items were more investor-specific, the firm swapped in new questions relevant to founders’ experiences—touching on subjects like runway, the experience of pitching, and what partnering with an investor is like once a round closes.
The main difference between this and the VC Survey, Mancini said, was the free text. “Founders wrote at far greater length than investors did, and those responses ended up carrying the report.”
Ultimately, 16 questions were posed to each of 72 founders across nine states.
Some key takeaways from the survey
While we won’t aim to summarize the entire survey here, there are several clear takeaways that, together, provide an overarching sense of the findings:
- On founder confidence—in what they’re building and in their investor partnerships
- Perhaps unsurprisingly, the survey found that founders see strong potential for what they’re building; 88% of respondents scored a prompt about growth and revenue potential being “significantly better” for the next 12 months as a 4 or 5 (out of 5).
- Founders who have successfully raised also indicated a high degree of satisfaction with investor partnerships. As Mancini put it: “Founders who have raised from regional investors report not just confidence in their business, but in their investor partnerships as well.”
- That said, founders who have not yet closed an institutional round report feeling “a bit lost” and “frustrated.”
- On founder sentiment toward the broader regional environment
- While founders were bullish on revenue and growth potential (average rating 86.5/100), they were less enthusiastic to varying degrees concerning their read on the Southeast ecosystem (61.8) and their ability to raise on fair terms (50.7).
- Mancini summarized, “Southeast founders have high conviction in their business, are guarded on the environment, and genuinely split on capital.”
- On what founders want to see more of from investors
- In a word, clarity. Within the Capital Markets Experience Index (one portion of the report), founders scored three components under 50/100: the experience of pitching, the fairness and competitiveness of valuation and terms, and—at a notably low 36.4—the speed and transparency of the process.
- Regarding low scores for the pitching experience, Mancini said, “One of the most actionable asks from founders given this experience is simply more clarity from VCs in the region on their investment process and timeline, check size, and usual terms.”
- Mancini added, more broadly, “The ask from founders regarding clarity on VC investment processes isn’t really that hard to answer. Funders in the survey weren’t asking anyone to change their underwriting expectations or write checks they don’t want to write.” But, he said, three things came up repeatedly: “First, publish entry criteria alongside your stage label, so a founder can self-select in or out. Second, commit to a decision timeline and hold it. And third, give a better sense for how decisions are made.”
- (Mancini also noted that many VCs are very open with their criteria)
- On positive sentiments toward the region
- Founders remarked on the fairness of the Southeast region, citing investors’ willingness to recommend more fitting partners or recognize opportunities specific to building in this area.
- Mancini said this sentiment “might be the most encouraging thing in the data,” noting that these types of replies came unprompted and concerned various investors across the region.
- “One founder who came from Silicon Valley said the difference in the Southeast is that a pass here usually arrives with a referral, and that the referrals have been thoughtful and valuable,” Mancini recalled. “Another said physical proximity got their local investors to price in what building in that metro is actually worth. That generosity is real and we’d push VCs including ourselves not to lose this mentality with founders and other investors even as the regional ecosystem continues to grow rapidly.”
- On negative sentiments toward the region
- Some founders indicated a need to raise elsewhere, even if they continue building their companies in the Southeast.
- Founders also spoke in various ways to the slowness of discovery and connection, suggesting that relationships—to investors, between founders, or with potential collaborators—can be slow to come by. (Editor’s note: They should read GrepBeat!)
Is there a single prevailing impression?
A report of this nature really shouldn’t be narrowed down to any one takeaway. (Once again, you’re encouraged to delve into the full thing!) With that said, the survey broadly conveys that founders are confident in what they’re building, happy with investor partnerships when they have them, and frustrated by processes and access when they don’t.
None of those are particularly unexpected notes. But maybe more surprising, as Mancini identified, is that, “The divide [between founders and funders] seemed smaller than we had expected coming into the survey and that closing it, where it exists, doesn’t feel that hard.”
Will this be the first Founder Pulse Survey of many?
It appears that’s the plan.
This survey was conducted in August, and Front Porch’s goal moving forward is to produce subsequent versions each fall (with the VC Survey releasing in the spring). The approach will be adjusted as needed based on feedback from founders, and Mancini implied that beginning with year two, there will be some opportunity to identify and assess trends.
He also noted that for year two, they plan to add a “recognition question,” inviting respondents to name people and programs that have helped them build. This echoes a change that was made for the latest edition of the VC Survey.
But for now, the first edition is available for your perusal and filled with interesting insights (well beyond what you saw summarized here!) into founder sentiment across the region.
