The first questions we received in the early days of the pandemic were all about what was on the horizon for start-up funding. Anecdotic reports of “misbehaviour” from some investors were luckily contradicted by wider surveys – as well as our first-hand experience – that most VCs are still open for business.
However, Funding Rounds as we know it are not going to be much of an option for a few months, as investors re-assess the market and in-person meetings prove harder to arrange.
There is a very solid alternative: the route of crowdfunding – especially for early-stage companies – could provide much needed financial support, as opposed to institutional investment.
Our partner Seedrs recently reported a snapshot of the activity data on their platform, which paints a very encouraging picture.
According to the activity data, the Seedrs platform has seen very little fluctuation on the demand side, as investment per campaign only a minor drop in the week prior to the start of lockdown.
The bigger change as an effect of the pandemic was actually a steep drop on the supply side, with 45% fewer active campaigns on the website in the three weeks starting 12 March 2020, compared to the prior three.
As Founders and CEOs redirected their attention towards more urgent contingency planning, many campaigns due to start then were delayed to April.
From March 30, reports Seedrs, metrics returned to their usual levels, with particular interest from the investors’ side. Weekly total investment measured in April more than doubled the same period in 2019.
As everyone in the venture funding sector moved online, investors showed unprecedented levels of engagement with Seedrs’ content and events, such as digital pitching events counting upwards of 700 investors registered.
Interestingly, Seedrs reports that an increase on the supply-side of their platform most often result in an increase in total funding available, outweighing the dilution resulting from more opportunities available.
Among our clients, we witnessed some success stories first-hand, with remarkable companies such as EnvoPAP smashing their target and closing their Funding Round just short of £400k on crowdfunding platform Crowdcube.
In the words of Seedrs Chief Investment Officer Kirstie Grant:
“The Seedrs platform and its investor community has proven itself to be resilient to some of the macroeconomic uncertainties of previous months. While we are still far from the finish line of the COVID-19 pandemic and potential further economic uncertainty, we are seeing promising signs within both the startup ecosystem and investor communities.”