Looking to Raise?
You might be wondering - is now a good time to be thinking about your next round of funding? Dragon Argent take a brief look at funding conditions in the wake of COVID-19.
Current Activity Levels
Crunchbase shows a total 521 recorded raises in the UK for Q2 of 2020.
This ranges from pre-seed to Series A, with total investment of over £1B. Compared to the same period in 2019 (a record-breaking quarter), this is a drop of 69%.
While this may seem like a negative outlook, it doesn’t mean there isn’t funding available in the market and historically, the first half of 2020 was still up on the same period in 2018 by more than a billion dollars. Additionally, investments into the UK market were more than double that of Germany, the next highest European market.
There has been a focus on follow-on investing, with investors supporting existing startups to weather the storm, rather than quite as many new rounds as we’d normally see.
Angel Investors
The Angel Investment Network are reporting increased focus from Angels on sustainable investment since COVID struck. Whilst there is still angel investment available, it is being directed towards startups offering sustainable solutions, powered by tech.
Most commonly used search terms on the Angel Investment Network platform are telling, with Greentech, Medtech and Agtech trending in the first half of 2020. If your startup operates in this space, its likely there are angels who would be interested in your proposition.
Venture Capital
VCs have access to capital that had been committed to funds prior to COVID-19, and they are required to invest it. Longer term we might see less money coming into VCs as institutions tighten their belts, which means businesses looking to raise are better off doing so sooner rather than later – providing they are investor ready.
If you are looking for VC investment, you may find the window of opportunity is closing before a period of less certainty kicks in.
Crowdfunding
Crowdcube are reporting positive results for Q2, with 59 businesses funded, 9% up on Q1 and a 16% increase on the same period in 2019. They also saw the amount invested increase by 25% versus Q1 2020.
These results were across a mix of raises from startup to later stage, with 7 companies raising over £1million. Raises were sector agnostic and covered everything from financial service products to new TV channels and sporting goods.
With a bullish Crowdfunding investment market, using the remainder of the summer to prep for an autumn raise makes a lot of sense – if you get your preparation right, you can run a smooth raise and ensure you have required funds to bolster 2021 planning.
We hope this short summary proves informative if you are thinking about your next raise and if you need any advice on preparing for a funding round, please contact us.