If you're looking for investment for your startup or scaleup business in 2020, here are some important trends to consider in the year ahead.
1. Angel investors alone are unlikely to get you fully-funded
Many angel investors have matured to the point where they're no longer putting large amounts of money into a select group of investments, but instead are spreading their risk wide by putting much smaller amounts into many investments. It's not uncommon now for the average angel investor to put between £5k-10k into a credible business. This means that if you want to raise a round of £200k you may need an average of 20 investors to get there, and some 3-6 months of legwork.
The general trend is to have a blended approach with a few angel investors and a small fund, and then leverage that onto an equity crowdfunding platform where many of these smaller investors operate.
Due to the changing size and nature of investments from angel investors, a more recent trend is to have an open-ended funding round rather than big "raise events" such as seed stage, early stage, series A and B rounds etc.
SeedLegals, the UK's largest legal platform for startups, is one of the pioneers of “agile funding”. This article by CEO and co-founder Anthony Rose explains why agile funding is likely to be the future of startup investment, and how it’s already transforming the way startups are building and growing their businesses.
In the year ahead it may be a good idea to make investor relations an ongoing priority for your business so that you're able to nurture your existing investor community, but can also establish a continuous pipeline of new investors which you can tap into for support as your business develops.
3. The rise of equity crowdfunding
Equity crowdfunding has been growing over the past several years. Many thought it was a fad or just a short-term trend, but it continues to surge in popularity. The World Bank predicts that investment crowdfunding may be worth up to US$96 billion a year by the year 2025.
Importantly, an estimated 50% of current crowdfunding investments come from professional investors and institutional investors who trust equity crowdfunding platforms such as Crowdcube and Seedrs. So when looking to raise investment for the year ahead, it's worth utilising these powerful crowdfunding platforms for your own business.
There are other emerging trends that will make it much easier to finance your next stage of growth. Join us this month to learn the latest approaches to attracting the right investors.
You can fight the tide and swim upstream, or ride the wave of these new techniques for raising capital and enjoy a prosperous New Year!
Paul & The Funding Game team.
P.S. If you'd like to create some real momentum for your startup or scaleup business in 2020, join me and angel investor Colin Coghlan at the British Library’s Business & IP Centre on Friday, 24th January for 'How to Attract the Right Investors' – our popular half-day workshop that will put you on the fast track to funding. Other dates available.