James Littmann, January, 2024
There’s no doubt that 2023 faced one of the hardest landscapes in equity crowdfunding that we’ve ever seen. Globally seed funding was down over 20% - around $2bn less went into seed stage businesses. And funding into early stages businesses was even more cautious - dropping 30% in the last quarter.
With ongoing conflicts in Ukraine and the Middle East putting increasing pressure on energy costs and UK interest rates at their highest level since 2019, you couldn’t be blamed for asking: “Is it all doom and gloom for 2024”?
It would be disingenuous to say there haven’t been better times for raising capital, but that does not mean that you should be putting your fundraising goals on hold.
By their natures, founders are a resilient bunch. There’s a plethora of hugely successful businesses which were started over the years in the bleakest of economic times - take Sage Group, JD Sports and PureGym to name a few.
Data shows that pairing a realistic valuation with the right messaging, can still lead to good conversion - but it’s never been more important to get these elements right.
Another trend we’ve witnessed is a significant increase in the amount of time it takes to fill a round. A new pattern is emerging where instead of companies undertaking periodic rounds, fundraising is now an ongoing concern for many founders.
So instead of putting your fundraising goals on hold, just follow some simple tips to adjust to the current environment:
Be realistic about your valuation - giving up more equity is better than hitting a brick wall.
Raise earlier and accept it will take longer and occupy more of your capacity.
Think more strategically and split your round - maybe even it into phases.
Get your messaging right and hit the right emotional and rational hot buttons to set yourself apart from the competition and increase the likelihood of conversion.
Make sure that you maximise alternative funding options - Grants, R&D Credits, non-dilutive funding etc.
In 2023 we successfully helped founders buck market trends and achieve their fundraising goals. In 2024, at TribeFirst, we remain fully committed to taking the heavy lifting out of the process to enable founders to balance funding requirements with running the other aspects of their business.
If you have questions about your fundraising goals in 2024 - don’t hesitate to get in touch so we can advise you how best to achieve them.
