Published 21 March 2018 Category: Entrepreneurs, SMEs, Startups, Business, Fundraising

Fundraising For Your Startup

2018 is shaping up to be an awesome year for startup founders or those that have yet to take the journey into starting a business.

Over the last three years (2014 to 2017), the funding ecosystem for early stage founders have been high in dollar amounts and low in the number of deals that were being funded. VCs were more interested in maintaining their positions and helping their current portfolio companies stay afloat longer by investing more money into them versus adding new companies to their portfolio.

This had a big impact on upstream investors (Angels and Pre-Seed Stage folks). One of the questions early stage investors ask themselves when reviewing a deal is whether or not the company will be able to secure additional funding from later stage investors. They do this because they believe that fundraising is an essential building block for early stage companies.

In the last several years, the slowdown in the later stage VC community triggered a slow down for early stage investors and seed stage deals took a hit. That is all changing.

The StartUp ecosystem is diversifying (or at least providing founders with alternatives to VCs).

The bullish economy is already here. More money in the market mixed with tax cuts and less regulations is having a major impact on founders that have been idle in bringing their ideas to market.

Public Tech Companies want to grow
The appetite for acquisitions - If you aren’t planning on taking your venture public, the other path to a significant liquidity event is through selling your venture to a bigger player and right now you are just in luck. The purchasing power of publicly traded companies have swelled and in the tech segment, purchasing power is at $30B. This is enough money to acquire 30 unicorns. Here’s how that breaks down.
Publicly traded tech companies (not including Google/Amazon/Facebook) have grown their cash reserves by 20X over the last ten years and haven’t been too acquisitive with that dough.

Newly Minted Millionaires  
The global millionaire count is growing. The biggest driver of growth is an overall uptick in global wealth. Strong Markets, liquidation events and newly opened markets will help mint 4.5M new millionaires by 2021.

Facebook alone created 1,000 new millionaires, many of which went on to invest in the early stage ecosystem and helped spur the growth of companies like AirBnB, DropBox, Spotify and Uber. Now it’s their portfolio companies’ turn to give their early investors an ROI as well as help mint new millionaires that will continue the cycle.

Fundraising is no longer a barrier to entry - Fundraising has never been easier. With new funding channels available to founders and a boatload of new VCs and Angels coming into the scene, fundraising is not a barrier to entry any longer.

There are more micro-VCs  - 550 new micro-VCs have entered into the ecosystem since 2016. Most of these funds are looking for pre / seed stage deals and their average cheque sizes range between $150K to $500K.

Bigger VCs have scouts looking for early stage deals  -  Namely AngelLists’ very own 'Spearhead' are funding mentors and founders that have cultivated networks of entrepreneurs and want to help these founders gain access to capital.

ICO (Initial Coin Offering) Markets (used by startups to bypass the rigorous and regulated capital-raising process required by venture capitalists or banks); have grown nearly 100X since early 2017 - The bitcoin bubble has minted many millionaires and these investors are looking to keep that momentum going while also minimising their risk. They do this through diversifying across multiple investments or ICO’s to be specific. If your company is disrupting [enter nascent industry name here] by decentralising through the blockchain, you have a good chance of closing your first $100M round. Just Google It.

With all these investors and money coming into our early stage startup ecosystem, fundraising is becoming less strenuous and cryptic for founders. All the resources you need are a google search away.