Crowdfunding platform Crowdcube has seen investment activity recover significantly in April as small businesses start to reignite their fundraising plans.
The level of investment into businesses on Crowdcube reached £9.2m last month, up 58% on March and only 15% lower than April 2019. May also had a good start, with £2.7m invested in the first 10 days.
This comes as activity levels reduced sharply in March as the coronavirus pandemic took hold in the UK, with many businesses putting fundraising plans on hold.
“Quite rightly, founders and business leaders were focused on putting in place plans to weather the storm, and in some cases pivoting to maximise potential opportunities,” said Matt Cooper, chief commercial officer at Crowdcube.
“Now, as we all settle into this ‘new normal’, we’re seeing an increase in businesses wanting to resume and reignite their funding plans, and as the number of businesses seeing investment grows, investors are following suit and stepping up to invest.”
Despite a slight dip in investment activity, investors have continued to back businesses throughout the crisis, Cooper added, with over 7,500 transactions registered on Crowdcube in March.
Startups still reporting cash raises despite coronavirus
The reduction was likely due to a lower number of businesses seeking funding, he explained, rather than a softening of investor appetite.
As for which businesses were more successful under the current circumstances, Cooper suggested it was “irrespective of sector”.
He said: “The businesses that are performing well in these challenging times are those that are adapting and seeking opportunities to not only survive but thrive.”
In the food and drink industry, DTC fmcg businesses were “thriving in the current environment” he explained, with companies like Mindful Chef growing exponentially in recent weeks.
To further encourage investment in smaller businesses, Crowdcube “strongly advocates” temporary changes to tax reliefs available to investors in startups through EIS and SEIS, such as increasing the threshold to 60% from the current levels of 30%.
The measure was first urged by the the Enterprise Investment Scheme Association, which said it would unlock up to £200m extra funding for companies currently facing an “existential threat” from coronavirus.
“While the government should be commended for the support measures they have put in place, I firmly believe they can, and should, do more to support early-stage companies to ensure our economy is not robbed of an entire generation of startup and early-stage businesses,” Cooper added.
Three food and drink brands have hit crowdfunding targets since the end of March. On Seedrs, premium pot noodle brand Mr Lee has raised £1.8m, vegan ice cream startup Perfect World £97k, while Rejuvenation Water, a healthy soft drinks brand, raised £100k on Crowdcube.
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