UK Report Claims Investment Crowdfunding Declined by 15% in Q2 but More Investors are Backing Early Stage Firms

A new report tracking investment crowdfunding campaigns in the UK says this sector of Fintech declined by 15% during Q2 2020. A decline should come as no surprise as the data would be coming from the period when COVID-19 was impacting all markets. The same report added that while top-line numbers may have declined more investors are backing offerings than in the two prior.

Just over £53 million was said to have been raised in Q2 2020 via investment crowdfunding, slightly lower than the amount raised in the first quarter of 2020 at £57 million and a big difference from the £112 million raised in Q2 2019.

Equity Crowd Expert says it tracked 86 different, successful investment offerings that closed in Q2 2020. The five prior quarters reportedly booked an average of 100 funded securities offerings.

With 49,000 individual investments being made in crowdfunding this quarter, investors appear to be showing continued enthusiasm for online investing as that number is up from the two previous quarters (45k in Q1 2020 and 37k in Q4 2019).

Additional insights include:

  • The securities crowdfunding market ground to a halt for a month following the UK-lockdown announcement with just 10 new campaigns launched during that period but this is now fully recovered with an average of 1.7 campaigns launched every day in the last fortnight.
  • Freetrade was the largest campaign both in terms of capital raised, reaching £6.7 million and attracting the most backers, with 5,989 investors via Crowdcube. This accounts for roughly 12% of both the total amount raised by crowdfunding and the total number of investors during the quarter.
  • The crowdfunding market is back to full speed with 87 active campaigns targeting £47.5 million. These campaigns have an average target of £305,000 (median) and are valued on average at £4.4 million (median).

As one may anticipate, larger platforms dominated the market.

Nearly half of the money (49%) was raised via Crowdcube. Seedrs was a close second at 47% and 4% for all other platforms. Seedrs accounted for exactly half of the number of campaigns closing in Q2 2020 vs. 45% for Crowdcube and 5% for other platforms.

Etienne Paresys, founder of Equity Crowd Expert ltd, shared the following statement:

“The facts confirm what everybody would expect in the current environment:  it has been a difficult quarter for Equity Crowdfunding. There were less deals but the crowd stuck at home during lockdown is responding to the situation and still actively investing in crowdfunding. The success of Freetrade raising £6 million at the hight of the epidemic is a good example but Crowdfunders did support many other opportunities, including some like The Cheeky Panda  – successfully raising over £2 million to support a hike in demand for its sustainable toilet rolls! Crowdfunding is well setup to quickly adapt to the market and we would expect to see an increase in demand for funding for companies during this difficult market”

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