Between 2020 and 2021, every major fund type boosted their investment activity, and crowdfunding persisted as one of the most important parts of the UK’s early-stage funding market, with a median round size of £490k in 2021.
Venture capital and private equity firms made headway over other categories, playing a part in 51% of rounds announced last year.
Individual angels made their way up to second place, relegating crowdfunding to third.
Last year, angel activity grew, and while this is thanks to a genuine increase in activity, this boost is likely also heightened by a growing desire for businesses to announce the inclusion of angels in their equity rounds.
This is made evident by the increasing number of high-profile, high-net-worth individuals whose names are attached to a company, in many cases to simply add further validation to the company’s cap table.
2021 saw 573 deals which included participation from the crowd, representing an 18% increase from 2020.
The public is taking part in larger and larger equity rounds, as a record 15% of deals last year were worth more than £2 million.
The largest round of 2021 that included the crowd was PaySend’s £91 million raise, which composed of £167k in crowdfunded investments.
Notably, the types of deals attracting crowdfunding were strongly skewed towards consumer goods, with many companies seeking funds from the crowd, doing so through their own customers and support bases.
Opportunities requiring a high-level of due diligence did not appear to fare as strongly as opportunities that already had solid customer or stakeholder bases.
So, did crowdfunding come of age during the pandemic? In our opinion, it certainly came out of the pandemic stronger than it entered it.
However, with many platforms disappearing since the start of lockdown, and others looking for fellow platforms with which to consolidate, the sector seems like it is still to find its niche – which means the real opportunities for the platforms may still yet to be found.