Is Now the Best Time Ever for Start-up Investment?

Without stating the obvious, the pandemic has changed our world forever, from accelerating trends to the emergence of entirely new markets.

Existing industries are being reshaped and new approaches created, as inherent risks are laid bare – for example, dependence upon global supply chains, customer behaviours, centralised workforces, the nature of selling and the importance of reskilling.

Central to all of this are dozens of new market leaders and numerous innovative opportunities being born – making this current period, arguably one of the best moments ever for investment opportunities, and subsequently, for founders seeking investment for start-ups.

For investors looking for investment opportunities and companies to invest in the UK, the timing could not be better – a surge of innovation, leading to more start-up opportunities and increased competition for investment on the one hand; and savings at levels we have not seen in years, on the other.

And history tells us that the best ventures emerge from serious downturns – Microsoft, FedEx, Uber, Square, WhatsApp, Roku, Pinterest, Slack and Groupon are all great examples of this.

Notable UK successes following a downturn include Adam and Eve, Crunch Accounting, MVF, Farfetch, Lendinvest and Funding Circle (conceived in 2008 launched in 2010); all of which launched or accelerated their growth in a downturn.

Crowdfunding itself came out of the last global recession following the banks’ unwillingness to deploy capital to start-ups.

The current crisis has disrupted the world socially and economically, highlighting the value of goods and services to consumers, that were previously under-appreciated. As a result, we are seeing a major shift in economic paradigms and consumer lifestyles and behaviour.

And as countries battle their ways out of lockdown, new innovations are popping up every day, to take us into a new normal and provide paths for us to return to (relatively) normal ways.

Inevitably many traditional companies have already folded and will continue to do so. Our future economy will be more digital and less personal. High street retail, which was already in serious trouble before the crisis, may well never fully recover.

Other sectors that have taken a massive hit include International trade, travel, tourism, hospitality and airlines, but all of these are being set back on the path of normality, through new innovations and creative start-ups.

The technology revolution has been expedited, such that we are possibly 10 years further down the technology track, then we were this time 12 months ago. Concerns over personal liberties seem to have gone out the window, in favour of security and safety, opening the door for yet more disruptive innovation.

Things have changed – big time! And it all points to a buyers’ or “Investor Market”, with terms turning back in favour of investors. More innovation means more opportunities and increased competition.

Meanwhile, cashed-up VC investors are deploying capital less frequently and more selectively, meaning start-ups are not able to negotiate advantageous terms and clauses, and valuations are coming back down to earth.

Consequently, investors are in a great position to negotiate favourable terms and increase their protections. And with savings at a record high thanks to the generous furlough scheme and our relative inability to spend over the past 12 months, angel investors too are cashed-up and looking for ways to invest wisely.

Finally, after several years of founders dictating the terms, the tide has turned; and investors have the power. Perhaps now is the best time ever for investment opportunities into UK Companies.

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