Despite 2020 being a challenging year for most, many startups pivoted and were successful in the past 12 months. In fact, data suggests that startup seed rounds actually performed better than many expected over the course of the year. What will this mean for 2021?
Breaking Down the Data
According to TechCrunch, seed investments appeared to show some resiliency as 2020 continued. The data suggests that while seed money dipped in March and April, it exploded by the fall in the US.
Comparatively, seed investing in March 2020 hit a value of short of $500 million. By September the same year, seed rounds for startups were worth almost $1.1 billion. That's more than double the funding and double the interest.
TechCrunch's data suggests that seeding interest dipped to below $400 million for November. Therefore, it's clear that we will need to assess 2021 with a fresh pair of eyes. Did this dip occur to increasing global uncertainty? It may be politically related.
In any case, this data clearly shows we can expect fascinating changes in the way ventures gain capital for the year ahead.
Startups Are Learning to Pivot
Arguably, the increase in seeding may result from startups learning to adapt to the pandemic. Investors and VCs are not just casting large sums of money at companies once they take firm roots. If anything, the data suggests investors are willing to take risks early on.
We only have to take a look at some seeding success stories to understand this. For example, Cosmos Video was able to raise more than $2.5 million in seeding alone. The company specializes in virtual venue setups and gaming collaboration. It is arguably a pivot or idea born out of necessity during the global crisis.
As life changed for millions of people during 2020, so did startup intention. HBR considers that pivoting out of the crisis became commonplace. Businesses faced an unprecedented and immediate need to adapt and survive.
Could this be why there appears to be so much thrust in seed investing this past year?
What 2021 Will Hold?
It is clear that the global crisis will continue to persist for some time to come. However, 12 months on, the world is arguably preparing for the better. Many hope this will cover business plans and pivoting, too.
It could have a knock-on effect on when and how investors fund. Seeding interest is clearly growing.
Investors now have a more explicit choice in ventures born out of the crisis. Industries such as telehealth and scalable software solutions are thriving. Smart investors are looking for companies who are not only crisis-proof but who seek to help the world adapt, too. It will be interesting to see which new resources and services emerge by the end of 2021.
Investors keen to help pivoting startups through seed rounds may use databases such as Fundz to find new opportunities. With the New Year just emerging, now is the time to start looking for enterprising new ideas.
SOURCES USED
https://techcrunch.com/2020/12/24/us-seed-stage-investing-flourished-during-pandemic/
https://www.finsmes.com/2020/12/whatnot-raises-4m-in-seed-funding.html
https://www.embroker.com/blog/startup-statistics/
https://hbr.org/2020/07/how-businesses-have-successfully-pivoted-during-the-pandemic
https://techcrunch.com/2021/01/04/5-questions-about-2021s-startup-market/
