Fundraisings decline due to COVID-19
COVID-19 has hampered many industries and the financial services sector is not immune. Fundraisings by new and growing companies have been particularly hard it.
In the period between 23 March and 18 May fundraisings halved compared with the same period in 2019, according to Beauhurst and Plexal. There has still been more than £1bn raised during the period.
The number of deals has fallen by one-third, so the average amount raised by a company has declined. There were 61 deals, out of a total of 202, where cash was raised by start-ups. The start-ups raised a total of £43m. That represents an 83% decline on the corresponding period in 2019.
The largest start-up fundraising was by customer data platform developer Audiens, which raised £6.4m, followed by University of Oxford imaging spin-out Living Optics, which raised £3.3m.
That compares with the £100m raised by Cazoo, which was the largest fundraising in the period. Cazoo is an online retailer of used cars.
PrimaryBid comes of age
PrimaryBid has benefited from the requirement of many quoted companies to shore up their balance sheets due to the continued uncertainty concerning how long the COVID-19 lockdown will be in force. It has also enabled the crowdfunding platform to gain its first major company.
FTSE 100 index constituent Compass Group used PrimaryBid for a retail offer to enhance the amount raised from a much larger placing. The retail offer raised £5.59m at 1025p a share, which is much more than normally raised via the platform. The offer price was a 3.3% discount to the market price. Existing Compass shareholders were given priority, although the amount generated by the retail offer was below the maximum on offer. A total of £2bn was raised by the catering company.
In the same week, two AIM-quoted medical companies, Open Orphan and Tissue Regenix, used PrimaryBid for fundraisings. Open Orphan wanted cash to finance services relating to COVID-19 vaccines and tests, as well as increasing laboratory capacity for the provision of third-party services. The PrimaryBid raised £500,000 (at 11p a share) out of a total of £12m after expenses. Tissue Regenix, which has developed dCELL tissue replacement technology, raised £2m out of £14.6m via PrimaryBid at a share price of 0.25p. Tissue Regenix was running out of cash was it was imperative that money was raised.
At the end of April, AIM-quoted residential property developer Inland Homes raised £1.1m, out of a total fundraising of £9.9m at 47.5p, via PrimaryBid. That includes subscriptions by directors.
The Lexington, a music venue in Islington, has raised £62,760 in order to pay staff during the COVID-19 lockdown, which means the venue is closed for the foreseeable future.
Fee-free share trading platform developer Freetrade has successfully raised £7m in its latest fundraising via CrowdCube. This was the maximum allowed without issuing a full prospectus. There were 8,559 investors that contributed to the crowdfunding, which was launched on 14 May and is eligible for Enterprise Investment Scheme relief.
The Freetrade app has around 150,000 users and Freetrade Ltd is authorised by the FCA. Freetrade is also a member of the London Stock Exchange. Freetrade operates in the UK, Ireland and the Netherlands and plans to launch in France and Germany.
Freetrade used CrowdCube to raise money last year and existing investors were given priority this time. Previous investors include Draper Esprit. A larger fundraising could happen next year.
Workplace pension platform provider Husky has passed the initial target of its fundraising via CrowdCube. It has a free-to-use mobile app called Husky 4 Everyone that helps employees take control of their workplace pensions.
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