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EIS Crowd 9 August 2020

  • BY: Andrew Hore |
  • POSTED: 17/08/2020 |

Decline in cash raised in first half of 2020

Beauhurst has published the latest edition of its equity investment market update. There was a 30% drop in the cash raised in the first half of 2020 when compared with the same period in 2019. Digital security and ehealth startups bucked the trend.
There was £4.77bn raised by 911 deals. The quarterly figures to show a sharp drop in the second quarter.
Crowdfunding deals raised £103m, which was up from £92.4m in the first half of 2019. Crowdcube and Seedrs remain the dominant platforms.
There was a 15% decline in first-time fundraisings compared with the second half of 2019 but there was a sharper fall in the money raised. The amount was the lowest in a single half except for the first half of 2013.
To put the figures into perspective, the first half of 2020 generated the fourth highest amount in total fundraisings in a six-month period in the past decade and more than the annual totals prior to 2017.
The number of down rounds in follow-on fundraisings is increasing. Bank Monzo raised money at a 40% discount to the previous funding. There were 15% of fundraisings at lower prices than the previous round.
There is a long-term trend showing a decline in up rounds. Even so, nearly two-thirds of the fundraisings were at higher prices.
Median deal size for growth companies was a record £10m. There were 22 so called megadeals (investments of more than £50m) in the first half of 2020, which is the highest ever number. The largest was £383m raised by challenger bank Revolut. This partly reflects the growth of companies that raised money in previous years. 

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Moneybox closed its crowdfunding nearly four weeks early. The plan was to raise £1m and the savings and investment app developer ended up raising £4m in four hours from pre-registered investors. The upper limit of £7m was reached in two days.
There were 16,738 investors. This is the second highest number of investors in a crowdfunding. Monzo attracted more than 36,000 in 2018.

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According to ResearchandMarkets.com, the global crowdfunding market compound annual growth rate will be more than 16% between 2020 and 2025. Reward-based crowdfunding is one of the major reasons for this growth. European crowdfunding is set to grow fastest. 

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Aardvark has developed dog food using insects for protein and it has raised £274,000 via Crowdcube. The pre-money valuation was £1.05m. Aardvark is partnered with insect farm operator NextProtein. The cash is required to manufacture the first batch of pet food and then market the product. There are plans to expand into Europe in 2021 and the US by 2024.

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Scottish brewer Broughton Ales has launched a crowdfunding campaign to save the brewery. The offer via Crwdfunder.co.uk is offering rewards in exchange for donations. This includes the planting of commemorative trees at the brewery.

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PrimaryBid remains an important source of funds from small investors for large and small companies. The funding platform helped Aston Martin Lagonda raise £152m. Countryside Properties, Gore Street Energy, Nanoco and Hipgnosis Fund, which recently bought the rights to Blondie songs.
SIMEC Atlantis Energy raised £1m out of a total fundraising of £7.5m at 12p a share. Technology commercialisation company Frontier IP had to turn money away when it raised £2.33m at 55p a share via a placing and PrimaryBid offer. Other AIM companies include EQTEC, e-therapeutics, Woodbois and K3 Capital.

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