A day late and a dollar short…

Meanwhile, in the world of finance, tech, and venture things continue to be a little meta – no doubt you’ve all seen the incredible GameStop short squeeze engineered by several Redditors that led to the stock crossing $480 / share from a low of just under $3 a year ago. Truly incredible that a group of retail investors could create this sort of market action and if you’re interested in learning more (if Twitter hasn’t already maxed out your interest in the topic), then this is a great article from Morningstar to understand what happened – I mean even Elon Musk got in on the game.

(We’d love to have seen the pitch deck for this strategy – two slides: 1. Hedge funds are making money, let’s stop them. 2. Buy GME).

Deal Dynamics

On to the world of venture, and more specifically UK venture.

We had a look at data from Beauhurst and in the final quarter of 2020, over 1,300 deals were raising just under £4bn which is a similar amount to the prior-year though across fewer deals, showing that capital has become more concentrated (2019: 1,783 deals raising £4.2bn).

50% of these deals were at the seed stage, a further 32% at the venture stage, and the balance for growth and established businesses.

This is a great article from Grayscale that really shows how incredibly difficult it is to get from pitch deck all the way down to investment – according to data from GREE Ventures South Asia, of 475 deals sourced, only 2 made it through to securing investment – that’s less than 0.5%!

So if we were to apply those same metrics to the data above, that means that VCs would have had to have looked at around 260,000 deals in total to get down to 1,300. Never forget that raising venture capital is not simple and not guaranteed, as we saw in one of our previous blog posts, investors may have different approaches, but ultimately, they are going to want to see that there is a big enough market, a product to serve the market and a team to execute – if there’s some performance data to back all of that up, even better.

Talking of funding, it’s worth noting that the extension to the UK’s Future Fund expires on the 31st of January – if you haven’t got your applications in, you may have left it too late, so get a hustle on.

Finance for Founders

Here at EmergeONE, we’re always keen to learn from others, and equally, we love sharing our own knowledge through the ecosystem. We’re busy building out a mini curriculum around the theme Finance for Founders, we’d love it if you could spend a couple of minutes filling out this simple form.

Right, that’s it from us for now, back to building!