As 2021 begins, start-up, small, and medium companies have taken the brunt of much of the economic collapse.
But as is often the case, proved deft at changing the way they operate compared to slower-moving enterprises. Regardless of size, however, firms that accepted transformation amid the turbulence, rather than scratched their heads over it, find themselves in a better position for 2021.
What’s more, data analyzed by ZoomInfo generally indicates that young companies and organizations seeking angel or seed funding, private equity, or Series A or B investments have seen an increase in action during the period from April 2019 through April 2020.
Quick side note: seed and angel rounds are small amounts that help a startup get off the ground. Private equity is funding from an equity firm or hedge fund, while series A and B are early-stage rounds that help startups obtain more customers or increase operations.
The Data Behind Startup Funding
Year over year from April 2019 to April 2020, angel, series A, and series B funding saw increases as detailed below:
- Angel and seed funding went up 27% YOY.
- Series A funding went up 15%.
- Series B funding went up 8%.
Figure 1: Early-stage investments generally showed an uptick from April 2019 to April 2020. Source: ZoomInfo.
Investment firms independently indicated similar patterns of activity.
The rise in angel investing, as illustrated by ZoomInfo’s numbers, may confirm that investors not typically involved with seeding are now earmarking funds to the earliest-stage companies.
For example, “Venture capital firms that focused on Series A funding before the pandemic have joined seed investors in backing early startups, some of New York’s top seed investors said in a virtual panel hosted by Eniac Ventures,” reported Karma, a site that covers sustainable business news.
Those results may seem counterintuitive considering the turmoil financial markets were in, but such situations also provide opportunities for investors. While the stock market plummeted during the early phases of the pandemic, fiscal stimulus packages and interest from investors helped stock performance rebound back to 2019 levels by 2020.
It turns out that investors saw hints of innovation amid rising COVID-19 worries, and firms looking for early-stage funding during the pandemic actually had a better chance of securing the money in 2020 compared to a year earlier.
All that said, an unstable market doesn’t equate to limited investments.
“While it’s likely that startups will need extra support, it’s also well known that some of the best venture-backed businesses were founded and funded in recessionary times.”David Blumberg, founder and managing partner at Blumberg Capital, in Crunchbase News, May 2020. “Examples include Facebook, Microsoft, Nutanix, and Electronic Arts.”
In many cases, businesses that survived (and even thrived) in 2020 are now preparing go-to-market and other expansion efforts for the new year. Recipients of early-stage funding will go-to-market and expand in 2021 as a new generation of post-COVID companies.
[To browse through more consequential go-to-market trends and 2021 business predictions, continue on to ZoomInfo’s latest Annual Report: Going-to-Market Smarter in the New Economy!]