Despite seeing growth significantly impacted during the pandemic, the vast majority of UK startups are now confident about the next 12 months. This was a key finding of a survey of startup opinion, conducted by Angel Investment Network (AIN), the UK’s largest online angel investment platform.
In the largest study it has ever conducted, AIN surveyed the views of 645 UK startups 18 months after the pandemic first hit. Despite 59% seeing growth negatively impacted, nearly three quarters are now optimistic about the next 12 months (72%), with 42% very optimistic – up from 23% when a similar survey was conducted at the start of the pandemic. Of those who have raised in the past year, 54% reported being negatively impacted with investors pulling out. Meanwhile 68% reported delaying fundraising as a result of COVID.
AIN has seen surging growth on its platform with connections between entrepreneurs and investors up by 23% since the start of the year. Meanwhile revenues have increased by 40% to a new record, indicating the huge pent up demand from startups now seeking funding.
For the startups surveyed, the biggest challenge going forward is raising investment (85%), followed by product development (27%), hiring/recruiting the right talent (25%) and ongoing COVID issues (19%). Consumer confidence was a concern for 15% of respondents and Brexit remains an issue for 8% of respondents.
Strategies to mitigate
There were a variety of strategies to deal with the challenges of stalled investment as a result of COVID. Many have focused on building the pipeline and networking, holding off on marketing and launch plans delaying new hires and choosing to bootstrap instead. Only a quarter had let staff go.
The top strategies have been:
- Focused more on networking instead (45%)
- Delayed marketing (35%)
- Held off making hires (35%)
- Held off launch plans (29%)
- Bootstrapped instead (28%)
- Had to let staff go (24%)
- Pulled back from R&D (22%)
- Used furlough scheme (16%)
The research identifies a very different approach in raising investment in the Covid era. For those who have raised, 75% of respondents have only met one out of four investors in person as a result of the restrictions.
According to Mike Lebus, founder of AIN: “Startups by nature have an optimistic mindset but the last 18 months have been enough to challenge anyone. It is therefore very encouraging that our survey reveals a picture of battle-tested startups, having weathered the storm and remaining hugely positive about the next 12 months. After the stalled growth due to the pandemic, there is huge pent up demand for fundraising and we are seeing a record number of connections on our platform. Many have used the time wisely, building up their networks and bootstrapping their businesses as far as they can go to get investment ready.”