09 Sep How COVID-19 is changing the fundraising landscape

From pre-seed to series D, at Plug And Play we are continuously monitoring startups and their groundbreaking innovative technologies. We follow startups from the beginning of their journey to the process of scaling up to help them navigate the often daunting process of growing as a company. As coronavirus swept across the world in March of 2020 it quickly became clear that life as we know it would become more challenging than ever before.

Since early 2020 the coronavirus has been troublesome for all, but we have seen startups take advantage of the change we saw overnight as to how the world operates. We watched as the whole world adapted to living and working digitally as the pandemic spread from country to country in what seemed like a matter of days. Tech startups are in demand now more than ever before; offering services such as digital banking, digital health screenings and digital grocery shopping. Even though, on the surface we see a higher demand for these small startup companies, many of them are struggling to break the surface.

Although it may seem like startups should be soaring with their advanced technologies during this crisis with the global economy struggling it is proving difficult for many startups to move forward with fundraising. In a recent poll conducted by Plug And Play Ventures with 66 startups nearly 80% answered that Covid-19 has slowed down their fundraising efforts. Our founders say this is due to investors beginning to pull their soft commitments. A substantial number of founders are postponing fundraising. They seem to be doing so in the hopes that by waiting and gaining more traction, their fundraising efforts in the near future will be more successful. We hope this to be true but this primarily depends on the development of the pandemic and its economic consequences, which we may not see the effects of within the year 2020.

With the extreme uncertainty surrounding 2020’s events, there are still several early signals to be optimistic about. We still see the majority of investors are honoring soft commitments, most startups have decided to keep their valuation targets and not negotiate against themselves, and several have used the urgent demand of our new digital lives as reasons why their investors and customers have to be more open regarding their interest levels. These signals show that as we navigate further into this pandemic, the strategic choices we make will determine the results of positives and negatives to emerge for the startup community. 

Authors: The Amsterdam Team (Madeline Wallace, Poey Lam & Gabrielle Inzirillo) 

About the Amsterdam team: Gabrielle Inzirillo, Madeline Wallace and Poey Lam of Plug And Play Amsterdam located at Cumulus Park, an initiative by ING Group, support global corporations in scouting and implementing best in class technologies through pilot driven programmes with tech startups. In addition, they contribute to the ecosystem by deploying venture capital and sharing best practices on innovation processes.

About Plug And Play: Plug And Play is an innovation platform. We run over 50-industry themed innovation programs in cities around the world every year. We supercharge the innovation of over 450 industry leading corporations from every continent. We are also a top global VC firm and invest in over 250 startups per year globally.

Data in Article was collected by Plug And Play Ventures Team in 2020

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