Many startups are currently thriving, providing us with products and services we never knew we needed and now can’t imagine doing without. The 2020 downturn proved to be the perfect time to get many ventures off the ground, and it also provided an opportunity for fundraising alternatives other than banks and VCs to prove themselves as viable cash flow routes for startups—including equity crowdfunding.
When the pandemic first emerged, few could have predicted the impact it would have on the global economy. Travel, entertainment, sports, restaurants and retail stores are just some businesses that saw huge losses, with many of them eventually succumbing to nationwide lockdowns and restrictions.
Startups are Thriving Amid Pandemic
At first, startups seemed particularly vulnerable, but it turns out many are thriving. In some industries, startups have been clear winners: sectors from edtech to ghost kitchens have mainly been concerned with meeting unprecedented demand.
The capacity to reinvent the brand or reengineer its business model has helped many startups turn this challenge into an opportunity, and so has the potential for collaboration with other businesses to help meet demand.
Digitization Key to Success
The capacity for digitization has proven a clear road to success for startups, and the fintech sector has seen unprecedented growth. Digitization in particular has propelled growth in existing sectors and created new ones. In fact, many startups—especially ones focused on solving a persistent problem in society—have succeeded in creating entirely new categories, and this can prove as important to success as their product, team and culture.
And contrary to what you might think, many of these new trends are poised for long-term success and will flourish in the post COVID-19 world.
Getting Creative with Cash Flow
The pandemic has forced startups to get creative when it comes to raising funds, too. Early-stage VC deals dropped by 57% in the spring months of 2020, and many startups going into the year with ambitious fundraising goals had to reconsider their options.
Many realized they could—and should—go to their community of existing and potential customers and ask for funding. They also found an entire community of people ready to invest, on equity crowdfunding platforms like Wefunder.
The Rise of Equity Crowdfunding
Equity crowdfunding isn’t a new concept. However, new regulations allowing normal people to invest in startups, along with disruptions to other, more traditional fundraising routes, have caused a serious rise in this strategy’s popularity.
Founding a startup during a pandemic poses its challenges, but entrepreneurs who are successful in their efforts come out with a strong, resilient company.
If you’re interested in pursuing fundraising through equity crowdfunding, take a look at our previous blog post where we covered some equity crowdfunding basics. Learn about the multitude of benefits of this route as well as how to get started.
At Arora Project, we’ve helped many startups reach their full potential, and we’re always happy to talk to founders about their next big idea. So if you’re ready to focus on your long-term growth, we’ll focus on securing the funds that’ll get you there.