What are some alternative routes to gaining capital?
A recent report from KPMG has revealed that the rise of funding from investors has screeched to a halt during the end of 2015, potentially requiring an adjustment in strategy management.
In the final quarter of 2015, the amount of funding gained from venture capitalist deals decreased by 30 per cent compared to quarter three.
Although the rest of the year showed strong activity, National Co-Lead Partner, KPMG Venture Capital Practice Brian Hughes believes that the downturn will likely continue for the next few months.
“Sentiment and the outlook became very negative towards the latter part of Q3 which suggested we would see a slowdown,” he explained.
“This slowdown was not just for VC-backed companies at the late stages; while the Unicorns get a lot of attention, Q4’s data shows that it became harder for early-stage companies to raise money as well.”
However, businesses shouldn’t feel too blue as there are other channels through which they can gain the funds for a new strategic venture.
Where can firms go to gain more capital?
According to Deloitte, the traditional methods of funding involve venture capitalists and debt funding through banks. However, innovations in technology have opened up new methods.
For example, the upsurge of crowdfunding over the last decade has made it possible for many people to contribute a small amount of money towards a project, rather than a few large sources investing. Modern crowdfunding is split into social and financial branches, with consumers either investing a project they have an emotional connection to, or if they expect a monetary return later on down the track.
No matter which method you chose, there is plenty of potential to incorporate this into your modern strategic plan. By 2015, crowdfunding raised US$34.4 billion for businesses around the world compared to US$1.1 billion just four years ago.