Less money from business angels

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29.04.2020
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The Swiss ICT Investor Club SICTIC and Business Angels Switzerland (BAS) conducted a survey among active business angels. Times are getting harder for start-ups, especially for those looking for new investors.

The uncertainty caused by the corona crisis is immense. The exact effects on investments are still unclear. To address this situation, SICTIC and BAS have conducted a survey among active business angels. A total of 65 investors responded. Almost three quarters of the respondents intend to adjust their investment strategy. This particularly affects start-ups looking for new investors. The PDF with all results can be downloaded below.

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51% of the business angels stated that they plan to invest less or much less money or even no longer invest in start-ups at all in which they are not already invested. Only a small minority of 3% want to make more funds available. This makes fundraising considerably more difficult, especially for very young start-ups who want to raise money from business angels for the first time.

The situation is somewhat better for start-ups that already have business angels on board. A third of those surveyed want to invest less money or not at all in follow-on rounds. Given the current situation, a relevant minority of 13% plan to provide more money than previously planned to companies in which they already have a stake.

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Not only is less money being invested, but the business angels also assume that valuations will decline. However, according to the assessment of those surveyed, this decline has not yet been anticipated by start-ups. 60% of the survey participants describe the valuations for which founders are asking still as "high".  And three-quarters have not yet noticed a decline in the valuations founders are asking for.

The business angels themselves expect that valuations will fall by an average of 20 to 25 percent. This decline will be permanent, according to the investors. For the end of 2020, they also expect a moderate decline compared to the pre-Corona period.

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(Stefan Kyora)

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