Research from Beauhurst has revealed that crowdfunding platforms have experienced their first slowdown in five years, which could be a sign of a larger decline in investor sentiment.
The number of crowdfunding investments offered across the various online platforms fell 17% in the first half of2016, compared with the levels experienced during the last half of 2015. Overall investment also slumped 29% during this period, which represents the first fall in figures after ten consecutive half-years of growth.
(Image source: Crowdfund Insider)
In terms of value, the research found that £87.4 million was raised via crowdfunding platforms over the first six months of 2016, another drop of just over 4% from the £91.3 million raised over the final six months of last year.
Commenting on the figures, Pedro Madeira, Beauhurst’s head of research, said that the slowdown was “particularly noteworthy”.
“Equity crowdfunding relies mostly on armchair investors, who will presumably be quicker to retrench their investment activity when they’re fearful, and are therefore good real time gauges of investment sentiment,” he said.
The data from Beauhurst also showed further slowdowns in startup investment from venture capital and private equity firms over the same period. Totalling it all in, the study recorded a 20% fall in the number of investment deals.
The report cited uncertainty around the vote to leave the EU “will almost certainly have resulted in deals being delayed, or abandoned altogether”.
Bruce Davis, spokesman for the UKCFA (UK Crowdfunding Association), however said that the dip in deals offered was only momentary.
“The market has had a slowdown because of Brexit, but we’re still taking a large share of the market. We should expect some sort of blip around Brexit, we’re not immune to the economy.”
Davis said that the UKCFA was confident deal numbers would begin to grow again. “The key to that will be strong signals from the government on strategy to see where it wants to see growth and investment. [Crowdfunders] are best placed to deliver that into the real economy.”