TREND OF MOVING EVERYTHING ONLINE AND FINANCIAL FUNDING
Everyone is reading and expressing their views on the financial funding worldwide these days due to the pandemic situation faced by the world. I came across a similar and a very interesting article on the same issue and thought that it should be shared with you. Here are some very important points to be aware about and to be pondered upon:-
The pandemic has a very different impact on funding than what it was expected. It has shown improvement in funding as opposed to that in 2008 crisis. This only means one thing - that leading technology companies emerge stronger given the trend of moving everything online.
To understand the impact of the pandemic on global venture funding a look has been taken on comparative trends for the first four months of each year from 2016 to 2020. The immediate effect was on transportation, travel, logistics, real estate, retail, recruiting. They all had to let their staff go because of the increased social distancing and impacted business because of it.
On the other hand, the investing style for venture capital firms has changed as the have shifted to investing without feeling the need to meet face to face. Just on the rapport built by online meeting.
Global funding is although down by 11% for the first four months of 2020, yet this percentage is supposed to be declined and the funding is supposed to rise if we compare the trend to that of 2019. Because if we notice, in the timeframe where social distancing took hold during March and April in most parts of the globe, funding increased by as much as $2 billion to $5 billion per month over the first two months of the year.
Regional differences also play a vital role in funding. There was a downward trend in funding in China which predated the crisis, The U.S. and Europe has shown 13% decline in 2020 when compared to 2019. Both regions grew during the 2019 four-month time frame, over 2018’s growth. India on the other hand , due to Facebook’s investment in Reliance Jio, has shown an increase in it from $4 billion in 2019 to $9.7 billion in 2020. The rest of the world was growing its share of venture in 2018 and 2019, but is down 26 percent year over year for 2020. Leading countries include Singapore, Indonesia, Israel, Canada, Australia, and Brazil. Of these, Indonesia, Brazil and Australia experienced the highest growth year over year in the first four months of 2020.
Late stage funding as opposed to seed and early stage funding has shown stability in the first four months time frame at $54 billion with a greater share of overall dollars coming in at 66 percent versus 59 percent in 2019.