This summer’s VC slowdown could be far worse than in previous years. Thankfully, startups have many other routes to growth capital.
Like most businesses, venture capital firms tend to take things a little slower over the summer. The result is a noticeable decline in completed deals, a trend the investment community calls the ‘summer slowdown’.
The summer slowdown is problematic for cash-strapped startups at the best of times. But with VCs scaling back their investments in the technology sector, this year’s dip could be far deeper and significantly more disruptive.
Helpfully, high-growth startups have a range of other avenues to funding, including GrantTree’s Advance Funding service.
A troubling decline in VC investment
Founders and financial leaders will be all too familiar with the seasonal lull in equity investment. Meetings become harder to schedule, pitch desks are submitted without reply, deal terms sit in inboxes unsigned.
This summer’s slowdown, however, could be even more challenging than in previous years, thanks to a global decline in venture capital investments driven by the cost of living crisis, rising interest rates, and other economic headwinds.
According to KPMG’s Venture Pulse, VC investments in the Americas, Asia, and Europe fell 27% between Q1 and Q2 2022. In the UK, technology companies received just $8.6 billion in venture capital funding between April and June – a six-quarter low – with investors taking “a more cautious approach”.
The perils of the summer lull
For startups, difficulty accessing capital is more than a mild seasonal inconvenience; it’s an immediate and alarming impediment to growth.
Without new funding, companies may be forced to postpone hiring, mothball research and development projects, and shelve plans for new products, all of which can allow cash-rich competitors to pull further ahead. In extreme cases, a lack of funding can prevent a company from fulfilling its’ day-to-day financial commitments, jeopardising its survival.
Thankfully, VC firms are not the only route to growth capital for startups. As we explore in our comprehensive guide, there are many other forms of funding available, such as equity peer-to-peer lending, business loans, and innovation grants.
What is R&D Advance Funding?
R&D Advance Funding is a GrantTree service that lets you access up to 80% of your R&D Tax Credits windfall up to nine months before your year-end.
The service is designed to give high-growth, loss-making companies the flexibility to increase their R&D spending, make critical investments months ahead of schedule, and keep their business on track while they pursue other forms of funding.
You can access your first tranche of Advance Funding as soon as you’ve finished your first financial quarter, giving you plenty of time to reinvest it in new personnel, projects and additional research and development work. If you do invest your advance in R&D, you could increase your end-of-year R&D Tax Credit by as much as 36%.
The process of securing Advance Funding is fast and simple. Once you’ve registered your interest, GrantTree’s specialists will verify your eligibility for the R&D Tax Relief scheme and run some due diligence with our partners. As soon as the checks are complete, we’ll transfer the capital to your corporate bank account, and you can start investing it right away.
Ready to try Advance Funding?
If you’re waiting to close your next round of equity finance, Advance Funding is a great way to access additional capital so you can keep your growth on track.
To talk to one of our consultants about whether Advance Funding makes sense for your company, just drop us a line and we’ll be right with you.