Ciara O’Brien Thursday July 23, 2020, 15:06, The Irish Times
Cash-starved start-ups eyeing alternative funding avenues amid Covid-19 crunch
Dublin-based equity crowdfunding company Spark Crowdfunding said it saw a record increase in new accounts during the coronavirus pandemic, as early-stage firms looked to new funding sources.
The platform, which connects early-stage firms with people who want to invest, saw an increase of 75 per cent in the number of new accounts between April and June, at the height of the coronavirus outbreak in Ireland.
“Retail investors flock to venture companies that come up with strong plans and management teams even under coronavirus, while companies also look more to crowdfunding as they have less contact with institutional investors,” said Chris Burge, Spark’s chief executive.
“Our role is to facilitate connections between exciting Irish start-ups and individual investors interested in finding the next Stripe.”
Some companies have taken advantage of the new platform to boost their coffers. In May, Donegal-based software company Motarme raised €117,000, while Dublin-based aviation start-up Frequency took only 35 days to raise €378,000 in June.
Equity crowdfunding offers shares in the company to a number of potential investors in exchange for financing, targeting small and medium-sized investors rather than large funds. Investors can provide small contributions, and are entitled to a stake in the company proportional to their investment.
Spark Crowdfunding said its average investment amount is less than €2,000, but contributions can go as low as €100 for smaller investors.
“We want to give Irish investors access to new investment opportunities that would previously only have been open to venture capitalists or private equity firms,” Mr Burge said.
“With platforms like ours, investors can invest anything from €100 upwards and support Irish start-ups in the process. With new campaigns coming on stream every month, there are always new investment opportunities for Irish investors.”
Since its establishment in 2018, the platform has raised more than €2.4 million for 14 Irish start-ups.
Mr Burge called on the Government to develop new supports and initiatives that would allow potential investors to more easily back indigenous start-ups and early-stage businesses.
“Never in the history of the State has there been a greater need to channel the huge amount of cash that Irish investors have at their disposal into Irish businesses,” he said.
“While the EIIS scheme does provide a 40 per cent tax rebate for Irish investors, it hasn’t stimulated the type of activity that is required to support some of the amazing Irish start-ups out there.”
Frequency in The Irish Times