The Competition for Seed Funding in 2020 and Beyond

The Competition for Seed Funding in 2020 and Beyond

Simon Jenner

Tuesday, 8 September 2020

There are lots more startups and there is lots less funding. I can't believe people aren't talking about this.

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Riding the crest of a waveWhen you ride on the crest of a wave it's exhilarating, there's absolutely no doubt of that. It also means that you get to spot the rocks racing towards you before anyone else does. You get to be the first person that waves their arms and screams "Rocks! Rocks! We're all going to die!". Meanwhile the people behind you sail on in ignorant bliss. They think, "Hey, there hasn't been any rocks yet, so why should there be rocks in the future?"
As most of you know by now Million Labs was a bit of an accident. We really didn't plan to become the business we are today. I wanted to build a bank and Simon wanted to sell coffee. However, as we have accidentally found ourselves on the crest of the no-code wave our general feeling is that we should try to stay there as long as we can.
The Wave See that wavy orange line above? That's google trend data for No-Code, Visual development platforms. It's about the only real data I could find to evidence what we are feeling right now. An anecdotal short hand for that wave is this: Last year I was part of the launch of a well funded accelerator and we couldn't get eight startups to join. Right now we can do eight startups in a week (and we're still in beta).
In 2020 over $500m has been invested into No-Code platforms. Those platforms (particularly have matured to deliver on the promise that 'anyone can build software without learning to code'. In reality that means a startup that would have required $250,000 and 18 months to get live can now be built in weeks, in a shed, for peanuts. That cost reduction is democratising the digital start-up space. Founders from every country and community and are using no-code to deliver propositions that would have previously been too small/niche to warrant investment. 
Three months ago I would have said "where there used to be one startup there are now ten". I suspect it's now more like a hundred.
The RocksSee the sad blue droopy line? That represents the global number of Seed and Angel investments. It's more than halved. Value of investment is plummeting too. There's half the money and a hundred times more qualifying startups vying for it.
The same thing happened at Christmas Dinner 2017. We thought we were going to have a small family meal (me, wife, three kids) but, due to a cock up in scheduling our festivities the entire extended family turned up. A very hungry family at that. And do you know what that meant? It meant that there were not enough roast potatoes to go round! Keep that horrifying though in mind...
The outcomes for startups and investors are both really simple to imagine. Startups that expect to close Seed and Series A are more likely to go hungry. Investors will be massively over-subscribed and, while I can see Institutional Investors might be able to solve their problem the way we did in in 2017 (Chinese Takeaway), its more likely that they will need to build new operational models for dealing with the Lean No-Code Startup revolution.
Building a Rock Proof BoatI could over complicate this, but I won't. The best solution to high volumes is self service. When Egg Bank got swamped in 1998 by savings applications we built the first online banking platform (I think that project was named "Flat Eric" after a yellow puppet... I might be wrong...) and the best way to find investment opportunities in a sea of complex fast moving assets is with data.
So it will come as no surprise that's what we've been up to of late. We've been building a way of capturing information and turning no-code startups into data points so that we can pick investments. We're trying to make a model efficient enough to allow us to invest smaller amounts in more startups because, simply, no-code startups don't require as much money. In that way we can amplify the positive effect we have and right now, the way the global economy is, businesses need all the help they can get.
The start of that journey for us is launching our AngelList syndicate and engaging startups through our Bootcamps, MVP and Incubators. You can find out more about that here:
We are also starting to share our own data with government, industry and people in the No-Code community, so you're likely to see us becoming a little more vocal in the next six months. No more hiding for old Simon and Jof.
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