Funding slowdown?
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Venture capital funding slowed massively in H2 2022. According to this report by EY, VC deal value fell by 59% (from $172B to $70B) in H2 2022. And by 65% (from $93B to $32B) in Q4 2022. Pretty staggering. The growth stage has definitely been significantly harder hit. But earlier rounds are also moving more slowly, and will probably be impacted further over the coming months, as multiple compression continues to work its way up the waterfall.
I’ve always hoped that Wefunder would be counter-cyclical. That as VC funding dries up, founders would find value in raising capital from their customers and community as an alternative (or complementary) option. I think we’re going to see that in 2023.
Not to say that founders won’t find it harder to raise on Wefunder in 2023, than they would have done in 2021. I expect they will. But if you execute, you can make it happen.
As a few illustrative examples, here are 10 startups that have raised capital through a community round through the downturn.
(1) Sensate
Consumer hardware device that immediately relieves stress. Raised $2.9M from 964 investors. Check out our podcast interview with CEO Anna Gudmondson here.
(2) Zencastr
Podcasting platform, backed by Kickstart Fund. Raised $512K from 838 podcasters and fans.
(3) Here
Platform for investing in vacation rental properties, backed by Mucker Capital, Liquid 2 Ventures and Fiat Ventures. Raised $3.2M from 3,000+ investors.
(4) MTailor
“A master tailor in your pocket”. Backed by Y Combinator and Khosla Ventures. $1.8M raised from 1,146 customers.
(5) Offline
Consumer subscription business to help people discover and enjoy more restaurants. Previously backed by Tweener Fund. Raised $2M from 451 investors. Founder David Shaner on our podcast: “When you nail one of those community rounds, it's the best feeling in the world”.
(6) Kettle
Platform to help teams thrive in a in-person/remote hybrid environment. $1.7M raised from 143 investors.
(7) Blender Bombs
Superfood Smoothie Booster (CPG beverage brand). Raised $980K from 502 customers, after bootstrapping to $13M in revenue.
(8) Reflect
“The Superhuman of note taking apps”. Product Hunt’s top product of the week. $758K raised from 317 customers and fans.
(9) Tucson Tamale
CPG food brand, available in 5,000 locations throughout the country. $480K raised from 380 investors.
(10) Fathom AI Notetaker
“Never take notes on a Zoom call again”. Previously raised $5M+ in capital from VCs, angels and Zoom itself. NPS of 85. Raised $3.6M from 1,000+ customers. “The best marketing campaign I have ever run” — founder, Richard White
Our hope is that — not only is this a valuable source of capital for founders, on relatively generous terms, in a tough macro funding environment —, but also that enabling your customers to invest can engender deeper loyalty and resiliency over the coming months and years.
To learn more: communityround.com.