ABSTRACT
A Round is financing that usually occurs after the seed stage of venture capital. The crunch refers to recent drops in available funding for these funding rounds. Although it has been perhaps rightfully suggested that crowdfunding alone will not solve the Series A Crunch (Caldbeck, 2013), it does provide an additional avenue for potentially raising seed capital for very early stage ventures. Additionally, businesses may require a small tranche of funds between seed and Series A in the form of crowdfunding to fill in funding gaps or until the current Series A Crunch ends and liquidity increases. Shontell (2012, 2013) highlights several examples of companies that were effectively killed by the lack of access to Series A financing. It appears there is an overall decrease in risk appetite and liquidity from larger investors. Moreover, the industry is witnessing the very first evidence of a consolidation of some angel investors into angel networksupported crowdfunding platforms. One example of this is MicroVentures, a US-based crowdfunding platform, which advertises itself as ‘connecting angel investors and startups’ (MicroVentures, 2013). There is also Crowdfunder.com which connects local start-ups in the USA and Mexico with select groups of local qualified investors depending on where they are geographically located (Crowdfunder, 2013). Additionally, there is the investment platform, AngelList, which maintains a team of select Silicon Valley investors (AngelList, 2013).
