2023 Macro Outlook for the Funding Market. What can we expect from it?

The Economy Outlook

Weak market sentiments from fiscal and monetary tightening, diminishing reopening boost, China’s Covid restrictions and property slump, and energy supply shock from the ongoing Russia-Ukraine war throughout 2022, global growth is expected at just 1.8% in 2023.

Experts are anticipating recession to take place widely in US and Europe as effect from monetary tightening is now felt in 2023 as businesses cope with higher borrowing costs and shrinking liquidity. The market we have gotten used to is likely behind us. Higher-than-expected inflation and the trend of retreating globalisation will shape the current markets in new and challenging ways. 

The Big Picture in Fund Raising

Equity crowdfunding market in 2022 ended basically flat from 2021, with US$426 million invested in 2022 compared to US$486 million in 2021, a 12% decline recorded, according to KingsCrowd. Global venture funding, on the other hand, was down 35% in 2022 compared to 2021 as reported by Crunchbase, making the decline in equity crowdfunding insignificant. Equity crowdfunding still fared better than venture capital in the same period.

Despite the general funding slowdown, stronger start-ups should have a better head start turning to equity crowdfunding as other funding options seemed less attractive in the current market. There is also a noticeable trend whereby companies with VCs on the capitalisation table are able to fundraise more quickly than other companies.

Go for the Win

For the current market scenario, investors are quite reluctant to invest in future potential unless the business comes hand in hand with solid customer traction. So, for start-up intending to raise fund via crowdfunding, it is imperative to get the products or services into the hands of customers soon. Getting customers and consumers on the product or services can be beneficial to gather constructive feedbacks and using them to sharpen the focus and prioritization and ultimately rewarding the customers for contributing their feedbacks.

Here are some tips:

1. Get feedback and insights from customers with a working product.
2. Aim high for the long term, but don’t work on anything except your minimum viable product (MVP) in the short term.
3. Always remember the problems you’re trying to fix for people and reward them for choosing you.