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Why do people invest in early-stage businesses?

29/09/2023

What are the main considerations for investors backing an early stage business? 

This was one of the questions answered in a recent research project from equity crowdfunding platform Seedrs. The results of their State of the Investor 2023 survey are now in – and here’s a snapshot of what they learned.

 

Investor motivations

Tax relief schemes are a major consideration when choosing to invest in an early stage business, according to 70% of those surveyed. What’s less important now than before is the possibility of substantial returns – a factor cited by 54% of investors in 2022, but only 47% in 2023. An affinity with the companies in question has grown in importance, with 57% saying “supporting industries you believe in” is a key reason to invest in startups, and 48% citing “supporting brands you believe in” as a factor in their decision. 

 

The role of macroeconomic pressures

As a result of the wider economic climate, 50% of investors say that they are investing less now than in previous years. This corresponds with the decline in net investable assets seen in the survey results: 12% of those surveyed have over £500K of assets and 30% have over £100K – figures that have dropped from 14% and 35% respectively in 2022.

 

How important is ESG?

Very important. 78% of investors surveyed say that they consider ESG factors when deciding on where to invest, with 48% already holding ESG investments of some form. 

Of those who say ESG is important, it’s climate-related investing that is the priority. 74% of this group state that investing to have an impact on the climate of importance. 

 

“Stable Rise Limited is not authorised or registered by the Financial Conduct Authority. The marketing materials are not intended to provide financial advice nor promote any individual financial products.”

 

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