Abstract
This commentary explores the manner in which the current COVID-19 crisis is affecting key sources of entrepreneurial finance in the United Kingdom. We posit that the unique relational nature of entrepreneurial finance may make it highly susceptible to such a shock owing to the need for face-to-face interaction between investors and entrepreneurs. The article explores this conjecture by scrutinising a real-time data source of equity investments. Our findings suggest that the volume of new equity transactions in the United Kingdom has declined markedly since the outbreak of the COVID-19 pandemic. It appears that seed finance is the main type of entrepreneurial finance most acutely affected by the crisis, which typically goes to the most nascent entrepreneurial start-ups facing the greatest obstacles obtaining finance. Policy makers can utilise these real-time data sources to help inform their strategic policy interventions to assist the firms most affected by crisis events.
Highlights
This commentary explores the impact the COVID-19 pandemic is having upon entrepreneurial activity in the United Kingdom by examining how the unfolding crisis is affecting the market for entrepreneurial finance
While mitigating the immediate aftershocks of the COVID-19 crisis is crucial for the short-term stability of the economy, we wish to look at a longer-term indicator of entrepreneurial activity – entrepreneurial finance – and how this has, and will be, affected
To explore how the COVID-19 crisis is affecting sources of entrepreneurial finance in the United Kingdom, in line with others (Block and Sandner, 2009), we examine a novel real-time data source provided by Crunchbase
Summary
This commentary explores the impact the COVID-19 pandemic is having upon entrepreneurial activity in the United Kingdom by examining how the unfolding crisis is affecting the market for entrepreneurial finance. The setting for this study is the United Kingdom which has the largest (40% of the European total)2 market and associated ecosystem for entrepreneurial finance in Europe, both in terms of volumes and value of deals (Bertoni et al, 2015; British Business Bank, 2020).
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