Financing entrepreneurship in times of crisis: Exploring the impact of COVID-19 on the market for entrepreneurial finance in the United Kingdom. (August 2020)

• Record Type: Journal Article
• Authors: Brown, Ross; Rocha, Augusto; Cowling, Marc
• Is Part Of: International small business journal. Volume 38:Number 5(2020)
• Page Start: 380
• Page End: 390
• Publication Date: 2020-08
• Subjects: COVID-19 -- crisis -- entrepreneurial finance -- entrepreneurship -- seed finance; Small business -- Periodicals; 338.64205
• DOI: 10.1177/0266242620937464
• Languages: English
• ISSNs: 0266-2426

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.