As an investor, it can be tricky to balance the need for research and due diligence against the worry that a round will end or fill up before there’s a chance for you to invest. Because each startup gets to set its own raise end date, there’s no standard time length. Some raises last for less than a month. Others go for more than a year.
For this Chart of the Week, we decided to examine the question of round duration. What was the most common length of time for raises to last? In order to answer that question, we examined all Regulation Crowdfunding and Regulation A equity deals that have closed from the beginning of 2018 to July 2021.
Our total dataset for this chart included 1,306 funding rounds. (Note: this likely represents fewer than 1,306 companies because it includes repeat raises). The time length with the highest number of rounds was between 91 and 180 days. Nearly 530 raises fell into that duration. However, this particular time length does not hold a substantial lead. There were 400 rounds that lasted between 31 and 90 days and nearly 350 raises that went longer than 181 days. A clear take away from our data is that not many rounds last for less than 31 days. Since 2018, only 29 rounds have closed in a month or less.
From an investor standpoint, there are some useful observations we can draw from this. When evaluating a company, there’s very little chance you’ll need to make a decision in a month or less. A timeline that falls between less than six months and more than one month looks to be the most common. That provides ample time to do due diligence, ask questions on the raise page, and come to a full understanding of a company.
It’s also useful to consider these results from a company perspective. Perhaps there are so few month-or-less funding rounds because it does not give founders enough time to market their company and levy their network. It is also possible that extremely short rounds may inspire distrust in potential investors who feel they are not being given the chance to make informed decisions.
Note: all data used for the Chart of the Week comes from the KingsCrowd database and represents a snapshot of the crowdfunding market.
