Alternative funding venture Tractor Ventures launched in late 2020, as equity markets were taking off thanks to free money in the Covid era — and the fledgling loan provider followed suit.
But the situation is very different for Tractor right now, CEO Jodie Imam admits.
Like many who provide capital to startups — from VCs to crowdfunding platforms and loan providers — Imam is finding it tough, because the increased cost of living means startups are not growing at the rates they might have a few years ago. This has led to increased risk aversion from traditional funding sources, signalling more trouble ahead.
“What we’re finding is there’s still a flow of founders coming to us for money, but our ability to approve them is a lot lower, because they’re in a position now where they can’t actually support a loan as well as they could a year ago,” says Imam.
The caution from traditional VCs in the market right now is also having an impact. Startups that previously may have used Tractor as a bridging round no longer have confidence that their growth numbers will attract VC investment later on.