A fast growing spin-off company from the Department of Biotechnology at the University of Turku, Abacus Diagnostica raised nearly EUR 1.5 million through Invesdor in summer of 2020. CEO Erno Sundberg shares his thoughts about the funding round for companies who are planning crowdfunding.
Round: June 2020
Pre-money valuation: EUR 4,046,800
Total funding raised: EUR 1,458,858
Number of investments: 361
Abacus Diagnostica aims for a future where the doctor can confirm the patient's diagnosis by laboratory test during the first visit. The pandemic has given Abacus’ business a real turbo boost. As laboratories become congested, there is a demand for rapid testing and, as a result, the company's revenue has increased tenfold in a year.
"More than 15 years of work is finally being rewarded. We've finetuned our technology and cleared all flaws away. We have a good foundation and readiness to scale up. Brisk growth will continue in 2021, and our goal is to double net sales," says Sundberg.
The fast and light process defeated other funding options
Before crowdfunding, Abacus had a couple of major and half a dozen minority owners. The management had been looking for capital funding for a long-term need for quite a while. According to Sundberg, even before the coronavirus, it was evident that the business was starting to expand.
"Crowdfunding was a fast and light process compared to many other options. We were a little late for the corona boom, but otherwise the round was perfectly scheduled. The balance sheet structure became better at one stroke," Sundberg analyzes.
Invesdor has organized funding rounds for healthtech companies with a good pass-through rate, and Sundberg says he had full trust in the process.
"I was familiar with crowdfunding and the process from the investor's point of view. In addition, Invesdor gave us good tips and information along the way."
Encouraging messages from minority shareholders
When the round started in June 2020, Sundberg admits it was an exciting moment. "There was a quieter phase in the middle of our round, which was certainly influenced by the beautiful summer weather. However, we got a good final spurt – maybe with the help of a few cloudier days."
Investors from both Finland and abroad, including a few distributors, joined Abacus. According to Sundberg, companies considering crowdfunding are unnecessarily shying away from the growing pool of owners.
"We now report more regularly to the owners. Otherwise, I don't feel that new owners have created extra work. With the growth, there have been much bigger changes as our team has tripled. It feels good to receive encouraging messages from minority shareholders."
New tests on the market
Most of the funding raised will be used to develop a next generation test system. Sundberg describes the coronavirus has revolutionized the defensive market for infectious disease diagnostics. Laboratories have suffered from overcrowding and supply difficulties, causing panic rush. Abacus offers test results in less than two hours.
Abacus' typical customer in Finland is a central hospital laboratory. Abroad, their tests serve, for example, oil rig workers. The world will not be free from viruses and bacteria even though the corona pandemic will settle at some point.
"We have several other bacterial and viral tests for influenza, norovirus, hospital bacteria as well as the cause of antibiotic associated diarrhea, among other microbes. A test for meningitis is coming up in the product development pipeline. Viruses will transform, and diagnostics must keep up with it."
Sundberg's sure bets:
1. Before the actual round, collect the minimum capital through your networks.
2. Get media coverage before, during, and after the round. Visibility plays an important role in reaching potential investors.
3. Refine the investor story with care and crystallize your core messages. Do not hesitate to rely on professional help in writing and translations.
4. The timing of the round is important. Pay attention to holiday periods. Invesdor will give you good tips for this. However, you can never control everything. For example, we found out that sunny weather weakened investor activity.
5. Don’t be afraid of getting lots of new owners. The shareholders' agreement is a versatile tool that is worth drawing up carefully, and Invesdor also will give you good tips for this.
Images: Abacus Diagnostica
Image 1: Test kit and test chips
Image 2: Analyzing a sample
Image 3: Erno Sundberg