Invesdor's expansion to Europe
Invesdor is the first crowdfunding platform with a MiFID-level licence for placing of financial instruments, including crowdfunded equities and bonds. We intend to redefine the European alternative finance environment.
Raising funding for startups and growth companies has changed dramatically in the latest years. On one side, traditional players have decreased the amount of funding for high-risk ventures. On the other, private equity and venture capital investors have gained popularity and prestige.
Overall, the financing system for growth companies has been shaped by two opposite financing philosophies: cabinet financing and open funding. Accredited or professional investors, such as venture capital and private equity funds tend to pursue a cabinet financing approach with deals closed to the public. Traditional and public investors, instead, focus on open and transparent markets that assist the companies’ growth until the public stock exchanges and beyond.
The choice for individual investors is to either pursue closed deals in restricted networks or wait for companies to grow enough to enter the public markets before investing in them. Invesdor is providing a different approach to investments by allowing everyone to invest in an open, transparent and secure way in growth companies on their path to Stock Exchanges.
We are building the leading cross-border crowdinvesting platform in Europe, bringing together European companies with investors worldwide. With a top notch team including the best fintech professionals in the market we are creating a new way of investing and raising funding.
Invesdor is the first crowdinvesting platform with a MiFID-level licence for investment advice, reception and transmission of orders and placing of financial instruments. The licence can be passported across Europe. It enables us to pursue a scalable expansion within the European Union and create the most professional platform in the Continent for cross-border investments. The year ahead will see Invesdor expanding in the European market and launching our new product Crowdbond. We will provide our services to companies from selected EU countries, allowing them to raise equity or debt financing from investors worldwide.
Our business & market situation
Invesdor delivers a lean, professional and easy to use service for growth companies, which are raising funding thanks to our knowledge of the growth financing scene and the quality of our technology platform. We handle the collected capital from the beginning to the end of the process by allowing the investors to transfer their funds in a secure and trustworthy customer deposit accounts. Our model allows entrepreneurs to focus on the marketing of the round and the business development of the company, as during the round, we collect the capital as the round proceeds and we transfer the funds at the end of the successful round. Investors, on the other side, have the opportunity to screen a cross-industry deal flow of companies to find diversification opportunities as either active or passive investors. Each user has the possibility to go through all available information about the company and communicate with the entrepreneur during the round to perform his/her own due diligence.
With over 30 successful rounds in Finland and more than 4,4 MEUR collected we are the largest Nordic player in equity crowdfunding and a strong contender in the European Crowdinvesting segment. The international expansion under MiFID regulation will allow us to enter other European markets as a professional and trustworthy player from day one and gain market shares against un-regulated and local competitors.
Crowdfunding, as part of the alternative finance industry, is a wide market that has been growing at a compound annual growth rate of 134% in the last 4 years. The industry covers multiple segments characterized by different business models from donation and reward crowdfunding to the more regulated debt and equity crowdfunding.
Both in Europe and US the equity and debt markets are under strong development and transformation. The underlining trend in both sides of the Atlantic is the strong push for rules and regulations for the platforms. Europe's regulations are relatively fragmented in the different Member States but Financial Authorities in key countries, such as United Kingdom, France and Italy, are pushing for more organized markets. But instead of relying on local member-state specific legislation, platforms like Invesdor can count on the existing MiFID rules to allow easy expansion of authorized companies among Member States.
In the last three years the European alternative finance market expanded extensively, in particular equity based crowdfunding grew by 116% and peer-to-business lending grew by 272% in the same period. In the whole of Europe, the equity and peer-to-business lending represented approximately €1.3bn. Collectively, the European alternative finance market, excluding the UK, is estimated to have provided €385m worth of early-stage, growth and working capital financing to nearly 10,000 European start-ups and SMEs during the last three years, of which €201.43m was founded in 2014 alone (data from University of Cambridge and EY report on European crowdfunding market, February 2015).
Crowdfunding in the Nordic region has been growing at a fast rate in recent years. Currently, there are close to 20 local crowdfunding platforms operating in the region, the majority of which are very small and young companies. Invesdor has established a leading position in this fragmented market with over 46% market share in the Nordics in 2014.
The business model:
We are working on strengthening our current offering and we are introducing new unique services to our clients. Invesdor’s core initial focus has been in the equity Crowdfunding market, allowing various categories of investors to invest in growth companies from various industries. From our first focus area we have seen and exploited opportunities to create added value in the growth financing market delivering additional services like our own electronic shareholder management tool, Ownersportal, and the first secondary market for crowdfunded companies in cooperation with Privanet.
We are now ready for European expansion and the launch of our Crowdbond product with a strong and reliable service that will allow our client companies to raise debt and equity, manage their shareholders and access a secondary market to increase their assets' liquidity. To reach these goals our core strategy articulates around 6 core points:
- The MiFID licence
- Invesdor Services
- Equity Crowfunding offer
- Crowdbond offer
- Ownersportal and secondary market
- Invesdor Fund
The MiFID Licence
Invesdor is the first and only Crowdinvesting platform with a full MiFID licence for investment advice, reception and transmission of orders and placing of financial instruments, official as of Friday, April 17th 2015. We see the licence as a unique strategic asset for our expansion strategy because of its legal and business values.
The evolution of the alternative finance market has shown the need for a more structured environment to increase the trust level of the participants. The Crowdinvesting segment, in particular, deals with a high-risk asset class and risk communication and expectation management are key factors for the long-term success of the industry. We believe the licence has a positive effect on these issues by increasing the professionalism required to operate in the industry and working on several aspects of the communication between the companies, the platform and the potential investors.
Investment firm licence poses the basis for the minimum requirements of any platform that wants to operate professionally in our industry in the future. Being the first and only platform with our kind of licence we have the possibility to capitalize on our first mover advantage by entering and opening new markets. This represents the corner stone of our international expansion and diversification strategy and puts us in a valuable unique position in the European Fintech environment.
Invesdor has launched earlier this year a new set of services for our client companies through the 100% owned subsidiary Invesdor Services. Invesdor Services focuses on crowdfunding consultancy to help companies raise funding and minimize the trust gap between the target companies and investors. The unit is fully operational and is targeting positive income for 2015.
The team has already successfully served several clients from various industries and is currently working on a full pipeline for the next months. Invesdor Services is an important step of Invesdor’s strategy since it aims at delivering services Europe-wide from our headquarters in Helsinki and increase the amount of successful cases. Clients benefit of the dedicated approach and the deep knowledge of the crowdinvesting, i.e. equity and debt crowdfunding market and minimize the effort for their funding round. The service is targeted especially for traditional SMEs and growth companies that have already a validated local market and are on the edge of further expansion or innovation in their respective industries.
Equity crowdfunding is Invesdor’s initial offering to our clients. We have launched the first equity crowdfunding campaign in Finland in mid-2012 and since then we have accomplished an impressive track record of successes. Our client companies raising funding through the platform have the possibility of working on their pitches, deciding the amounts, what they want to raise, set the valuations, set the basic shareholder rights and then run the crowdfunding campaigns.
Our equity arm has generated high interest and stunning success cases since the beginning of the operations with:
- 500+ application on the platform
- 90 companies accepted
- 31 successful cases
- 4,4+ MEUR collected for our client companies
- Average Pre-Money Valuation: 1,5 MEUR
- Average amount raised: 118.000 Euro
Successful cases range in different industries with companies of different sizes and maturity. We distinguish between two main kind of client companies that raise equity funding through our service:
- Early start-ups that aim at involving their networks and angel investors to kick-off their business
- More established SMEs aiming at scaling up their growth that target investors looking for interesting diversification opportunities in their industry.
We are happy to announce that our unique debt or credit crowdfunding product will be open to the public in the next months.
Invesdor has been working on a unique form of bonds, called Crowdbonds. Our Crowdbonds will have a value of 100 Euro each and will be fully transferable allowing financiers to buy and sell them in a secondary market. Entrepreneurs will have the possibility to decide on the maturity of their Crowdbonds at the beginning of the round and the interest rate will be formed dynamically via an auction system.
We have already developed the needed technology for the dynamic pricing of the interest rate and plan to announce the first debt crowdfunding campaigns soon. A binding agreement between the lender and the issuer is possible to introduce a hybrid form of financing like, for example, convertible bonds.
The business lending segment is one of the fastest growing segments in the alternative finance industry and we believe it constitutes an important business opportunity for Invesdor. Our unique offering in the market with transferable Crowdbonds with an auction set interest rate represents an excellent funding option for companies.
Ownersportal and secondary market
Equity crowdfunding, by definition, involves a crowd of investors joining the capital table of a company. We understood early on in the process that both entrepreneurs and investors are concerned of the amount of work and communication required for managing a vast shareholder base. We introduced Ownersportal, an electronic shareholder management tool that allows companies to keep track and contact their shareholders. Investors, instead, can use the tool to keep track of their investments, shares and voting rights.
Ownersportal allows companies and investors to access our secondary market developed in cooperation with Privanet. Launched earlier in 2014, the secondary market, represents an exit opportunity for investors for an otherwise highly illiquid asset class.
For companies who want to list in an official stock exchange soon after Invesdor round, we are preparing a pathway to official book entry system.
We have initial discussions about creating an open-ended fund, which will only invest via Invesdor crowdinvesting service. We want to create a possibility for investors to invest in a growth company index. We believe that this kind of fund will attract much better quality deal flow to Invesdor, but also make the investment into this category much more accessible to the investors.
Our international team represents the corner stone of our growth and international expansion. The unique mix of different expertise and backgrounds allowed us to create a strong company culture and an environment where each individual is focused on quality and customer service.
Our board members have an extensive background in finance, investment banking, law and sales and bring a strong added value to the company. You can find more information about the whole team in our team page.
CEOWith more than 16 years of experience working in finance, banking and building businesses, Lasse brings solid financial and capital raising experience to Invesdor. Beginning his career as an investment banker in London (Merrill Lynch), Lasse was involved in various capital raising initiatives, stock exchange listings and company mergers and acquisitions. From Merrill Lynch, Lasse moved on to became a partner in Icecapital Securities (Helsinki) specialising in capital raising and acquisition projects. After eight years in investment banking, Lasse moved to KONE Corporation, where he was responsible for company acquisitions and alliances. Recently Lasse was part of Consti Group and Corbel Holding's management groups, with responsibilities for acquisitions, finance and business development. Lasse has a BSc from the Cass Business School (City University, London) and an Executive MBA from Helsinki School of Economics. http://fi.linkedin.com/in/lassemakela
Chairman of the BoardWith more than 17 years of working in financial and pharmaceutical industries and as a start-up entrepreneur, Tero brings international networks and experience to Invesdor. Tero began his career at Serono, a Swiss biotech company, where he worked in R&D and marketing. He joined the Nordic investment banking arm of ABN AMRO in 2000 and spent 11 years in equity brokerage business, a career that took him to London and Zurich. He spent the years 2003–2011 mostly abroad. After moving back to Helsinki with his family in 2011, he has focused on grassroots level work with Finnish start-ups in life science and financial sectors. Tero has extensive experience of equity brokerage, equity capital markets, M&A and start-up finance. Tero has a MSc in Pharmacy from University of Helsinki and an MBA from Helsinki School of Business Administration. http://fi.linkedin.com/pub/tero-weckroth/0/27/5b9
Board MemberMikko is managing partner at Summa Capital. With more than 17 years of experience as entrepreneur and in banking and corporate finance he brings important skills to the board. Mikko also worked at Deutsche Bank and Alfred Berg/ABN AMRO as an advisor to many significant companies. https://www.linkedin.com/profile/view?id=265135&authType=NAME_SEARCH&authToken=VxoZ&locale=en_US&srchid=709374791398339736668&srchindex=2&srchtotal=3&trk=vsrp_people_res_name&trkInfo=VSRPsearchId%3A709374791398339736668%2CVSRPtargetId%3A265135%2CVSRPcmpt%
Board MemberPetteri brings international sales and marketing experience to the Invesdor Board. He is well known for his high energy, positive never-give-up attitude and unlimited creativity. Currently Petteri has a senior management role at Oracle Corporation. He has a strong, over 15-year long track record in managing, coaching and recruiting the most successful multinational sales teams. Petteri holds an Executive MBA from the Helsinki School of Economics and a BBA degree from Helsinki Business Polytechnic. He has studied Marketing and Information Systems in Helsinki and Dublin. http://fi.linkedin.com/pub/petteri-poutiainen/0/2b/500
Board MemberTimo is a legal counsel to high growth companies, business angels and private equity investors on areas including financing rounds, transactions, corporate law and IPR. In 2006, after having worked for several years as a lawyer specialising in technology companies, equity investments and corporate acquisitions, Timo joined Fondia, a start-up company offering a new approach to corporate legal services. Timo is also a board member to several startup and growth companies and acts as the Chairman of the Boardman 2020, a network which supports Finnish startups and the development of a pro-business culture in Finland. Timo combined legal studies at the Helsinki University (LLM) with business studies at Helsinki School of Economics and Business Administration (BSc (Econ)). http://fi.linkedin.com/in/tlappi
Board MemberTeuvo graduated with an MSc (econ.) and began his career in accounting at KONE. He advanced within the organization to become CFO of KONE’s crane division. Later on he was also the area director for Konecranes Plc’s Western European operations and CFO of Konecranes. During his career, Rintamäki has been nominated i.a. as the sixth best Nordic CFO by the IR Nordic Markets study in 2006. Since 2008 he has been an independent investor and advisor. In addition to Invesdor, Rintamäki is also a member of the board at Etteplan Oyj, TM Voima Oy and LeaseGreen Oy.
COOHanna-Leena brings the Invesdor team over 15 years of experience in business development and marketing both from corporate and startup worlds. Hanna-Leena started her career in management consulting at Vectia, working 5 years with clients across industries in marketing and customer strategy, service design and account management. She then worked in service design and customer loyalty programs at Tallink Silja, the leading cruise and passenger transport provider in the Baltic Sea. Travel industry was followed with 5 years at a global pharmaceutical company Pfizer where she was responsible for business development in several innovative remote-service and technology initiatives and was responsible for implementing digital remote sales tools across Europe. Lastly, Hanna-Leena played a key role in growing a health-tech startup Wellmo from seed stage to international growth track. She continues to act as an external advisor to Wellmo. Hanna-Leena has Msc. in Economics and Business Administration from Helsinki School of Economics. https://fi.linkedin.com/in/hannaleenaback
International Senior AdvisorHenrik Ottosson is based in London where he has lived and worked for the last 20 years. He has a background in investment banking and global markets where he has worked in various roles as Managing Director and Head of Nordic Region. During his career in London he has worked at Goldman Sachs, Credit Suisse, Royal Bank of Scotland and Société Générale. His experience ranges from capital markets, equities and fixed income to asset and liability management solutions. Additionally, he has extensive experience in developing distribution strategies and product partnership with financial advisors, insurance companies and wealth managers. Today he works as an entrepreneur, investor and independent consultant with a focus on Northern Europe and the financial services industry. https://www.linkedin.com/pub/henrik-ottosson/62/468/41b
International Senior AdvisorDr. Rotem Shneor is an associate professor in international management at the University of Agder’s School of Business and Law in Norway. He serves as the academic director of the Center of Entrepreneurship at the University of Agder, and is managing a range of collaborations with public and private actors in the Southern Norway entrepreneurial eco-system. In addition, he is also serving as the head of the Nordic Crowdfunding Alliance, and is an active advocate of crowdfunding in Norway. Rotem has wide experience in evaluation, development and implementation of local and international business development efforts of small and medium companies in a wide variety of industries. https://www.linkedin.com/profile/view?id=4187524