Invesdor review with Mikko Savolainen
Mikko Savolainen is communications manager at Invesdor, a firm which helps startups source financing from the crowd. In this interview, he explains how invesdor works and why startups are an important part of the economy.
What problem is Invesdor solving?
Simply put, we’re enabling growth companies to tap into new global capital flows and investors to find new investment targets.
Stock markets are only the tip of the iceberg, and most of future job growth will come from private companies. However, these companies have so far had limited access to investors, often only being able to talk to small business angel networks and their own contact networks. Vice versa, investments in unlisted companies have previously only been available to the wealthy and well connected, and not to all investors. By digitalising fundraising, we’re making it possible for companies to lower their fundraising costs and to reach a whole new audience of investors.
What is the scale of this problem?
There are very few places on Earth where companies have sufficient access to growth financing, and in those places venture capital and private equity firms tend to wield considerable power over the companies and the term of funding. Opening up the possibility of reaching out to an international crowd of investors gives companies everywhere more options for choosing their own path, and eventually digital funding channels will be relevant for companies in all markets where growth capital is needed.
Similarly on the investor side, while there are of course big differences in retail investment activity due to cultural, economic and regulatory factors, investors everywhere want to take part in good stories. Indeed we already have investors from 70 countries using our platform to invest in Nordic and British growth companies.
What are the three main advantages for investors in crowdfunding campaigns on Invesdor ?
- As a regulated platform, we take due diligence and the disclosing of all relevant investment information seriously.
- Invesdor can be used for efficient investment portfolio diversification with riskier unlisted assets across several geographies.
- Access to previously inaccessible private companies and making direct investments in them.
What are the three main advantages for looking for those looking for crowdfunding through Invesdor ?
- Fundraising is hard work, and our digital tools and processes save companies time by making funding campaigns compact.
- Crowdfunding campaigns have a major visibility aspect to them; the funding round is a marketing campaign with significant carryover effects to future business.
- As a regulated platform, we identify all investors in line with our KYC policies. The companies will always know who they are getting as their shareholders and that these people are clean.
What have been some of the best success stories on Invesdor ?
The one I would definitely highlight is Heeros, an accounting SaaS company. Heeros raised crowdfunding with us in 2015 and IPOed on the Nasdaq First North Helsinki in November 2016. Heeros’s listing was the first crowdfunding exit via IPO in Europe. Other great examples are the million-euro rounds of language learning app WordDive and fresh-casual burger chain Friends & Brgrs. Both of them demonstrated the immense momentum you can build by engaging your networks and by marketing the campaign well; both rounds were oversubscribed in a little over a week.
The key takeaway from less successful campaigns is that campaigns need marketing. The “if you build it, they will come” mentality does not work.
What are your selection criteria to choose applicants for Crowdfunding Campaigns on Invesdor ?
To even be considered, companies have to meet the following minimum criteria: Registered company in the UK, Finland, Norway, Denmark or Sweden (Ltd, Oy, AS etc.), Committed team, Marketing-mindedness, Growth potential, No unresolved credit issues, Up-to-date online presence. After this, the in-depth screening phase focuses on growth potential, founder and team backgrounds, market validation and story. We don’t have any sector limitations, as the same process can be adapted to all kinds of companies.
What was the greatest challenge so far in the course of launching Invesdor ?
In the beginning, we faced considerable pressure from incumbents who weren’t too happy with having a new funding channel compete with them for clients and investment targets. Reaching validation and being recognised as a serious player took a lot of work, and we think becoming regulated was the thing that pushed us past that threshold and generated the greatest trust, both from established industry players and the general populace.
Is Invesdor open to international investors?
Yes, we have investors from 70 countries. As long as the investor’s local regulation allows them to invest abroad in unlisted companies, our know-your-customer and certification processes work with investors of all nationalities.
Where do you see Invesdor in 3 years?
In the past two years we have seen a big leap in the industry towards bigger transactions as public companies have started seeing the possibilities in digital fundraising. It’s becoming viable for listing companies to reach out to retail investors instead of only institutionals, in a sense this is bringing the “P” back into “IPO”. I believe that three years from now Invesdor will remain the market leader in digital fundraising in the Nordics, although the market will be much bigger than it is now. Additionally, and perhaps most excitingly, I think we will be involved in several cross-border IPOs in Europe.
We thank Mikko Savolainen for this interview.