Finland Should Copy This UK Investment Scheme
There’s an interesting instrument being implemented in the UK. It’s called Seed Enterprise Investment Scheme (SEIS).
In the light of the current financial crisis, this kind of tools should definitely be taken into use in Finland as well. It’s not too far-stretched to say that without getting many (really many) start-ups of the ground and really fly, we’re doomed. We should not let Angry Birds fly alone, there space in the sky for the others as well.
This kind of incentives would motivate private investors to invest in early-stage companies which have great difficulties to raise the initial funds to prove their point. Even though there are emerging new funding tools such as venturebonsai.com, it’s not enough. Maybe the best approach would be combining these two approaches: effective deal-flow and process tool together with tax incentives. This would be perfectly doable.
Summary of this proposal is:
- Individuals will benefit from… Continue reading
Did Nokia kill the Finnish Startup Ecosystem?
Yesterday 11/2/11 was the day of the big news. Nokia ecosystem in Finland is going to be shut down.
Hey wait, what ecosystem? Well, the one around Nokia and Symbian, based on Nokia buying services from subcontracting companies. It could be defined as a system where one big giant defines the game and the others follow. Too bad if that one horse dies… like happened yesterday.
It of course could have been otherwise. People always keep asking what would be the next Nokia for Finland. It’s a wrong question, based on very old Finnish understanding of military-like chain-of-command. Riding on a one-horse-only strategy is bound to fail.
One of the big problems of the last decade was betting on one horse only. Well, it’s not of course fault of Nokia if everybody wanted to work there instead of being entrepreneur. Working for Nokia was cool, being an entrepreneur was… Continue reading
Introducing Equity Crowdfunding
Venture Bonsai is now open! It still requires an invitation, but it’s easy to get one. Just make sure you include your LinkedIn profile link and briefly explain whether you’re an entrepreneur with a start-up looking for funding next year or an investor, willing to invest 5000 euros to one or more companies. Brief introduction is here.
This first release of Venture Bonsai already enables two very important things:
- It has an end-to-end process (following the financing regulation) for an entrepreneur run a funding round
- It has an end-to-end process for the private investors invest money in the companies
Crowdfunding for entrepreneurs
You can learn more about how to prepare for a funding round (as an entrepreneur). The whole process (preparing and running the round) has been implemented from a view point of an entrepreneur (as we are entrepreneurs ourselves and know what we’re talking about). One of the… Continue reading
The Statue of Liberty was Crowdfunded
So you knew crowdfunding is not actually a new idea. It was, after all, used already for years in the music and movie industry.
But did you know that it dates way beyond that. Even The Statue of Liberty in New York was in a way “crowdfunded”. The statue was a gift to the United States from the people of France. They agreed that the French finance the statue and the Americans provide the pedestal and the site.
But the Americans ran out of money.
Here’s the story…
The price tag for building the pedestal and erecting the Statue topped $300,000. The American Committee raised half this sum between 1877 and 1884. Then a crisis occurred: the Statue was due to arrive, funds had run out, and work on the pedestal stopped. In March 1885, publisher Joseph Pulitzer and his newspaper, The World, came to the rescue with a highly successful… Continue reading
Crowdfunding and the Benefits of Standardized Documents
Traditionally, running an investment round has meant a lot of work with the legal documents. Getting the Term Sheet and Shareholders’ Agreement into such a document that all parties agree on, can mean a lot of work and legal costs. Quite often it’s also the investors who bring the initial document on the table (as often the entrepreneurs don’t have those in the first place).
But what is the definition of a standardized document?
For me it is a document that is acceptable for all parties (investors and entrepreneurs alike) as such, without any tough negotiation concerning the key issues. The parties could just select between some key options (like in this Term Sheet Generator) and fill-in the blanks, such as the company name, valuation and the amount of funding.
With the “old way”, agreeing on the Term Sheet and the creating the actual financing documents requires a lot… Continue reading
What About the Exit?
So you got your friends, family and even some angels believing in you to invest in your startup. But what if it takes a bit longer than anticipated to make it a success? Wouldn’t it be nice to have a mechanism for the early-stage private investors to make a partial exit?
Many people believe that having a possibility to exit a private investment withing 3 years would greatly accelerate the willingness to invest. The effect would probably be much greater than any of those planned tax breaks. Tax breaks are useful, after all, only after making an exit.
Why should you, as an entrepreneur, worry about the exit strategy of your private investors?
Aren’t there already enough challenges of your own?
There are quite a few things that make this important aspect to think about.
Well, at least to think about whether it concerns you or not.
According to the… Continue reading
10 Years Ago: Akumiitti’s 20 M€ Funding Round
Time flies, they say. It’s now ten years since we closed in Akumiitti one of the biggest investment rounds in Finland.
Akumiitti was founded by Antti Hannula, Pertti Kasanen and Mika Wenell. The company was originally focusing on advanced backend solutions for networked services, and evolving into one of the leading companies in the mobile entertainment solutions.
One of the projects startingf around 1998 was concerning ringtones. That turned out to be one of the key businesses for Akumiitti as well. You can read some of the history here!
By the way, there has been quite a bit discussion concerning who “invented” commercially made quality ringtones. Technically it all goes back to the idea of some Nokia engineers trying to find use for some extra memory in the phone, and the SMS protocol enabling over-the-air ringonte download. The truth is that the originally idea was given by… Continue reading
Silicon Valley Early-Stage VC & Angel Investor Event
Today I had an opportunity to participate a pitching event arranged by FundingPost.com, in Palo Alto, California. The event consisted of group of entrepreneurs pitching for the audience and then the panel of Venture Capitalists giving comments on the state of the industry and the presentations as well.
It was stated that Friends&Family investment rounds can typically be up to half a million dollars (unless you have really rich friends and family) and VC investments typically start at 2 million. So there is a great gap in between, and that has increased the deal flow for angel investors. At the same time “time to liquidity” ie. time from investment to exit has doubled. Today, investors may have to be prepared to stick with the company even more than 10 years.
As always, some companies are more “hot” than others. That influences the interest to invest. In the best position is… Continue reading
Elevator Pitches on the Video!
As part of the Venture Bonsai concept, we shot the first five elevator pitches today in Helsinki.
The idea is to make two videos for start-ups looking for funding: one public 100 seconds video and another 5 minutes non-public video which can be shown to potential investors.
To our knowledge, this is the first time elevator pitches are really made professionally.
Same questions were asked from each entrepreneur and if the answer filmed did not go well enough it was shot again. All the aspects of each answer were fine-tuned towards high quality of the message.
The filming itself was done by a professional as will be done the editing.
Looking forward seeing really cool videos next week!
Crowdfunding Made Easy: Venture Bonsai Is Coming
Last Friday we released some information on our crowdfunding project, now officially named as Venture Bonsai.
Venture Bonsai is a tool for companies (start-ups and others alike) enabling them run a crowdfunding-style financing round successfully.
I’ve covered some of the challenges of the crowdfunding model in my recent blog articles (Part 1 and Part 2). Venture Bonsai is about to solve some of those, if not all, challenges.
The key benefits of using Venture Bonsai are
- Demystification of the crowdfunding process, and a funding process in general
- Offers tools and processes to follow the financial regulations
- Offers tools for acquiring or creating the key documents such as Business Plan, Shareholders’ Agreement and Term Sheet
- Offers a platform for Vendor Due Diligence (DD), including DD done by certified partners
- Includes tools for company valuation
- Includes a “Show Room” for your marketing material
- Includes “Elevator Pitch on the Video”
- Includes communication… Continue reading