How good are returns from equity crowdfunding?

Recent successful exits inside the equity crowdfunding industry prove the possibility of returns to be greater than expected.

equity-crowdfunding-returns

As the champion of alternative finance, equity crowdfunding has disrupted the financial sphere with its offers of democratizing investment and opening it up to new echelons of investors.  The risk inherent in startup investment has roused skepticism since the beginning,  with industry detractors claiming that only high-risk investors will circle the industry.  Nonetheless, the liquidity of equity crowdfunding, which likewise raises question marks, has continued to attract investors from across the full spectrum of investment.  There is now sufficient research to negate the skepticism surrounding the returns from equity crowdfunding, and today Invesdor looks at the figures. 

 

The Facts and Figures

We know the figures about investing in startups. 90% of startups fail, 50% of all businesses fail in the first five years, and 40% lack the market need for their product.

Following the equity crowdfunding boom in 2014, more research has been revealed that educates how viable equity crowdfunding in startups has become. For example, the AlfFi report on companies that raised finance through equity crowdfunding is definitive, offering a counterpoint to industry scepticism, showing that of those companies who funded since 2013, 80% were still trading. Likewise, last year saw the highest first quarter for dollars invested since 2000.

Finally, research firm Beauhurst has likewise compiled research on issuers raising capital via equity crowdfunding, stating within the report that “according to the data at least – crowdfunding may be turning into a form of fundraising far less risky than anyone could have predicted.”

 

The Winners of Crowdfunding

Recent successful exits inside the equity crowdfunding industry prove the possibility of returns to be greater than expected. For example, when Fireblade, a cyber security firm, was acquired by Stackpath for $20 million, the crowdfunding platform that had facilitated the raise created the (first in the world) role of ‘Chief Exit Officer’. Similarly, the very first successful crowdfunding exit was an enormous one, with UK startup E-Car Club being acquired by Europcar. The first crowdfunding exit via IPO came from Finland with Heeros's listing on the Nasdaq First North Helsinki, however the share price has not changed considerably in the three months since the IPO.

These sorts of successful exits result in amendments to equity crowdfunding regulation, like the UK’s subsequent FCA amendments, or the formation of a committee for equity crowdfunding in Sweden.  The Finance Minister of the latter has promised to improve conditions for emerging companies and crowdfunding platforms alike.  Further, in a deal that Fortune.com described as “the transportation version of Facebook’s deal for Instagram”, General Motors acquired Cruise Automation, a San-Francisco based automated car development company – in the equity crowdfunding industry’s first billion dollar exit.  The deal was celebrated by observers from within the industry as exciting proof of disruptive tech companies opting for equity crowdfunding for Series A and B funding. 

Ultimately, these returns herald the next generation of equity crowdfunding, which now offers tangible returns to loyal investors, and has quelled the initial skepticism that clouded the industry. As a result, the industry grew 84% in 2015, to £1.74 billion in funds raised across Europe alone. These companies and their platforms indicate the exciting and dynamic potential of equity crowdfunded businesses.

 

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RichardAndreeWiltens

About the author
Richard Andrée Wiltens is a commentator within the fintech sector, who has written for an array of international investment platforms. His career has spanned from investment banking to financial technology firms, backed by an education in economics and finance.

5 Tips on Pitching from Pitching Guru Annette Kramer

No one is born understanding how to articulate a value proposition effectively, so practice with the right feedback is key to success. Here are some tips to help keep you on track as you explore investment opportunities.

Pitching-tips

London continues to buzz with new start-up activity.  The ecology has become so robust and offers such numerous opportunities that even the threat of BREXIT doesn’t seem to have slowed numbers of new businesses.

Along with the numerous opportunities generated by such a large community of high-growth companies comes heavy competition for attention from investors.  No one is born understanding how to articulate a value proposition effectively, so practice with the right feedback is key to success.

Here are some tips to help keep you on track as you explore investment opportunities:


1. Start a conversation

Rather than thinking of your communication as a broadcast or “pitch”, instead start a conversation listeners want to continue.  Think of opening a conversation rather than closing a deal.  Business is never done in the first meeting.

 

2. Know your audience

Be careful to keep an investment conversation entirely investor-focused – it's not a marketing pitch.  If you combine marketing and investor information, the result tends to be a muddle for your listeners.  Know how your audience hears, and keep the data specific to what the room is listening for.
 

3. Don’t make your listeners read text

Slides should be used to support your story, not to lead it.  If you can make a point effectively without the use of a slide, get rid of the slide.  Certainly don't make your listeners read text.  It's distracting and, again, dilutes focus from the point you're making.


4. Leave room for curiosity

Don't try to be exhaustive when first approaching someone you’d like to talk to.  Instead, be brief, and think of ways to persuade your audience to ask questions, leave room for curiosity, and just show a little leg.


5. Listen to everything but stay true to your company

Avoid VC whiplash by focusing on what you’re trying to accomplish.  Every investor will have an opinion about what you should be saying and how you should say it.  This is your company, so listen to everything but change only what you know will meet the criteria of Best Practices.

 

Need some help with your pitching? Join us on March 16th for a workshop led by Annette Kramer on Getting Pitch Ready for Investors. Book you tickets on Eventbrite.

AnnetteKramer

About the author:
Annette Kramer is a non-executive director and communications consultant who has successfully helped corporates and entrepreneurs secure funding, clients, and new markets in Europe, the US, South America, Africa, India and the Middle East. Annette is known by start-ups as London's leading Pitch Mechanic

‘Skype for Grannies’ Pivots to Digitalise Elderly Care

Finnish tech startup Pieni piiri refocuses its business from being a ‘Skype for grannies’ app to a provider of digitalised elderly care services. To fund the growth of its new business, the company has launched an equity crowdfunding campaign.

Pieni-piiri-Skype-for-grannies

PRESS RELEASE 23 February 2017

Finnish tech startup Pieni piiri refocuses its business from a ‘Skype for grannies’ app to a provider of digitalised elderly care services. To fund the growth of its new business, the company has launched an equity crowdfunding campaign.

The story of Pieni piiri – Finnish for ‘small circle’ – began in 2010, with a recently widowed grandmother. The founder Matti Kari noticed that even that her granny was in good physical condition, she was almost completely lacking in peer contacts. It was soon discovered that she wasn't the only one suffering from isolation and loneliness - up to 50% of the elderly receiving home care report feeling lonely in countries across the Europe.

Pieni piiri’s business builds on its original ‘granny-proof’ tablet application. Essentially, the application can be used to make digital services accessible to elderly end users without any previous IT skills. The application is used by a number of health and care organisations, including the Hospital District of Helsinki and Uusimaa (HUS), Mainio Vire, and the Finnish cities of Vantaa and Kotka.

“We found out that most care organisations are unable to reshape the ways they work”, says Mikko Järvinen, CEO of Pieni piiri. “To overcome this issue, we’ve decided to build our own 100% digital elderly care organisation. We believe to serve thousands of elderly customers by 2020.”

By building the new digital service organisation, Pieni piiri Oy will pivot from software business towards digital elderly care services. The initial market focus will be in Finnish home care, but at later stages the company will expand to other elderly customer needs on new markets.

While the crowdfunding round has been open for public for only a week, Pieni piiri’s equity offering has already raised over 40,000 euros. The target is to raise at least 100,000 euros for sales and marketing to break profitable with the new model.

“I believe we can truly be the change we want to see. At the same time, we can save money from our public health care system and, by means of our digital community, improve the quality of life of the elderly,” says Matti Kari, the founder of the company.

“Digitalisation is coming to all industries, and virtual home care visits are a great example of how digitalisation of elderly care services can both reduce the costs of providing the services as well as making them more accessible by eliminating costly logistics. Pieni piiri is doing in elderly care what we at Invesdor are doing in finance, and we are happy to be able to help,” says Mikko Savolainen, communications manager at Invesdor.

Read more about Pieni piiri's equity offering at Invesdor.com/pienipiiri

 

Contact:

Mikko Järvinen, Partner, Pieni piiri Oy
mikko.jarvinen@pienipiiri.fi, +358 44 5675 756

Mikko Savolainen, communications manager, Invesdor Ltd.
mikko.savolainen@invesdor.com, +358 40 747 5205

 

Pieni piiri in brief:

Pieni piiri was built as a “granny-proof” tablet application, that makes digital services accessible to elderly end users without any previous IT skills. The application is featuring easy to use interface and video calls, making the most natural social interaction possible regardless of abilities. Pieni piiri is currently used by dozens of home care providers, but also organisations serving customers with mental health problems or learning disabilities.

More information: http://www.pienipiiri.fi/ 

 

Invesdor in brief:

Invesdor is the Nordic market leader in equity crowdfunding platforms measured in invested capital and revenue in 2015. A financial technology (fintech) company founded in Finland in 2012, Invesdor operates an online investment platform that connects ambitious European growth companies with investors worldwide. So far Invesdor has helped raise more than 26 million euros and hosted 73 successful equity crowdfunding campaigns.

Invesdor's clients include private and publicly traded companies from Finland, the UK, Norway and Denmark as well as investors from more than 50 countries. Invesdor has offices in London and Helsinki.

Invesdor in numbers 2016

Invesdor media kit

Award-winning crowdfunded accessories help avoid everyday crankiness

Turtleneck, a Norwegian company based out of Oslo, has a novel approach to internationalisation: it crowdfunds its way to international markets. With an award-winning Kickstarter campaign under its belt, the company has now opened an equity campaign on Invesdor.

Pullover by Turtleneck

PRESS RELEASE 22 February 2017

Turtleneck, a Norwegian company based out of Oslo, has a novel approach to internationalisation: it crowdfunds its way to international markets. With an award-winning Kickstarter campaign under its belt, the company has now opened an equity campaign on Invesdor.

Turtleneck’s accessories are designed to help avoid everyday crankiness by solving common accessory problems in a fashionable way. For instance, ‘Pullover by Turtleneck’ is a sleeve for your earphones that keeps their cords tangle-free, while ‘Høytrykk by Turtleneck’ is a portable vibration speaker that you can attach to any surface you happen to have available.

“Our products have to make the user feel good and look great when wearing them,” Turtleneck co-founder Karstein Lien summarises Turtleneck’s design ethos.

In a short period of time the company has expanded from a one-product company focused on the ‘Pullover by Turtleneck’ to a fashion-tech lifestyle brand with three other products launched in 2016 and three more on the way in Q1 and Q2 of 2017.

Turtleneck is no rookie when it comes to crowdfunding: the company’s Kickstarter campaign in November 2015 won the award for the best Norwegian crowdfunding campaign in the consumer goods category. Now Turtleneck is turning to equity to raise funding for hiring sales personnel.

“We love crowdfunding, it’s a fun challenge and a very logical move from a business perspective. Our goal is to get 50 to 100 new co-owners. This may sound resource consuming, but we believe that the value they bring to our business is worth so much more than the extra work that follows. Think about it, our new owners will also act as brand ambassadors, merchants, idea accelerators and problem solvers. In addition, they hold competencies and knowledge that can be useful for us,” Tore Helland, co-owner and CEO explains.

”We love Turtleneck’s approach; they don’t take themselves seriously but they are serious about the business they do - making well engineered products that solve everyday problems.  Since we met I have bought a Turtleneck solution for my earphones, raved about it so much that 6 other people in the Invesdor team have bought one since,” comments Peter Moore, Invesdor’s Equity Director in Norway and Sweden.

“Following an award-winning Kickstarter, it only makes sense that they move to the next step and raise equity funding with Invesdor.”

 

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Contact:

Karstein Lien, Co-founder and COO, Turtleneck AS

karstein.lien@turtleneck.life

Mikko Savolainen, communications manager, Invesdor Ltd.

mikko.savolainen@invesdor.com, +358 40 747 5205

 

Turtleneck in brief:

Turtleneck is a Scandinavian fashion-tech accessory brand helping people avoid everyday crankiness by eliminating their irritating everyday problems. Its first product, Pullover by Turtleneck®, was launched in November 2015. It is a beautiful textile sleeve that makes your earphones tangle free. You don’t have to carry with you any separate devices or buy a new set of earphones. Continue to use the earphones you already have. Make them awesome looking and tangle free. 

Invesdor in brief:

Invesdor is the Nordic market leader in equity crowdfunding platforms measured in invested capital and revenue in 2015. A financial technology (fintech) company founded in Finland in 2012, Invesdor operates an online investment platform that connects ambitious European growth companies with investors worldwide. So far Invesdor has helped raise more than 26 million euros and hosted 73 successful equity crowdfunding campaigns.

Invesdor's clients include private and publicly traded companies from Finland, the UK, Norway and Denmark as well as investors from more than 50 countries. Invesdor has offices in London and Helsinki.

Invesdor in numbers 2016

Invesdor media kit

5 things startups should know before entering a corporate accelerator

Accelerator and incubator programmes sponsored by corporations continue to pop up in the UK. Startups should vet the corporations as thoroughly as the corporations vet them.

UK startups have myriad accelerators to choose from

Even the British intelligence and security organisation GCHQ now has a startup accelerator – but what’s right for your start-up?

Last month, GCHQ announced the seven start-ups accepted into its newly launched Cyber Accelerator initiative.The initiative – a triad between GCHQ, the Department for Culture, Media and Sport (DCMS), and Telefonica’s Wayra accelerator – is part of a government “strategy to drive cyber security ideas and innovation, domestically,” writes TechCrunch.

However, if it feels a little bit like GCHQ is just another in a long line of corporations and organisations jumping onto the accelerator/incubator bandwagon, you’re not wrong. Companies across the spectrum are making concerted efforts to bring start-ups to their door, from beauty brand L’Oreal to health insurance provider AXA PPP, from City law firms to Facebook and Uber.  

Rather than a ‘keeping up with Joneses’ scenario, this increase in corporates reaching out to start-ups indicates a realisation that the best forms of innovation often come from without, instead of from within. “The number of interactions has grown in the last five years as increasing numbers see new companies as an opportunity rather than a threat, with both learning from the other,” Chris Haley, head of start-ups and new technology research at Nesta, told TechCity News.

However, with start-ups in the UK almost spoilt for choice with the number of incubators, accelerators and CVC programmes coming from corporations, it can be hard to know which – if any – to go for. While the clout associated with working with – for example – GCHQ no doubt makes for good pub anecdotes, how do you choose which corporations to engage with?

The answer is in vetting them as thoroughly as they vet you. Think of it as a job interview, that goes both ways. Here’s our checklist of five things-you-should-know before working with a corporation or large organisation, whether via incubator, accelerator, or CVC programme:

 

1. Compare ethos and ethics

Are your core values aligned? Could you support their statements on corporate responsibility? Do they tend to treat, pay and remunerate their employees and other start-ups in a way that you can get on board with?

2. Know their objectives

Corporations enter into start-up engagement for a myriad of reasons, and each will impact how they work with you. Are they hoping to inject some fresh air into their corporate culture? Is engaging with start-ups part of larger re-branding initiative? Or are they looking solve specific business problems and/or future-proof the business?

3. Interaction, and with whom

Who will be your main point of contact and what is their position in the organisation? What kind of interaction can you expect from them? Day to day? Once a week? Skype every few days or so? What data will they want from you – progress, spend, analytics, customer numbers, etc – and how often?

4. Why you?

Ask them why they want to work with you, so you can have better insight into their goals and their expectations.  Is it purely your platform, API or technology? Are they hoping to harness some of your work culture? Is their main goal to tap into your customers?

5. How long will it last?

Have a clear understanding of their goals, KPIs,  and intentions. Do they have in mind a clear exit aim? Is there a time-frame for how long they’ll work with you, and what support will they offer you afterwards?

Of course, corporate partnership isn’t for every start-up. The benefit of the diverse entrepreneurial ecosystem in the UK is the breadth of funding routes to explore. From angels to crowdfunding to pitch competitions, start-ups can (and should) explore the array of options.

 

Are you a UK startup looking exploring ways to grow internationally? You might be interested in our international crowdfunding services.

Gayle

About the author:
Gayle O’Brien started her writing career during Web 1.0 and still appears to be standing. After multiple stints in-house and agency side, her writing now focuses on start-ups, technology, and innovation. A dual citizen of the US and UK, Gayle divides her time between Massachusetts and south-east England.

Mika Ihamuotila invests in Invesdor

"I believe that in the near future there will be fewer middlemen, such as banks, between investors and businesses looking for funding," says Ihamuotila, chairman of the board of the iconic Finnish fashion and design company Marimekko.

Mika Ihamuotila invests in Invesdor

PRESS RELEASE 16 February 2017

Mika Ihamuotila, chairman of the board of the iconic Finnish fashion and design company Marimekko, has invested in Invesdor, a provider of digital financial and crowdfunding services.

”I believe that in the near future there will be fewer middlemen, such as banks, between investors and businesses looking for funding. On the one hand this is made possible by digitalisation, but on the other hand it is also about developments in legislation and proliferation of crowdfunding,” Ihamuotila ponders.

”In my opinion Invesdor is a very promising startup in this sector. In a short time it has grown to be the largest crowdfunder of Nordic businesses thanks to its digital platform and skilled team. I hope that I will be able to contribute to the growth and international success of this Finnish company,” Ihamuotila says.

”We are happy to have Mika Ihamuotila onboard as an investor and sparring partner,” says Invesdor CEO Lasse Mäkelä. ”Mika is an exceptional combination of strong banking experience and strong knowledge of digital business. He has accumulated experience in the financial industry as CEO of Mandatum Bank and Sampo Bank and in digital businesses via board roles at Elisa, Rovio and Sanoma, among others.”

Invesdor, a fintech company known for its equity crowdfunding service, develops digital solutions for the financing needs of SMEs and public companies. In 2016 the average transaction size on Invesdor’s platform doubled to 612,000 euros. Capital invested during the year also doubled to 14.7 million euros.

Invesdor, which is currently active in Finland, Norway, Denmark and the UK, is considering expanding into Sweden this year. Invesdor itself has raised a total of approximately three million euros in funding, most of which has been raised through its own digital fundraising platform.

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Contact:

Lasse Mäkelä, CEO, Invesdor Ltd.
lasse.makela@invesdor.com, +358 40 7533 844

Mikko Savolainen, communications manager, Invesdor Ltd.
mikko.savolainen@invesdor.com, +358 40 747 5205

 

Invesdor in brief:

Invesdor is the Nordic market leader in equity crowdfunding platforms measured in invested capital and revenue in 2015. A financial technology (fintech) company founded in Finland in 2012, Invesdor operates an online investment platform that connects ambitious European growth companies with investors worldwide. So far Invesdor has helped raise more than 26 million euros and hosted 73 successful equity crowdfunding campaigns.

Invesdor's clients include private and publicly traded companies from Finland, the UK, Norway and Denmark as well as investors from more than 50 countries. Invesdor has offices in London and Helsinki.

Invesdor in numbers 2016

Invesdor media kit