Marita Huurinainen, a high fashion brand from Finland, is convinced about the benefits of crowdfunding. The company, whose brand is nowadays among the hottest Finnish fashion brands, is raising equity crowdfunding for the second time. The CEO of Marita Huurinainen, a German-born ex-investment banker named Andreas Jank, sees crowdfunding as a welcome change in the world of finance.
“It is a very positive development that individual investors now have the chance to invest in start-up companies directly. Previously this was only possible for institutional investors, who charge high management fees to their investors. In my opinion crowdfunding brings efficiency, transparency and equality into the market,” says Jank.
Crowdfunding has in a relatively short time become a viable form of fundraising and investing, but regulatory differences between different European countries has been a challenge for cross-border crowdfunding. Some countries are choosing to adopt lighter local legislation to support local growth of crowdfunding. For example Finland’s new crowdfunding act came into effect in September. Jank sees regulation of the industry as necessary, but hopes that regulators will adopt a balanced stance.
“I think that all financial transactions should be regulated. It is important for creating trust in the process. With crowdfunding, especially in smaller investments, it is however also important that the process is smooth and easy to execute. An over-regulated process will scare away investors. Regulation needs to be balanced, so that it fosters trust but not complexity,” Jank comments.
Prior to becoming the CEO of Marita Huurinainen, Jank spent eight years as an investment banker at Citigroup in London. To him, the similarities between crowdfunding and initial public offerings are apparent.
“In many aspects it is like a mini IPO. From preparing the offering documents to reaching out to investors, many steps are almost the same, just on a smaller scale. At the same time crowdfunding is much more personal as investors can very easily communicate with management,” he says.
The more personal touch that Jank refers to can have value for crowdfunded companies, especially ones selling to consumers.
“I see a lot value in a large number of shareholders, because committed shareholders can become customers and brand ambassadors. For us, crowdfunding is not only funding, but also marketing and customer acquisition,” Jank explains.
An oft-repeated mantra in investing is ‘invest only in what you understand’. The wisdom applies also in crowd investing, which entrepreneurs looking to raise funding should understand, thinks Jank.
“The easier the product or service is to understand, the more suitable the company is for crowdfunding. I recommend companies that are B2C to consider crowdfunding because they get a lot marketing from a public funding round,” Jank advises.
What about life post funding round, then? In a best case scenario, the company will have hundreds of new owners. Will general meetings become unmanageable? Based on Jank’s experiences, entrepreneurs should not worry.
“I have had only positive experiences so far. Many crowdfunding investors have become our customers and they actively support our business, while others are quite passive. At no point have I felt that having many investors is a burden. It is rather the opposite. We have many brand ambassadors.”
Mikko Savolainen, Communications manager, Invesdor Ltd.
email@example.com, +358 40 747 5205
Andreas Jank, CEO, Marita Huurinainen / Designium Brand Group Oy
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Marita Huurinainen in brief:
Marita Huurinainen is a Finnish design brand. The product portfolio consists of two main lines: WILD and WAVE. WILD is an ethical and ecological fur collection, while WAVE is a beautiful, elegant, light and comfortable summer shoe. The revolutionary and unique design was awarded the prestigious Ornamo Design Award for the best design product in Finland in 2009.
Invesdor in brief:
Invesdor operates an online investment platform that connects ambitious European growth companies with investors worldwide. Invesdor has helped raise more than 16 million euros and hosted more than 60 successful equity crowdfunding campaigns.
A financial technology (fintech) company founded in Finland in 2012, Invesdor is the Nordic market leader in equity crowdfunding measured in invested capital and revenue in 2015. 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.