An active year for angel investors in Finland despite the global pandemic – 36M€ investments into 321 startup companies – a record year for exits: In total 171 exits, up 68 %
April 20, 2021
Finnish Business Angels Network (FiBAN) and The Finnish Venture Capital Association (FVCA) have published their annual statistics of investments into Finnish startups and early-stage growth companies in 2020.
In 2020, startups and growth companies raised a new record amount, a whopping total of 951 million euros smashing all previous records. Business angels invested altogether 36Me – an amount which is starting to resemble an equilibrium for the Finnish business angel market. The total decreased from last year’s record number €54 million, when many exceptionally large investments were made.
Focus shifted from new startups to portfolio companies and raising follow-on rounds
A stark difference compared to previous years, there was a shift in focus from new investments to follow-on funding rounds: as many as 79% of the startups that received angel funding were follow-on funding rounds, compared to 44% in 2019. “This reflects the message we heard from our members over the year, that in the midst of the pandemic, the main focus has been on helping portfolio companies over this exceptional period, and there has been less time to spend in finding new investments”, says Amel Gaily, Managing Director of FiBAN.
Key figures for 2020
The median investment size per angel per round stayed at 20 000 €, which shows no change from the previous years. Although the median ticket size stayed the same, there was a decline in the larger end, 200-500 and over 500K tickets, which naturally reflects the total investments for the year. The median round size was 226 500 €. Healthcare and Medtech was the top sector in attracting angel funding in 2020.
There was a lot of variation in investment activity: Of business angels that invested in 2019, 55 % invested less in 2020 while 24 % invested more. “As is evident for the nature of private investing, angel investors can adjust their investment thesis as they see fit. Our community of over 650 angel investors consists of investors with different kinds of profiles and situations. It is encouraging to see such substantial contributions in context of an otherwise difficult year” Gaily continues.
Record number of exits in 2020 – Early-stage investing scene is maturing
Amongst angel investments, records were made in 2020 in exits made by investors: a total of 171 exits took place, up 68% from 2019. Of the exits, 13% were highly profitable, yielding a return of ten or more, and 6% yielded a return of five to ten. Despite the challenging year, the number of loss-making exits remained at the level of previous years, standing at 37% in 2020.
“The distribution of returns continues to be in line with the distribution seen in the previous years. Thus, despite the challenging year, the record number of exits is not a result of more liquidations, but a result of increasing angel investment activity over the past years. Therefore, I am confident that we are seeing more good angel exits in the upcoming years as well.”, FiBAN Chair of the Board Reima Linnanvirta adds.
“While the angel investment activity continues to be on a strong trend with over 35 million euros invested into over 300 companies despite the challenging year, we are still behind in the other Nordic countries in respect of the size of a typical round. Thus, we still need to develop tools to further facilitate the syndication in order to ensure that the funding rounds give the startups sufficiently broad shoulders to drive their growth.” Linnanvirta continues.
One of the current initiatives that FiBAN is following closely is the possible creation of a business angel co-investment fund proposed by the Steering Group for Domestic Ownership, set by the Ministry of Economic Affairs and Employment.
“We should aim to raise the median angel investment round from 200.000-250.000 euros closer to 400.000-500.000 euros, which better reflects the rounds in other Nordic countries.”, Gaily continues.
Amel Gaily, FiBAN’s Managing Director and Reima Linnanvirta, FiBAN’s Chair of the Board
Download the presentation on angel investment statistics 2020 here.
Read more: A Record Year for Finnish Startups: The Amount of Funding Raised Nearly Doubled In a Year and Is Already Approaching the Billion-Euro Mark