FiBAN Monthly: Dynamic early-stage investing landscape has to be built
March 09, 2022
FiBAN is a tremendous machine funneling early stage investments and setting the cornerstones of one of the world's most vibrant ecosystems. Our daily activities make a great difference for founders and startups. Therefore, it is also our duty to make angel investing and its impact visible for the wider public and policymakers.
For us investors, it is everyday life, but for the public, it’s something peculiar. Take for example the term angel investing. It’s not once or twice that some of us have been contacted for pure donations or like in the note, misunderstood as charity or at least very close to that.
The way we introduce ourselves is one thing
FiBAN has a long and wide experience in early-stage investing back from the days of the 2008 financial meltdown. FiBAN was founded by private money to get financing running when institutions were sorting out their mess. The action was taken by visionaries who had insight, experience, and capacity to act. Expertise and professionalism have grown and given us great pondus to form private funding for our part.
Pushing forward the early stage investing landscape
We have already been a vital part of drafting the Early-stage co-investment fund. The Ministry of Economic Affairs and Employment started planning a co-investment fund with early-stage investors in 2020. Our members and partners have been largely involved as advisors and experts on the scene, sharing their experience on investing with the officials. The results still remain to be seen, but we have been strong in our opinion that risk-taking and special knowledge on the industry needs compensation in form of carrying or other compensation and we can’t accept a model where public money is only invested with the same terms and conditions as private money.
And there is more that the policymakers can do to push forward the Finnish startup ecosystem:
The exit market is down. The existing marketplace has now shut down due to tightening regulations. Although it is understandable that this kind of financial service must be squeaky clean and transparent, the level of regulation is threatening the very existence of this. There has to be liquidity also on the secondary market in order to attract new money. As the numbers of new investors grow also the possibility of secondary exit comes crucial.
Luckily VC funds are showing more interest and entering the scene as active players. Well-curated companies are better worth the step even though some of the angels would like to exit. It is beneficial for all that forms of financing, ownership transfers, exploitation of growth potential to have more alternatives to choose from. Obviously, this comes with a discount, but nevertheless, these operators are much needed.
What we need is a Finland-sized solution; the Finnish early-stage financing landscape is very thin and we need to make the best of this on our country’s own terms. Adopting ready-made models from other countries doesn’t apply to us due to special circumstances. This is highlighted especially now with tumult in Europe.
Data for telling the difference
We in FiBAN have been collecting valuable and unique data on investments in early-stage startups. There is no one else doing this. Even as an incomplete set of data it shows the potential all investments can have when put in work in early growth companies. All of the investors who have provided their (anonymized) data have made it possible to visualize this impact. A Big Hand to all contributors. This is something that deserves to be noticed even more.
We are eagerly waiting for statistics for the year 2021. Once the results are public, please, do share them with your local media and spice them up with concrete stories of the difference your companies are making.
Chair of the Board, FiBAN
FiBAN Monthly is a blog series discussing current topics among FiBAN and angel investing. A new post is shared each month, alternating between FiBAN Chair of the Board Annukka Mickelsson and Interim Managing Director Aija Bärlund. In case you missed the letter from February, you can read it here.