Let’s start with your angel investing career
I did my first angel investment in 1995 into my school buddy’s company. I, of course, lost everything. But that spark didn’t extinguish, so I made a couple of more in the 90’s, before I sold my own company in 2003. Those investments looked good in excel, but were in the end bad, as well. That was an aftermath of dot com boom, so after selling my company, I just kept on investing.
I started to grow my angel portfolio almost accidentally. I got my deal flow from people I knew - I had made an extensive international network by living years abroad in Africa and Paris. I even had my own company in France. Of course getting deal flow only from your acquaintances is not great. The number of companies was small and there were no platforms to get new deals. Doing a competitor analysis was close to impossible. But I did some good investments, some obviously to software, but I also invested into natural candies, newspapers, and so on. Some of them were more like traditional private equity investments.
So when 2010 came and the idea of having FiBAN was introduced to me, it was really a no-brainer. You could get more deal flow, learn something new from peers, exchanging ideas was inspiring and comparing company valuations became easier. I was one of the signatories of the official FiBAN application for Finnish Patent and Registration office, and I joined the very first board, later becoming the Chair of the board.
It came down to either establishing another company as a founder, or becoming a VC fund partner. As running a small VC practise is like being an entrepreneur, I chose that. At first I thought I could operate the fund in a very early stage field, as I had as an angel investor. But then it would have been just the same of what I had already been doing. Thus, my fund, Evli Growth Partners (EGP) became a later stage fund.
So tell us more about your fund
We have now five partners at EGP, including FiBAN members Ari Korhonen and Kim Väisänen. I got to choose the team and I love it! We are all founders who have sold their companies with success, so we know what we are talking about. In addition to growth partners, we have a team of five, which are great analytical support and talent pool which help our portfolio companies.
The fund is for bigger A and B rounds, for companies with 5MEUR revenue and 50 people working, so more mature companies than what I previously invested in. Our portfolio companies are already ready to scale really big. Unfortunately, Finland’s deal flow is a bit small, that’s why we also look into Baltics and Nordics and the whole Northern Europe. We invest into the best companies wherever they are located. So we became more international than what I originally expected, but the geographical location is just a technicality. We just look for the best companies to invest in.
Depending on the case, we can give additional value with our know-how. We concentrate on very core issues of the company: people, product, and sales. Founders like the fact that we are entrepreneurs, as well. We are co-owners in the company and want to see the company succeed.
I have always been driven to be a responsible investor. Especially as a VC investor, when you invest other people’s money, we really look deeply into the cases to see whether they are following the SDGs (Sustainable Development Goals) or are implementing them in some ways into their business and way-of-working. As a fund, it would be really unwise to invest into companies that don’t consider impact or are not responsible in their actions.
Of course we want to make money, but mostly we want to help the entrepreneurs and the world to thrive. We, the EGP partners, still get excited about people’s creativity and resourcefulness. It’s inspiring to see new innovations being created all the time.
How would you compare being an angel investor and a VC partner?
Angel investing is a great replacement for founding companies, but to be frank, it’s quite lonely. You decide to invest on your own, you don’t have a team make the decisions with you or consider the cases together. FiBAN gave that network support, but at the end, you are still on your own.
As I used to be a lead angel there’s not too much difference in the deal making, but the amount of information we get is so much more than what an angel would get. We spend a lot of time getting all the data from the companies before we make the investment decision. We also might have 10 people looking at the deal: we have more resources to use legal assistance and top advisors. It takes a lot of resources from us, and can be challenging for the entrepreneur, but it’s worth it. Then we make plans for the future about team growth, business plan, and so on.
I will never stop being an angel investor - for one, I still have a lot of companies in my portfolio who I work with. Probably I will do a few more angel investments in the future, as they have been a good business for me. I have made money in it.
What do you see in the future for the Finnish funding ecosystem?
I am a bit worried about the future, to be frank, especially from the angel investor’s point of view. Corona will be a big shock to the market. As a health risk corona is very serious, but it will be under control quicker than its financial impact.
I am a bit worried about the future, to be frank, especially from the angel investor’s point of view. Corona will be a big shock to the market. As a health risk corona is very serious, but it will be under control quicker than its financial impact. The risk from the funding point of view is that we, as angel investors, have gotten used to the fact that there’s funding available for future rounds. There has been Business Finland, all foreign VCs and CVCs, you name it. Foreign VCs might not be compelled to look for cases outside their own region, as traveling might be limited for a long time. It’s just hard for Finnish companies to compete with US companies, for example.
My prediction is that at least for the next 6 to 12months it will be difficult to raise new international rounds. If that happens, companies might be pushed back and have to start from almost a scratch. There’re a few pointers for entrepreneurs, which I wrote about in an EPG blog. As a key takeaway, companies need to concentrate on their core, protect their cash flow and runway at all cost, and only start new pilots and projects once the market has settled. If there’s any money available right now, take it in now! We don’t know for sure what will happen, but entrepreneurship, innovation and good deeds will always prevail!
International Affairs Manager
FiBAN celebrates its tenth year of operations in 2020. The festivities culminate in a FiBAN 10-year Gala in December. To hear more, contact the FiBAN Office.
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