Good things can come out of university projects. Take for example Fredrik Teir, a student at Hanken School of Economics in Helsinki. As part of his school project he, together with a friend, wanted to learn more about funding possibilities for start-ups in Finland. Within two months they identified over 100 potential funders. To organize and make sense of the information they built Rahoituskone.fi, a search engine that helps start-ups find most suitable potential investors. The website covers both state and private funding institutions. With Rahoituskone start-ups can search for funders based on the amount of funding they are looking for, the type of investment and the kind of funding institution they seek the investment from. The engine would also show what investors would require from the start-ups in return. Rahoituskone is completely free to use.
Collecting information for the website was no easy job. 'When looking into different funding instruments we first checked the information on their websites and then double-checked it by calling those institutions directly', explains Fredrik. 'Some were unwilling to share the information at first, but once we made it clear that we'd include them in our list anyway, they would easily cooperate'.
Rahoituskone is targeted at any company that is seeking funding and the website's overall goal is to help entrepreneurs make informed choices when fund-raising. After making a brief overview of all the funding possibilities in Finland, Fredrik started looking more closely into each individual sector. The first segment he focused on were business angels.
The main finding Fredrik made was the importance of business angel networks. 'I think it makes a lot of sense for angels to join some kind of business angel network. They get to know the market better and see the dealflow, which ensures they make smarter investments.'
'It is also much easier to do syndicated investments if you're part of a network. Those things can come through personal contacts but they happen more often and on a larger scale through networks.' The main angel networks he identified in Finland were Business Angels Finland, FiBAN, LEDI and Finnvera.
As for the number of business angels in Finland, Fredrik points out that the exact number is hard to find. 'There are about 330 business angels in networks but we estimate there are at least between 1,000 and 2,000 business angels in Finland overall'. An average investment per angel varies a lot: from 10,000€ to a whopping 800,000€.
'Most deals are spurred during events like pitching competitions or seminars. Thus, there needs to be more of those to raise the dealflow overall', Fredrik observes. 'About 500 deals per year pass through angel networks and around 10% of them get funded in the end.'
Having covered all the smaller private funding instruments, Rahoituskone will focus on smaller government funding instituions. The overall goal is to gather all the funding opportunities in Finland in one place in as much detail as possible. Perhaps other countries in the region will be added to the system in the future.
Rahoituskone is a non-profit research project funded by Greenstep, a full-house financial service for small- to medium-sized companies.
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