Tattletech has a story on a new 150 million euro fund to be launched in Finland during Q2 of 2011. According to the article, there are three individuals behind the initiative - 2 telco pioneers and a Finn working in the European Investment Bank. I got in touch with the people behind the article and they confirmed this, working in PR, but were unable to give out anymore information just yet.
I wanted to talk to Nexit Ventures, as the year is about to come to an end, about the differences between angel investors and venture capital - how should the entrepreneur view the changing financial market, as well as what are some of the basic rules in deciding which of the alternatives in financing should the entrepreneur go for. We came up with five basic rules that differentiate angels from venture capital. Naturally these are simply generalisations and there are exceptions as always.
CapMan, the private equity investor in the Nordics and Russia, has announced last month that they will "restructure their investment operations" which in essence means they will stop investing. To be more precise, they will focus on their current portfolio companies and not raise any new funds nor do any new investments in the future.
Via Venture Partners has announced (PDF) raising of a new fund. The fund is its second, amounting to 134 million euros. In addition to the VC's original fund founded in 2006, this makes Via Venture Partners one of the largest VCs in the Nordic region with a total of EUR 268 million of committed capital. The fund targets Nordic high growth potential ICT firms that have a global market opportunity.
Finnish entrepreneurs, just like their peers from the whole of Europe, can now benefit from a new instrument to fund their ventures - Openfund. Openfund is a pan-European early-stage seed fund based in Greece focused on mobile apps, Internet and software industries. Ideally the cases should be positioned at the intersection of those three industries, without any restictions in terms of B2C or B2B services or products. Openfund invests 30 000 - 50 000€ for 15% equity into teams of 2-4 passionate entrepreneurs. The deadline for this year's applications is coming up next week on Novermber 30th so hurry up if you'd like to participate in their five-month programme!
Venture Bonsai is a new crowdfunding platform that is in private "invitation stage" as the co-founder of the company, Antti Hannula, states. Venture Bonsai enters the increasingly active market of enabling new methods to fund startups. The company is a little over six months old, but the idea originates back to Summer 2009 when Antti Hannula and Marko Lehtimäki talked about the difficulties startups face in getting funded.
Widespace is yet another mobile advertising startup from Sweden. The company provides premium mobile ad network to mobile advertisers, app publishers, and developers. Widespace aims to compete in the crowded mobile advertising space by claiming to allow advertisers superior targeting (by e.g. handsets, operators, and markets), being extremely simple and fast to get started, and taking smaller commission than other networks. For website publishers and app developers added promise is automatic revenue maximization by the company's proprietary algorithm. The startup also claims mobile site owners can considerably reduce their ad administration costs with the solution.
‘’The markets are on the web, the production power is on the web, both globally available for everyone’’ Mårten Mickos, CEO, Eucalyptus Systems.
Let’s do a small intellectual play: Web 2.0 services, or the current generation’s internet companies globally, are built for the most part on top of the so-called LAMP-stack. In other words their infrastructure is based on Linux, Apache, MySQL and PHP – a selection of open source software programs.
Fruugo, the much-debated ambitious Finnish e-commerce startup (see our previous coverage) that has raised tens of millions of euros of funding, filed its 2009 annual report last Friday. The report reveals the company made a loss of 11,040,071 euros (USD ~13.9M) in the financial year 2009. Despite the huge loss, the result was actually a slight improvement from 2008 when the company made a loss of 14.5 million euros. The report also tells that Fruugo produced a turnover of 8236 euros (yes, not a typo; i.e. USD ~10,350) from the sales commissions in 2009. The company launched its web storefront, available to consumers in Finland, Sweden, and the Netherlands (and including merchants from also the UK), in May 2009 several months late from the planned schedule.
The Nordic Tech Tour, organized by the independent not-for-profit organization The European Tech Tour has kicked off today. During two and a half days, the selected 30 promising early and later stage growth companies based in Denmark, Sweden, Finland, Norway, Iceland, and the Baltic countries will gather together with the leading cross-border venture capital and global corporate firms.
During the event, the companies have twenty minutes to present their business plans to 70 international delegates, consisting of senior partners, VPs, and CEOs from the global venture capital and technology industry, as well as advisors and academics. The investment capital present at the Tour is said to be worth over €10 billion.
Last week Tallinn was hot with startup and entrepreneur activity. Latvian travel search engine startup MoVoLo won the Elevator Pitch Competition organized by ArcticStartup and Tehnopol Estonia as part of the Third Annual Tallinn Conference by The International Technology Law Association and Enterprise Estonia. Also ArcticEvening Tallinn, among other startup events the same week, gathered a great crowd of entrepreneurs and likeminded people together.
Limited Partners or LPs, the people or institutional investors who invest their money in venture funds, are pulling away and the European investment climate is going from bad to worse. This is on one hand because of the dismal returns that the funds have generated and on the other hand because of the bloated management fees that some VCs collect without working much for their portfolio companies or for new deal flow.
Even if the general investment climate in Europe is getting darker Seedcamp is determined to make the early stage investing work in Europe. I talked with Reshma Sohoni, CEO of Seedcamp, at the Copenhagen Mini-Seedcamp about Seedcamp's past, present and future and what value they can offer for startups coming from the Nordics and Baltics.
Seedcamp model is to invest €50,000 in early stage startups in return for some 10 percent of equity. Beyond just the capital, they aim to connect entrerpeneurs with the best mentors across Europe, UK and US.
Nervogrid, a Finnish cloud computing company, announced yesterday (in Finnish) that they have landed a 700 000 euro investment from a variety of Finnish investors. The company has been founded in 2004, but in the last two years its sales have exploded dramatically. In 2008 its revenue was 240k euros and last year they managed a 1.2 million euro revenue - showing clear traction and demand for their services. With the investment, Antti Vihavainen, has been named the country manager of Nervogrid to further speed up the sales.
An interesting development: TechCrunch reported that a Swedish startup Klarna (formerly Kreditor), one of the biggest providers in Europe of in-store credit and invoice based payment solutions for the e-commerce sector, has secured funding from Sequoia Capital. What's interesting here is that the superstar VC Mike Moritz, who invested in Google among others, has joined Klarna's board.
Why this is interesting is because the general belief is that US VCs are very rarely interested in investing in European companies, and it's even rarer to see a big name US VC to join a Euro startup board. Just in our previous story our guest blogger, Marita Seulamo-Vargas, reported how the US VCs had advised Nordic and Baltic companies to seek investments primarily from home.
Early stage companies and entrepreneurs should celebrate, just as the whole startup ecosystem in the Nordics and Baltics - Conor Venture Partners has closed a very nice amount of investments for its early stage technology fund, Conor Technology Fund II. The new fund will invest in technology centric early stage companies from the Nordics and Baltics.
This is a reminder that the applications for the Elevator Pitch Competition on June 1st need to be sent in at the latest by May 6th 8:00 PM EET to events (at) arcticstartup.com.
All Baltic and Nordic startups and growth companies are welcome to apply. The applications to the Pitch Competition must be made using this form.
The Elevator Pitch Competition is organized as part of the Third Annual Tallinn Conference by The International Technology Law Association and Enterprise Estonia. The conference will be held at the Swissotel Tallinn during May 31-June 1, and the Elevator Pitch Competition will take place in the afternoon of June 1, 2010.
The conference theme this year is Preparing The Technology Company For Breakout: Challenges and Tools for the Nordic Region. Last year the conference drew in VCs, entrepreneurs and business owners, and naturally business lawyers (of the good type...) from all over the Nordic and Baltic countries, and also many guests from the USA.
To top it off, ArcticStartup will also organize ArcticEvening Tallinn in the evening of June 1st, to wrap up the conference and the pitch competition, and to create a networking forum for the international bunch in the city. Mark it in your calendar and stay tuned for more info!
Photo by cpalmieri (CC BY-NC-SA 2.0).
Northzone Ventures announced the first close of € 90 million of a new fund, Northzone VI. Targeting € 150 million, the fund will invest in fast growing Euro tech companies. Prominent Nordic and International institutional investors participated in the first close.
This was not only significant because we certainly don't have too much venture capital in the Nordics, but also because this will mean that some of the better venture capital firms are bullish enough to look outside for new investments instead of just trying help navigate their current portfolio companies through the rough economy. I'm happy that the Finnish Industry Investment, whose Advisory Council I sit at, invested a total of € 7.5m in the new fund (consider this as my disclosure). This shows that the institutional players believe in the asset class despite the lack of an IPO market. I agree that I might read this news as a bigger positive sign than most, given how bad the European let alone Nordic venture capital situation is, but what it highlights is that the best startups will always find the money when they need it regardless of geography or economy. For the real pirates now is always the right time to start a company.
GrowVC has slowly been marketing their concept in various social media networks and today is the date they're finally coming out with the concept and explaining it to the public. Back in December I had a chat with Valto Loikkanen, one of the co-founders of the company, and he told me the concept has been in finetuning for the last two years or so. They've put in a lot of effort to make sure their companies are registered and managed in the right way so that they are ready to scale once things start taking off.
The concept GrowVC is looking to disrupt is the age old venture capital business model. Many have complained that while business models in the online and mobile world have been turned upside down, one model remains loyal to the way business is done and that's the model of investing money into startups. Furthermore, the need for capital has gone down dramatically making smaller private investors more potential investors in startups than larger venture capitalists.
Just recently Mårten Mickos, former CEO of MySQL, joined Index Ventures as an entrepreneur-in-residence. He also serves in a similar position with Benchmark Capital in US. We of course welcome this as a positive news for the European entrepreneurship. But just a little earlier in January Fred Destin and the whole Atlas Ventures packed up and moved to Boston, leaving just enough staff to support to current European investments.
What is going on in Europe? Are we going to see the existing VC model literally disappear? Just last week I came back from DLD conference in Munich, Germany where I talked numerous people influential in the industry from Israel, London, New York and Zurich about the situation on the ground and most concurred that what we used to know as A-round-sized-VC-firms are becoming fewer and fewer. The smart ones are either going towards smaller deals and much more hands-on model or gravitating towards private equity sized funds (not least because of the hefty management fees) ...well, or moving to Boston.
Finnish VC Inventure has invested 2 million USD into Finnish mobile publishing platform firm Conmio. The financing will be used to support Conmio's international growth and product development. Conmio sees many opportunities for expansion due to the strong demand for mobile services. Conmio's target customers include media firms, device manufacturers and other companies interested in providing mobile solutions to their customers or end users.
For those who have not found this resource yet, I'd like to turn your attention to the wonderful list compiled by Larry Cheng on international Venture Capitalists who blog. He has compiled a list of the top international VC bloggers. The figures are interesting as the lists are created by average monthly uniques. On top of the list is not suprisingly, Fred Wilson of Union Square Ventures with about 100 000 uniques a month visiting his blog.
Larry has also compiled the RSS feeds of the bloggers into Google Reader bundles/OPML files that help faster subscriptions to the blogs.
- Top VC Blogs: Top 10, Top 25, Top 50, Top 100
- US VC Blogs: California, Massachusetts, New York
- Global VC Blogs: Europe, Canada, Israel
- Entire Directory: The Global VC Blog Directory
Here's the link to Global Venture Capital Blog Directory
Photo by Kris Taeleman
Daniel Blomquist of Creandum, a Swedish early stage venture capital company, has posted an excellent post to their blog analysing the differences between the Nordic countries to other countries as well as analysing the differences within themselves. In essence, Daniel goes on to confirm what Will Cardwell said some time ago.
Creandum has gathered a lot of knowledge about the Nordic venture capital market over the last two years to understand the ecosystem better and thus be able to work in it better. They now share some of this knowledge with us. Their main findings from the report were:
The Nordics and Baltics are still very much a wild west when it comes to venture capital and building startups into real growth companies and all the way to the IPO dreamland.
All the countries have their peculiar histories when it comes to VC landscape and so does Finland. Will Cardwell, the CEO of Techopolis Ventures, wrote a very enlightening post called "Reeling in the last decade in Finnish VC" (here) on how the scene has developed in Finland what factors have influenced it.
Will starts out by saying that while there certainly are a lot of colorful stories, the thing that bothers him is the number of “success stories that got away. When assessing history track record he goes on to say that he emphasizes exits, since they are the only relevant measure of success for both growth entrepreneurial businesses or venture capital investing, and this area (exits) is precisely where Finnish companies have had the biggest challenges Cardwell's view. By looking at the figures one can't but agree.
There's been a lot of talk lately about angel investing or the lack of thereof, and I think the time is finally ripe for it to raise its head here in the Nordics and Baltics.
I just recently talked to Petteri Koponen of Lifeline Ventures, who came back from the first SeedSummit that took place in London and was put together by the good people at Seedcamp. It's a new initiative that twice a year brings together a critical mass of Europe’s most active seed investors to try and establish a stronger, more cohesive network to support entrepreneurs across the continent.
We welcome the initiative. If its needed generally in Europe, the Nordics and Baltics are literally screaming for such an initiative.
The other angel investor coming from our neck of the woods who was present was who else than the other Jaiku co-founder, Jyri Engeström. Other angels present included Jeff Clavier, Martin Varsavsky, Brent Hoberman, Lukasz Gadowski, Stefan Glaenzer, Dave McClure, Andy Philips, William Reeve, Robin Klein and Sherry Coutu. A hefty list.
Today The Finnish Software Entrepreneurs Association issued a press release (here in Finnish) demanding tax exemption for Finnish startups. Jaakko Salminen, head of the Association, argues that the current Finnish tax legislation is not fair for startups in comparison to the BigCo. To fix this the Association proposes that those startups that fund their operations from their own profits and are owned by the entrepreneurs themselves should be exempted from the corporate income tax. This of course means that those startups are profitable. Further, the tax legislation should promote all the measures that lead to M&A activity that increases the size of the company. The Finnish Software Entrepreneurs Association also go on to argue that such measures push up the employment figures and increase the tax revenue in the long run.
Currently the heaviest burden from the Finnish taxation is felt by the early stage startups that don't use debt leverage as much as BigCo, are owned by the entrepreneurs themselves and fund their day to day straight from the accrued revenues. Salminen goes on to argue that being exempted from corporate income tax would incentivise exactly these types of companies to leave the money in the company to fuel the growth, instead of taking out every last penny through dividends.
We concur, but can't see how this helps the pre-revenue stage companies that are not profitable, which is the type of startup where the need for tax, or any break, is the biggest. Profitable and promising startups should not have trouble getting investors interested in the. Conversely, even the promising, but riskier pre-revenue ones do.
Seedcap AB help entrepreneurs and start-ups to raise capital. Here's Andy's 10 Mistakes Entrepreneurs Often Make When Raising Capital.
1. Trying to raise money too late
Raising money is time consuming. Count with an absolute minimum of 3 months, with a more likely scenario being 5 - 7 months.
2. Trying to raise money too early
There should be a logical relationship between the perceived value of the company in need of cash and the amount of cash to be raised. Trying to raise significant sums simply based on an idea usually fails, which leads us to point 3 below:
Nikolaj Nyholm, a Danish serial entrepreneur, who stepped down as Polar Rose's CEO just recently will join a Nordic venture capital firm Sunstone Capital as Partner in the Technology Ventures team on January 1.
Nyholm has spent the last 10 years working with internet infrastructure projects, commercial ventures and organizing, among other things, Reboot with Thomas Madsen-Mygdal. He has previously founded Speednames/Ascio acquired by Group NBT (NBT.NL), Imity merged with Zyb (acquired by Vodaphone Group), and Organic Network, a WiFi startup whose legacy is OpenWRT.org, an open source WiFi project.
Without a doubt this is good move by Sunstone Capital as Nyholm has an extremely wide network and is considered one of the most visionary entrepreneurs in the space. Quite naturally, at Sunstone Nyholm will focus on developing early-stage investments in the software, mobile and an internet space. Commenting his move, Nyholm said that " There aren't enough seasoned entrepreneurs joining VC firms in Europe, which should otherwise allow us to stir things up a whole lot more! " We couldn't agree more.
During our trip to the Silicon Valley we aimed to meet people who have experience from the Northern Europe on one hand, and from the Silicon Valley on the other to get the bottom of the differences between the two places .
Especially we wanted to know what their advice would be for the aspiring young startups that try to figure out whether it's worth to relocate to the Silicon Valley from Nordic or Baltic countries, or whether the whole Silicon Valley hype is just hot air and Northern Europe is just as good a location to build a startup as any.
Here Mia Lewin, a Finn, a former VC and an entrepreneur, talks about the differences between VC firms between Europe and the Silicon Valley, how to figure out where to locate and how Mia herself plans to build her startup and raise funding. See the video below.
Via Venture Partners, a Nordic venture fund, is to invest € 2.65 million in Swedish mobile marketing company PlusFourSix. PlusFourSix offers the mobile telephone as a marketing tool, making it possible for clients to create a mobile initiative for their marketing, without having to invest in expensive infrastructure.
According to Niklas Stålberg, the new PlusFourSix CEO as of 1 August, the money is raised to speed the company's expansion in Sweden and across the Nordics.
Anders Lindqvist, Partner in Via Venture, has been appointed as Chairman of the Board and Mattias Danielsson has joined the Board of Directors. Mr. Lindqvist says that mobile marketing is one of the fastest growing media channels with an estimated annual global growth rate of over 40 percent. We agree with cautiously, as its much easier to loose brand equity with badly designed marketing than gain paying customers. Regardless, PlusFourSix is the leading supplier of mobile marketing technology and solutions in the Nordic region.
A new report by Technopolis Online, a for-pay information tool for all high-tech financing activities in Finland, states that Finnish high-tech growth companies raised almost €51 million in the first half of 2009, which is a 17% decrease from the first half of 2008. In addition, Q2 2009 decreased more than 50% compared to the prior year.
Let's break down some of these figures. To put things in perspective the €51 million was raised by total of 29 Finnish high-tech companies from both, venture capital and angel investors. This was 17% below the amount raised by 34 companies in the first half of 2008, and 74% below the amount raised by 26 companies in the second half of 2008. For anyone who has followed the recent trends, not surprisingly the second quarter of 2009 was the lowest quarter recorded since 2007.