LØRN Case #C0433
Angle investors
In this episode of #LØRN Silvija talks to Reetta Ilo, International Affairs Manager for FiBAN about how you must first invest time and effort before you can expect investors to trust you with their money. As an international growth, funding, sales, and cooperation expert with two Master’s Degrees in international relations, politics, and economics, Reetta facilitates international funding rounds and is in charge of FiBAN Academy, training modules for business angels. Her expertise lies in running international projects and building paths for angels to collaborate and co-invest beyond borders. Under her leadership, this Finnish association of investors is on a mission to inspire private investment and she describes their work as connecting the connectors.

Reeta Ilo

International Affairs Manager

Fiban

"Our tech allows regular people to co-invest and buy shares in companies they would otherwise never have access to, on the same terms as lead investors. How to develop better collaboration terms so more startups get in touch with angles investors?"

Varighet: 27 min

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Who are you and how did you become interested in technology?

I think that everyone born in the 80s, 90s and 00s probably grew up programmed to be interested in technology.

What is the most important thing you do at your work? 

Connecting the connectors.

What are the central concepts in your tech? How do you usually explain it to kids?

The central concept is to scale analogue trust-building to facilitate investments in a digital environment.

Why is it exciting? What drives you here? 

It is exciting because it is an ambitious and difficult task, and it is motivating to be at the forefront of building new ways to fill in the gaps in current methods.

What do you think are the relevant controversies? 

Our tech allows regular people to co-invest and buy shares in companies to which they would otherwise never have access, on the same terms as lead investors.

Who are your customers?

We operate in a two-sided marketplace, so our customers are both amazing founders and smart investors.

What do we do particularly well in Norway or in your country?

Waffles. In Norway, Finland and Estonia, we are too small – especially with regard to angel investors, just investing in a few of their closest friends. We must understand the value of collaboration.

A favourite future quote, as a gift to our audience?

The quote should come from our conversation.

If people are to remember only one thing from our conversation, what would you like it to be?

Be kind.

Who are you and how did you become interested in technology?

I think that everyone born in the 80s, 90s and 00s probably grew up programmed to be interested in technology.

What is the most important thing you do at your work? 

Connecting the connectors.

What are the central concepts in your tech? How do you usually explain it to kids?

The central concept is to scale analogue trust-building to facilitate investments in a digital environment.

Why is it exciting? What drives you here? 

It is exciting because it is an ambitious and difficult task, and it is motivating to be at the forefront of building new ways to fill in the gaps in current methods.

What do you think are the relevant controversies? 

Our tech allows regular people to co-invest and buy shares in companies to which they would otherwise never have access, on the same terms as lead investors.

Who are your customers?

We operate in a two-sided marketplace, so our customers are both amazing founders and smart investors.

What do we do particularly well in Norway or in your country?

Waffles. In Norway, Finland and Estonia, we are too small – especially with regard to angel investors, just investing in a few of their closest friends. We must understand the value of collaboration.

A favourite future quote, as a gift to our audience?

The quote should come from our conversation.

If people are to remember only one thing from our conversation, what would you like it to be?

Be kind.

Vis mer
Tema: Digital strategi og nye forretningsmodeller
Organisasjon: Fiban
Perspektiv: Gründerskap
Dato: 190625
Sted: INTL-FINLAND
Vert: Silvija Seres

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Vi vil gjerne hjelpe deg komme i gang og fortsette å drive med livslang læring.

En LØRN CASE er en kort og praktisk, lett og morsom, innovasjonshistorie. Den er fortalt på 30 minutter, er samtalebasert, og virker like bra som podkast, video eller tekst. Lytt og lær der det passer deg best! Vi dekker 15 tematiske områder om teknologi, innovasjon og ledelse, og 10 perspektiver som gründer, forsker etc. På denne siden kan du lytte, se eller lese gratis, men vi anbefaler deg å registrere deg, slik at vi kan lage personaliserte læringsstier for nettopp deg. Vi vil gjerne hjelpe deg komme i gang og fortsette å drive med livslang læring.

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Utskrift av samtalen: Angle investors

 

Velkommen til Lørn.Tech. En læringsdugnad som teknologi og samfunn med Silvija Seres og venner.  

 

Silvija Seres: Hello and welcome to learn about tech. My name is Silvija Seres and our topic today is finance and technology. My guest is a Reeta Ilo. Did I say that correctly?

 

Reeta Ilo: That's very good pronunciation. 

 

Silvija: The international affairs manager at the Finish business angels Network FiBAN. Welcome Reeta!

 

Reeta: Thank you. 

 

Silvija: We'll be comparing the Norwegian and the finished scene, and trying to understand what can Norway learn from Finland? We will also talk a little bit about Finland after Nokia, which I think is a wonderful revival story.

And before that I'm hoping you could tell us a little bit about yourself, and what drives you?

 

Reeta: Certainly. Once again, thank you for having me. So, I've been working almost two years for FiBAN, which is by the way, the one of the biggest Angel networks in Europe. And definitely most active one. We have almost 700 active Angel investors. 

 

Silvija: Can I just ask you to Define that what is an Angel investor for the listeners that don't know. 

 

Reeta: That's a good question. So, Angel investors is someone who invests three things to startups or big potential growth companies. And I say them in the order of, to me what is the most important one. They invest their, know how, they invest their network, so they open up their own personal networks for startups to utilize. And thirdly they invest money.

Any and they invest their own personal money, that they have gained in their previous, even then their own companies or whatever they have done in their lives to gain some assets to their bank accounts. 

 

Silvija: So basically you don't want the money, and you don't want lazy money. You want if you're taking money as a startup that it actually comes with some help.

 

Reeta: Exactly. So, there's so much money in the market right now. EU has put up their own fond as a lot of money in the market. So, it's very important that you find a good match. So, an angel investor who has the right know-how for you and has the right Network. So maybe someone who has already done something in your technology field that knows the right people and understand your technology. That's very important when finding a right angel investor.

 

Silvija: I interrupted you. We were talking about FiBAN. So, my question is actually taking us back there. How do startups find their investors? It's not an easy journey unless we have somebody like these Angel networks.

 

Reeta: That's very true. Because a lot of angel investors actually want to do their thing incognito. Maybe norwegians are a bit better in that sense, that they are not hiding their wellness as well as fins. Finish millionaires still drive their father's old cars, and you know, don't talk about their money to anyone. So, it might be a bit difficult, and that's why what we invented managed to do. Is to get all of investor under the same roof. So, through us you are able to get in touch with almost 700 angel investors, and that's something that I would wish to see in Norway as well.

 

Silvija: So, you have a good deal flow and you expose. Because often people on the investor side lack access to the deal flow. They don't see all the cool startups, and they don't know how to find each other. But you get that connection?

 

Reeta: Exactly. So FiBAN is a nonprofit organization. We only facilitate the possibilities for investors and startups to meet. So yearly. For example, last year 2018 it was almost 900 startups that applied to us. Then me and my colleague go through the startup applications, and we screen the ones we think have the most potential. So, angel Investors saw almost 550 companies in 2018. 

 

Silvija: Its there a lot of activity in Finland?

 

Reeta: There is a lot. So, for example. FiBAN collaborates with all the accelerators with, incubators with other ecosystem players. And the activities why we have so much of them is because we work together and we're not jealous of each other's activities, or deal flow, or anything. We realized that since we are a small country, it benefits to collaborate, and not to fight with each other about deal flow or anything. 

 

Silvija: You're a small, but fantastic and unique country. And we'll go back to that as well. Before we do that. I'd like you to say something personal about yourself. You have any funny hobbies or something that people can remember?

 

Reeta: Thank you for asking. Well, I do. On my free time I'm a karate instructor. So, four times a week if I look all beaten up at the office. It's not because of my job. It's because I have been really beaten up. I always tell people do not worry. I'm fine. 

 

Silvija:You look very gentle, and innocent and feminine for being a karate instructor, But I guess that's how karate works. 

 

Reeta: That's exactly how it works. It's very good for your mental and physical health. And to me I feel that you need to have something else. Cause the startup scene, it easily eats you up, you know. It's so exciting, you get into the bus and you spend all your nights everything, you know, mingling and networking. But for me Karate is always an sscape, in a way that there I don't think about my work. I don't think about anything, and it makes me leave the office. 

 

Silvija: And something very physical as well, which is very important when you do so much mental stuff. 

 

Reeta: So much. And a lot of traveling, a lot of sitting down in a meetings and stuff like that. So, I hope everybody finds their own cut out there. Whatever it is. 

 

Silvija: We are here in Voss at the startup extreme week. And you were dragged up to the widget mountain and pushed out of the road by a wan and sprained your ankle?

 

Reeta: Well, now I know why Norwegian skiers are so much better than the finish ones. Because we can't even stand up on a mountain slope. So, I turn my ligaments, but I still love Voss, and I will come back next year. 

 

Silvija: We are very glad you're here Anyway. So, Finland. Great educational system. One of the countries in the world where people have most respect for teachers, which I think has huge spillover effects on what kids learn and how they develop both technical and social skills.

And then you have this fairytale of Nokia, which stumbled for a while. Basically, missed out on smartphones and now has this second revival with the huge growth in Network Technology, and smart cities and Edge and 5G and it's amazing. But in the meantime, there are 10 years where there were lots of excellent engineers free for taking, and something magical happened in the startup scene. Can you tell us more?

 

Reeta:Yes, so you described very well. When we were starting in the early 2000s there was no science that Nokia will ever die. So, everybody was really into Computer Sciences and stuff like that. They got very good technical engineering people. But everybody was thinking that they're going to do a great career at Nokia and then the collapse happened. And the whole nation was in panic for a bit. Like every single day there were news that Microsoft is shutting down, Nokia shutting down. But actually, what it did, and especially I would like to put some emphasis on not just to Helsinki area, where obviously a lot of the people relocated to or we're already living. But especially smaller cities such as Oulo in Middle Finland and Sallo which had huge Nokia campuses. They were now full of young Innovative good know how people who didn't want to relocate. hey just bought houses or whatever. They have moved their lives to Oulo to work for Nokia. So that's why in Finland. We have seen very good busing startup ecosystems, also outside of Helsinki. Which I think is very good because when we talk about ecosystem in in, whatever country It's usually the capitals.

 

Silvija: You already have a kick starter. And then one of the things that I was impressed by. I was doing some Ed Tech work and the university in Oulu had combined their researchers, who do work in education or in technology or in other things with Ed Tech startups and created a whole new industry. 

 

Reeta: Yes, exactly. Universities are a big thing in Finland, helping to spin out great companies because universities are great place to develop products, but they need to spin out quite quickly. And that's where Angel Investors for example coming picture, and they help to monetize those great products that fins are great in developing, but not that great to sell or monetize.

But yes, universities are doing great job. And it comes down to that feeling that. Hey, let's help out each other, you know. University helps, and the company's help. Everybody helps each other. And that's how prosperity has been created in Finish ecosystem I feel. 

 

Silvija: What's the secret of the Finnish gaming industry success? You have a couple of these companies that I think most people still don't realize the total value of. They are making gazillions basically. There are all these new gaming applications, that will spread from just entertainment into education into leadership Etc. And somehow you managed to create the world-leading companies here. 

 

Reeta: That that's a very good point. We just discussed this two weeks ago when FiBAN organized the biggest angel investor events in Helsink. And we had a panel discussion why gaming and let me add to supercell Rovio. Last year FiBAN gave the award to exit of the year to small Giant games, which was sould with almost 800 million Euros. So, Rovio and supercell are already Deca corns. But it's a funny question because Finland is not known for example if you compare to like Japan which is the entertainment business number one. 

And if you go there there's neon lights, and you can feel the gaming buzzing. 

 

Silvija: And they have a very big kind of place in the whole history of gaming, with the first big multiplayer digital game and so on. And then Finland comes out of nowhere.

 

Reeta: Exactly, but we felt that basically it's because games at the end of the year and at the end of the day are very much combining good technology and good software, which we are very good at building. And then the entertainment part is just half of that. So, just the amount of talent that we have in building good software comes into the picture and then the entertainment side. I guess, is the finished dark side. We do have little children living in us. So, we know how to do them. 

 

Silvija: You have 700 Angel Investors in your network. We have several Angel businesses networks in Norway, but none of them even remotely that scale. Norwegian investors have for a long time been spoiled by the fact that it was almost too easy to invest in relastate, shipping, Oil. And these industries were heavily subsidized, for political reasons. And I think they stole much of the money that could have gone into technology. How do we make that turn into more bigger scale technology investments, less fragmented, less conservative investors?

 

Reeta: So, what I think Norway could benchmark from Finland, is to realize that Norway or Finland does not have that big of an ecosystems, like for example Sweden. So, Sweden has done very well on its own. They have their own investors, their own starts up, their own scaleups, their own unicorns. Just within their own country. But Norway, Finland, Estonia we are all too small just to play amongst ourselves, or worst yet within for example, angel investors, just investing with a few of their closest friends. So that's one thing. Understanding the value in collaboration. But firstly, you need to get things together in within your own ecosystem. The other thing. I found a very peculiar, when I heard startups pitching here in Norway. That they wouldn't sell their evaluation, and they wouldn't tell how much they were seeking. And I asked about it from every single company. Like, if I'm the sitting and listening to your pitch, but I don't understand what I'm buying. But they were very hesitant in answering and they're like, oh, well, those negotiations needs to happen behind closed doors. And I was like, no, be more open and be frank about what you're doing, and be proud of yourself. You can say that my valuation is four million, and you get two present equity with that. And that's fine. Be ambitious and be strong. if that's the cultural aspect, I haven't really grasped it yet. But first realized that, it doesn't make any sense to try to work in a small circle. There's power in in number. 

 

Silvija: I think that too many of our entrepreneurs have not been trained to create business models. They can talk about the vision, but translating that into cash flow, and then translating that

cashflow into a sum, and then asking for a certain amount of money doesn't seem to be something that we have been doing enough. Basically. People will say “well, I need I think if I get 10 million Norwegian kroner. I can build a product, and it will be enough for the next two years and I'll make the team and so on”. Okay fine. But if you get that money, are you giving away half of your company, 10% or the whole company? And there is also that aspect of entrepreneurs in Norway. I think are a little too scared to give away shares. Well, if you look at Silicon Valley, if you look at successful investment ecosystems. You give away shares, but when the whole pie grows, everybody gets more. And you have to get in people on the ownership side.

 

Reeta: You would rather own 70% of a hundred million revenue company, than a hundred percent from something that makes 200,000 a year. So, bootstrapping in that sense. It can kill your company it can kill the power within you if you need to bootstrap for years and years and years. And I said, angel investor what they bring to the picture is their know-how and their networks. So, this massive potential of growing your business, especially if you get foreign investors on board who can open up their own home markets to you. So just be brave and valuation is something that is always discussed. At FiBAN.org our net side we have a lot of materials for startups to go and read about how to calculate your valuation. But in then, in the end of the day only right valuation is where money exchanges owners. So be brave, don't be too shy. But be prepared. We say usually as a rule of thumb, that you shouldn't give up more than 20% of your company per funding round. And investors don't don’t want to get more. They don't want to be that Hands-On, and they want to give the entrepreneur motivated. If they take up 40% at the first round who is motivated to work for their own company anymore. 

 

Silvija: Yeah, exactly. So how do you build technical skills nationwide? Finland is very good at creating Engineers. As you said. Actually, Norway is as well. But what are your aspects to that success?

 

RI; How to build technology or knowledge. I think, well for one, we talk how great universities are. But I think that to get more is to reach out the other ecosystem players. So, for example. If you know Slush, the biggest Tech startup event in the Nordics, with 20 something thousand visitors yearly. They now launched their own Slash Academy. So, they are going to teach new entrepreneurial and technological skills. And there's this new AI thing that is let's train few percent of the whole population of Finland to now understand about AI. So, it's the other players who come into the picture, not just universities who give that technological training. But those who actually are in the in the middle of it all who can give you valuable training. FiBAN for example is giving training to angel investors because we know the best what angel investors need to be successful. So, once again, it comes down to collaboration

 

Silvija: You say that you are at internationalisation freak. Meaning what?

 

Reeta: So, I come from a family who has lived for centuries in my hometown, and my parents have never even left Europe. So, for me living by myself in East Asia and backpacking around the world and realizing that, if you just look at your own country. Well, obviously for starts up the world needs to be your oyster. If it's not, you can grow to a nice two-million-euro revenue company, but you'll never make it big, if you don't look big. And you need to look global. But to make not only look starts up international, because they know how to do it. I look from the angel investor perspective, that for too long-time angel investors have been looking at companies in their own region. Because I understand, they want to help their own home region or whatever. But really, look abroad. You shouldn't look at your own region. You should look where is the best innovative technology that you want to find? it probably or might not be in your own region. So I want to make Finland in general more International. We kind of are. We speak good English, but that's only if you, or the international mindset is only if you live in Helsinki or Tempere. But if you go outside of those regions, Finland is very inward still. So I want to make entrepreneurs, investors and everybody to look abroad because Finland is just way too small. 

 

Silvija: Norwegians are explorers, have always been. And sometimes I wonder if they know how unique and cool that actually is. We need to go towards the end of our conversation, but I just want to quote you in a couple of phrases that wrote to me, and I love the way that you put things. So you won't be able to make a world a better place unless you cherish your company, your solution almost like a baby. Make it grow, make it be strong, push it out. Is that what you mean?

 

Reeta: At least in Finland, and in Helsinki, there's so much, you know, entrepreneurial mindset is there. But the downside being that a lot of young people establish a company because they are like, “well, I want to be startup entrepreneur, but they do it because of that. They don't do it because they love the technology and whatever they are doing” they are just saying “Here's my software. I'll monetize it and..”and its coo. But no, that's not it. You should focus on your own strong points, which should be within your own company and cherries the technology and your product. Not some idea what you want to be in a few year’s time. I think that's the mindset that is a bit dangerous. In Estonia I've been talking to a lot of Estonian investors that they are really suffering. A few unicorns came out from Estonia, which is awesome. But now every other kid think that they can do it, and some of them will do it and that's super great. But most of them looking at the statistics will not. 

 

Silvija: I asked you for a recommended reading, and new you recommend the Nordic guide for Angel Investing from FiBAN.org. That's basically a starter kit in a way? 

 

Reeta: Exactly. So, if you are thinking at any stage of funding round. And you know, when you are doing it for the first time. All the technical words, and how to calculate your valuation. So that's a booklet of around 40 or 50 pages. You can read it on your way to the next meeting. If you are going from Oslo to Warsaw or whatever. Few hours in a train and you can read it. So, I always recommend that booklet for anyone looking for funding. 

 

Silvija: You have a quote you'd like to leave as a gift to the audience? 

 

Reeta: My favorite quote from myself. What I've seen in my work where I facilitate funding rounds is that you need to invest two things first, before money. And that's Time and that's effort. Money will definitely follow if you first invest those things. But if you don't, money will not follow. 

 

Silvija: If people should remember one thing from our conversation, what would you like it to be?

 

Reeta: Work together, collaborate together. Get the ecosystem the key individuals to come to the same table and discuss. What can we do together? Let's not fight with each other, call people from Trondheim or wherever and bring them all the same table and think what you can do together. And that is such a strength when we are such small countries.

 

Silvija: Thank you for bringing people together. Reeta Ilo, the international affairs manager from the Finish business Angel Network FiBAN. 

 

Reeta: Thank you so much. 

 

Silvija: Thank you for listening.

 

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