Equity Crowdfunding is Here: Private Investors can now have their own ‘Dragons’ Den’
Equity Crowdfunding is Here: Private Investors can now have their own ‘Dragons’ Den’

A new platform is enabling Danish startups to fuel their growth and raise millions of kroner through an equity crowdfunding model. This is a great opportunity not only for the startup ecosystem but for aspiring angel investors.

A new platform is enabling Danish startups to fuel their growth and raise millions of kroner through an equity crowdfunding model. This is a great opportunity not only for the startup ecosystem but for aspiring angel investors.

 

From the time it hit the airways in 2015, the television program Løvens Hule (an adaptation of Dragons’ Den) piqued interest and provided opportunities for Danes to invest in quickly-growing startups. Now that the equity crowdfunding model has made its entrance to the Danish market – after years of hype – private investors can participate in their own Løvens Hule. This model enables smaller, private investors to invest in up-and-coming startups. In fact, a handful of Danish startups have already raised capital through the platform, Funderbeam.

According to Mads Emil Dalsgaard, CMO at Funderbeam: “Investing in startups isn’t for everyone. It should be part of a portfolio mix. Investing in startups takes the money and it’s high-risk. But that also means the rewards can be high. There are tens of thousands of people in Denmark who could be investing in startups, and we want to open the door for them.” 

While Funderbeam enables anyone to invest, there are a series of hoops to jump through to ensure that would-be investors understand the risks involved. Investors can start by buying tiny pieces of equity in individual startups for a couple of hundred euros. This means that private investors get a chance to try things out on a small scale, while startups have the opportunity to attract a wider range of investors.

Startup perspective

To date, 40 Nordic and Baltic startups have raised capital through Funderbeam. For example, the Danish company, Hooves just raised €114.000 from 114 investors.

Suvi Kaario, CEO at Hooves, explained: “… our company is built on community, so it is natural for us to engage the community in our fundraising. We are getting so much support from them, so we also want to give them a chance to be part of our financial success.”

 Hooves needs to attract both horse owners and horse renters to their platform. The startup hopes their wide variety of investors, made possible through Funderbeam, can help them to crack the classic “chicken and egg” issue they are experiencing.

“We now have a wide pool of experience and expertise to pull from whenever we need help or advice. Angel investors tend to be a rather homogenous group of people, so we were very pleased to see how different all of our 114 crowd investors are. We look forward to benefitting from their skills and network in the future,” Kaario remarked.

Breaking ground with a unique form of liquidity

Thanks to the equity crowdfunding model, investing in startups is no longer restricted to seasoned angel investors. Smaller private investors can get in on the action. According to the investor, Thomas Marschall, the model offers some advantages to classic startup investing. In his words:

 “Investing in startups is (generally speaking) riskier than investing in the stock market, which makes it important to diversify by investing in different companies. In the past, when investing directly in startups, you needed to invest hundreds of thousands of kroner in each company to get access, and this meant very few could invest. By investing through equity crowdfunding, you can get started with much smaller amounts, and easily spread across multiple investments and platforms.” 

Thomas Marschall, investor

Traditionally, startup investors didn’t reap their benefits for many years. It wasn’t uncommon to wait 10 years or more from the initial investment in a young startup to a return on their investment and an exit. This meant that even the right investment decision usually took a lot of time and patience to mature and pay off. 

 

By offering a secondary market, Funderbeam investors have the opportunity to sell their equity to other investors instead of waiting a decade to make their exit. Investors can now claim a smaller profit earlier on in their journey and then reinvest it.

As Marschall observed, “The option to potentially sell company shares is a great feature of Funderbeam. I brought CityLogistik – an all-electric last-mile delivery company – to Funderbeam as their lead investor. Since we closed the round earlier this year, its price on the secondary market has more than doubled. There are, of course, other companies that are not doing well, but that is the nature of investing: picking the right companies and helping them to succeed.”

Funderbeam will launch a new Danish campaign at TechBBQ. There, attendees can learn more about and test their products with a number of companies that are trading on the platform.

FLERE FRA COMMUNITY
Mest læste
This site is registered on wpml.org as a development site.