FiBAN’s annual investment and exit survey maps the development and effects of angel investments. “FiBAN members care about the social impact of their investments. We reach a significant part of Finnish angel investors, but private investments also take place outside of FiBAN,” says Annukka MickelssonTemporary CEO of FiBAN.
Figure 1: Investments reported by FiBAN members (in millions of euros) in 2017-2022. 248 companies received financing from FiBAN members in 2022. |
Almost half was invested in new startups
Finnish angel investors have remained active. The median size of the investment round increased from EUR 250,000 to EUR 290,000 from the previous year, and there were a total of 791 investment rounds. Almost half of these were invested in new companies.
“Even though globally, startup funding has fallen by half, in Finland interest in new companies has clearly awakened after the pandemic,” says FiBAN’s chairman of the board. Kim Vaisรคnen.
The median investment size remained at the 2021 level of 20,000 euros. Less than ten percent of FiBAN’s angel investors make half of all investments made through the network. They are so-called super angels, whose investments vary from hundreds of thousands to millions of euros at a time.
Finnish angel investors often have a background in management positions as well as in their own companies. For many startups, angel investors are the first believers. “The expertise of angel investors is based on extensive experience in management and business development. They bring networks and a desire to develop companies to startups. That’s why angels are often sought-after partners for startup founders,” says FiBAN’s Interim. CEO Annukka Mickelsson.
FiBAN offers its members training to support professional angel investing. “Angel investment often starts with smaller amounts and the amounts increase as experience grows. Previously accumulated assets are often reinvested in new growth companies. Professional angel investment is significant for the entire startup ecosystem,” adds Mickelsson.
Figure 2: FiBAN members reported participating in 791 investment rounds. Almost half of the investments were directed to new companies. |
High risk investing in bankruptcy and acquisitions
The number of exits decreased slightly compared to the record year 2021, when 168 exits were made. In 2022, 122 exits were made, half of which were acquisitions and a third were bankruptcies. The number of bankruptcies remained at the level of previous years.
“Angel investments are long-term commitments that should be evaluated over a longer period of time and not annually. Angels stand by entrepreneurs even in difficult times. We have been in startups for up to a decade,” says Vรคisรคnen.
“Exiting has changed when different option systems have become common in large acquisitions. It is more and more common to keep the management involved in the change after the acquisition,” adds Mickelsson.
The return expectation of startup investing is very broad compared to, for example, stock investing. However, high yield exits are rare, but a single exit can have a return on investment of up to 100x. “In general, about a third of angel investments fall to zero, but in some cases the value of the investment can multiply drastically. After taxes, profits are often reinvested in startups,” says Mickelsson.
The high valuations at the beginning of 2022 were reflected as a temporary increase in profitability. “At the beginning of the year, valuations were high, and then larger than usual exits were made. These were also temporarily visible as an increase in exit values,” adds Mickelsson.
HT
Source: Finnish Business Angels Network (FiBAN)
Source: The Nordic Page