VC co-Investing with business angels

NordicBAN’s VC partner Innovestor Group is an active VC company from Finland, with the largest private startup investment portfolio in the Nordics. Innovestor has a Nordic focus and actively cooperates with local business angels. In the article, Innovestor’s experiences from co-investing in PromoRepublic with business angels

Guest blog post by NordicBAN’s business partner Innovestor Group www.nordicban.net/innovestor

Co-investing in startups between venture capital firms and business angels is no longer uncommon practice. Innovestor led an international syndicate of investors to provide funding for PromoRepublic in the spring of 2018, a Helsinki-based SaaS-company focused on providing Artificial Intelligence (AI) enabled solutions for social media automation and digital content marketing. The company helps time-starved small businesses grow on social platforms and gain repeat customers.

Total size of the funding round was EUR 1.3 million. In addition to Innovestor, it included Howzat Partners and private investors from the Nordic region, as well as non-dilutive financing from Business Finland. Among the private investors, several were NordicBAN members. Innovestor manages Venture Capital funds, and operates an online Co-investment platform, through which private investors can invest together with us in early-stage ventures. Through Innovestor’s strategic ownership in Kasvun Roihu, we also operate Kasvu Open and Grow to Market acceleration program for founders for corporate partners. Innovestor has a team of 32 professionals, with offices in Helsinki, Jyväskylä, Stockholm and Moscow. 

​Growth journey and investment history

Prior to our investment in PromoRepublic, the company had received angel and seed funding in Finland and Estonia. They had recently launched a new AI-based premium product, which showed promising early traction among customers. Funds were principally sought to scale operations on English speaking markets.
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The dialogue between Innovestor and PromoRepublic started through a business angel, who also ended up participating in the round. Innovestor was the lead investor, and the main responsibilities included business and legal due diligence, setting valuation and terms, structuring and arranging the share issue, syndicating the share issue, collecting funds from co-investors and executing the closing process with PromoRepublic.

Why and how we co-invest with business angels

Our co-investment model is unique in the Nordics - it’s a hybrid between VC and angel investing. By active syndication with business angels, we believe the potential network, knowledge and resource pool available to founders expands, which positively contributes to likelihood of success.

In terms of the investment structure, a VC fund managed by Innovestor acted as the anchor investor for the round. A separate legal entity (SPV), which is also managed by Innovestor, was created for all the private co-investors. Technically, the private co-investors invested into the SPV, which then transferred all funds to PromoRepublic. 

Investor communication, cooperation and goals 

Keeping co-investors informed, and leveraging their resources is a key element of our value proposition. Through the board seat in PromoRepublic, Innovestor has wide access to company information. Formally, co-investors receive quarterly performance reports and annual financial statements from PromoRepublic. Informally, co-investors have frequent dialogues with both PromoRepublic and Innovestor, and we help facilitate them. 

Looking ahead, we hope PromoRepublic is successful in scaling the business as planned. It will require continuous improvement of product features as well as refining marketing and sales strategies, particularly on key markets in US and UK. To support continued growth, it would also be beneficial for PromoRepublic to attract a US or European Series-A investor in the next funding stage. 

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We are happy to discuss new co-investment cases, please contact us!
Wilhelm Lindholm,
Partner, Chief Investment Officer
​wilhelm.lindholm(at)innovestorgroup.com
www.innovestorgroup.com