This text was written by NordicBAN's Managing Director Claes Mikko Nilsen and originally published by Slush News (7.12.2017).
The Nordic and Baltic regions, “New Nordics”, have a very special startup spirit going on, united by the common startup ecosystem initiative #NordicMade. The activity is well shown at Slush, which is not a Helsinki, nor a Finnish, but a Nordic event. A newcomer to this Nordic family is Nordic Business Angel Network (NordicBAN), linking over 10 Nordic and Baltic angel networks and supporting the formation of angel led startup syndicates.
A Typical Nordic Angel
Business angels are private individuals investing their own time, networks, and capital into early stage growth companies. The investment size, according to FiBAN, is approximately 20.000€ per angel/round. These investments are usually made in syndicate groups where a financing round is ca 200.000€. There are several types of angel profiles: full-time, half-time, and hobby investors. As there is no accreditation needed to call yourself a business angel in Europe, the entrepreneur should make sure not to confuse potential angel investor growth support with mentoring (altruistic) or consultation (fee). An angel receives ownership (equity) from a startup in exchange for his/her input, making their main salary through an exit.
The startup community easily forgets the role of angels when discussing startup investing. Compared to for example VCs, angels are not forced to invest and startup investing is considered for many “as an expensive hobby”. Startups often find themselves competing for the attention of an investor who spends time with other private activities. In addition, angels also know that half of startup investments usually fail, so from the entrepreneurs perspective, a lot of effort is needed to close a round with angel investors. One of the main reasons for angels to invest in a startup is the emotional relation, the interest of being part of something significant and meaningful, with a potential for huge impact, which is often as important, if not more, as the financial possibilities. There is also a strong culture of “giving back” to young entrepreneurs as well as society.
Nordic Angel Groups
As startup investing is risky, there is an increasing interest to share risk and invest in groups. There are more angel groups arising which focus on linking investors and/or concentrate on facilitating investments. These groups play an import role attracting private individuals towards making startup investments and sharing experiences about the most common investment fails (yep, also angels do “fuckup nights”).
Below is an activity summary of Nordic angel groups and networks. The information is updated accordingly at NordicBAN’s site. We don’t yet have formalized angel groups in Iceland and Lithuania, but initiatives are ongoing.
The Baltic Startup-Tech-Magic
Estonia has guided the way and the rest of Baltics are catching up, also on the angel level. Estonia’s national angel network EstBAN has already gathered over 120 angel members and LatBAN in Latvia is developing fast. There are active discussions also in Lithuania to organize the local angel activity so we expect additional news soon.
Denmark’s angel ecosystem has really taken off last year. The national network DanBAN has over 170 investor members, including angels from Copenhagen, IFC Investor Fight Club and Vestor Angels. The membership requirement is 500.000€ liquid investment capacity. In addition to the national activity, there are local groups like Odense Seed and Venture, Business angel Syddanmark and Capital2Grow. Capital2Grow, for example, focuses on exclusive pitch sessions with facilitated investment rounds. We expect the Danish angel ecosystem to really take off in the near future!
Finland might have just one visible angel network, FiBAN, but then again, it is one of the largest in the world. With over €50M invested by angels in over 300 startups year 2016, it is clear that angels play an important role for the early-stage of startups. One of the main events for the whole Nordic angel ecosystem is Slush, especially Investor Day, which gathers the world’s leading investors for new co-investment possibilities, even some exit discussions.
Norway has the fastest growing startup ecosystem in the Nordics and the investors have also noticed the growth possibilities. The private angel ecosystem is driven by active local groups. For example AngelChallenge is the most active service facilitating angel syndicates. One of the most active startup accelerators, Startup Lab has an angel fund, which has so far invested almost 6 million euros in ca 40 startups (and growing). Other active local angel groups are Fintech Angels, BAN Bergen, BAN Trondheim and OIH Angels. There are also initiatives to gather the national activity of angels and we expect the Norwegian angel investment ecosystem take a very positive boost after the newly launched tax deduction for private startup investors.
This startup loving country has some amazing big institutional investors, but also more visible business angels. Stockholm is leading the investment game and this is supported by local angel groups like Stoaf, which is currently running their 3rd fund and the model seems to expand in Sweden. Also, Stockholm City’s accelerator Sting runs an angel group and a fund, mainly investing in companies from their own track. ConnectSweden is gathering angels together on the national level and is focusing on building additional angel services. Other local angel groups are Västkustens Affärsänglar, Keiretsu Forum, The Springfield Project and Angelr. NordicMakers is also very much Danish and probably one of the most known group of angels with a dozen serial entrepreneurs investing across Scandinavia.
NordicBan is an initiative by active angels and angel networks in the Nordic & Baltic region to support the linking of new startup investors, expanding the range of co-investing and sharing cross-border investing best practices. The vision is to make the Nordics one of the most recognized and dynamic regions in the world for startups to receive business angels investments.