Finance Board – The Do’s and Don’ts about financing international growth

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Finance Board, the first of its kind in Finland, brought together entrepreneurs and a host of financiers to share best practices in securing funds for internationalization. Widely thanked by the participants, the afternoon of March 10 featured several keynote speeches and a reverse pitching section with 15 pitches by venture capital companies and other finance providers.

Finance Board was organized by Boardman2020 and Takeoff Partners in cooperation, following the successful Growth Board that was organized in November 2015. As international growth always consumes resources, the focus this time was on funding the desired growth, as the name suggests.

Treat financing like a sales process

The afternoon’s program got a flying start with Micke Paqvalen’s insightful presentation about best practices in seeking finance. Paqvalen is the CEO and co-founder of Kiosked, the leading independent advertising automation platform company for native, in-view digital advertising that has grown into a 16,7MEUR business in 2015 and aims to maintain its rapid pace of growth.

One of the main points Paqvalen brought across was the similarity of the financing process to a sales process. Engagement, referrals, personal connections and relevant conversations are key, and this is why the CRO and CFO need to continuously be on top of the financing process. Paqvalen also emphasized the role of positioning: Trust is everything, and the team seeking finance should also do their homework with regards to their key differentiators in the market. Ideally, there should build a competitive bidding process going on, with “10 other options” existing.

And just like in sales, Always Be Closing (ABC): It’s not done until you have the money on your bank account!

It’s more art than science

Open Ocean Capital’s Partner Tom Henriksson highlighted in his presentation the various aspects they consider in a company that is seeking finance; Market, Team, Solution, and Traction. While these are straightforward, what always complicates things somewhat are the less obvious things such as timing, referrals, personal preferences and other things that make investing more of an art than pure science.

That there is a global market for the proposed product or solution is naturally a starting point for any meaningful financing negotiations. Hand in hand with the importance of the market potential goes the team: Is the team of the caliber that it can actually capture the market opportunity that it has identified? What about the solution then: Is it global-proof and scalable? Finally, traction of course is the best indication that customers not only have purchased the solution but are also willing to advocate it and to participate in developing it further. Ideally, there should already be paying customers outside of the home country to provide evidence of the international viability of the product.

Clean technology to China: Case GreenStream Networks

Jussi Nykänen, CEO of GreenStream Networks discussed in his keynote presentation the China-specific challenges that GreenStream Networks has encountered. Some of their lessons learned include:

  • Getting growth financing requires a lot of work. Closing a complex financing package takes time especially when the chosen business sector is less traditional and hence less well known.
  • The growth opportunity in the Chinese energy efficiency markets is huge, yet the capability to move fast is a must. The financing structures will need to enable this.
  • The Chinese markets are ever-changing, and as a consequence the business concept may need to be recreated several times. Being able to manage the transformations is a major challenge for the team.

Reverse pitching powered by Arctic Startup

One of the interesting highlights of the afternoon’s program was a reverse pitching event, organized in cooperation with Arctic Startup. The idea of reverse pitching is that financiers present their own experience references and networks to startup entrepreneurs seeking finance. Among the pitchers were 15 financiers, both private and state-owned:

Open Ocean Capital
IPR.VC Management Oy
Conor Ventures
Reaktor Ventures
On behalf of all VIGO accelerators: Marit Tuominen, FINAC ry/ Vigo-kiihdyttämöt
On behalf of Family Offices: Harry Brade (Lamy Oy) and Mikko Leino (M1 Capital Oy)

Case RELEX: Raising 20MEUR of growth finance

The afternoon was closed off with a final keynote case presentation by CFO Johan Haataja from RELEX Systems, provider of comprehensive solutions for supply chain management and optimization. RELEX managed to secure a 20 MEUR minority financing round from Summit Partners in summer 2015.

Haataja summarized Relex’ key success factors as follows:

#1 Evidence of strong growth – even better if profitable and cash flow positive
#2 Evidence of satisfied customers and customer value
#3 Evidence of competitive edge
#4 Evidence of 1+ B€ market potential

And to achieve the above you also need:
#5 A talented, motivated, happy and committed team rowing steadily towards a shared vision

The RELEX team charges ahead with a team of 200 in 9 different countries – and a solid financing for further accelerating its international growth.

Thank you once again to all presenters and participants for making Finance Board a success!