Helsinki 14.5.2013

START-UP YHDISTÄÄ JOUKKORAHOITUKSEN JA OSALLISTUVAN TUOTEKEHITYKSEN

Tamperelaisen tallennuspalveluyhtiö Varaanin sijoittajat saavat yrityksen tuotteen vuodeksi maksutta kotiinsa

Tavallisille suomalaisille tulee ensimmäistä kertaa Pohjoismaissa tarjolle mahdollisuus sijoittaa osakepohjaisella joukkorahoituksella kasvuyritykseen ja osallistua niin halutessaan samalla yrityksen tuotekehitykseen. Suomalaisen Varaani Works Oy:n kehittämässä henkilökohtaisessa pilvipalvelussa kotiin tulee verkkolevy, johon tallennettu sisältö varmentuu automaattisesti myös Varaanin varmuuskopiopalveluun. Sijoittajille tarjotaan mahdollisuutta osallistua vuoden mittaiseen käytettävyystestaukseen. Sijoittaja saa näin ainutlaatuisen mahdollisuuden tutustua myös sijoituskohteensa tuotteeseen. Varaani on solminut joukkorahoitussopimuksen suomalaisen Venture Bonsain kanssa.

Venture Bonsain tarjoama osakepohjainen joukkorahoitus mahdollistaa rahoituksen hankkimisen yritykselle suurelta yleisöltä siten että yksittäinen sijoitus on jopa vain muutamia tuhansia euroja. Sijoittajan kannalta tämä mahdollistaa osakesijoittamisessa tärkeän asian eli hajauttamisen ja tarjoaa vaihtoehtoisia sijoituskohteita nuoriin, aloitteleviin startup-yrityksiin perinteisten pörssiosake- ja  rahastosijoittamisen rinnalle.  Kun sijoitukseen liitetään mahdollisuus saada myös kohdeyrityksen tuote itselle käyttöön niin sijoittaja voi suositella sijoituskohteensa tuotetta omakohtaisin kokemuksin.

“Haluamme tehdä kaikista sijoittajistamme samalla myös palvelumme käyttäjiä. Tarvetta keskitetylle tallennuspalvelulle on lähes kaikilla” sanoo Varaanin toimitusjohtaja ja perustaja Kimmo Lahdensivu. ”Sijoittajamme saavat tuotteen vuodeksi maksutta testikäyttöön kotiinsa. He pääsevät itse kokeilemaan palvelua ja toivottavasti suosittelevat palvelua sitten ystävilleenkin. Vuoden kuluttua laitteen voi lunastaa itselleen. Kaikki voittavat, tämä on joukkorahoitusta parhaimmillaan” jatkaa Lahdensivu.

Venture Bonsai on alusta alkaen panostanut erityisesti sijoitusprosessin helppouteen, toimivuuteen ja lainmukaisuuteen sekä sijoittajan että yrityksen kannalta. Venture Bonsai on Suomen johtava joukkorahoituspalvelu ja siihen voi tutustua ja sijoittajaksi voi rekisteröityä osoitteessa www.venturebonsai.com.

Lisätietoja antavat:

Varaani Works Oy, Kimmo Lahdensivu, p. 040 5285058

Venture Bonsai Oy, Antti Hannula, p. 040 5447586

Venture Bonsai (www.venturebonsai.com) on vuonna 2010 perustettu johtava suomalainen osakepohjaiseen joukkorahoitukseen erikoistunut yritys. Palveluun liittyminen on maksutonta, se on kaikille avoin ja noudattaa Suomen finanssilainsäädännön vaatimuksia. Venture Bonsain toimialueena on sekä kohteiden että yritysten osalta Pohjois-Eurooppa.

Varaani Works Oy (www.varaani.com) on tamperelainen vuonna 2010  perustettu kasvuyhtiö, jonka tuotteessa yhdistyvät saumattomasti keskeiset tiedon tallennuksen ja digitaalisen sisällön palvelut yhteen helppokäyttöiseen pakettiin. Varaanin ratkaisun ytimen luo ainutlaatuinen varmennuksen innovaatio, jonka avulla suuret sisältömäärä paikalliselta tallentimelta voidaan varmistaa pilvipalveluun edullisesti. Varaani Works Oy valittiin 2013 Red Herring Europe Top 100 –voittajaksi yhtenä lupaavimmista eurooppalaisyrityksistä.

START-UP COMBINES CROWDFUNDING WITH PARTICIPATING PRODUCT DEVELOPMENT

Finnish cloud storage company Varaani gives investors the product for a year for free

For the first time in the Nordics, private investors have an opportunity to invest in a growth company and simultaneously participate in company’s product development. Finnish Varaani Works Oy has developed a personal cloud storage service in which all the data stored in a network hard drive at home is automatically backed up to the cloud service as well. Investors are offered an opportunity to participate in a year-long user-experience testing. This gives the investors a unique opportunity to get to know the products of the company. The crowdfunding round is implemented with Finnish crowdfunding pioneer Venture Bonsai.

Equity crowdfunding enables a company to get funding from the public so that individual investments can be as low as few thousand euros. For the investors this offers a tool for diversification, essential for any investment strategy, by offering a possibility to invest in promising early-stage private growth startups beyond the traditional investments in stock markets and funds.  When this is complemented with an opportunity to get also the product of the company for test use, this enables the investors to recommend the product based on their personal experience.

”We want to make all our investors also users of our service. Everybody has a need for a great storage service”, says CEO and cofounder of Varaani, Kimmo Lahdensivu. ”Our investors get the product for test-drive for a year, for free. They can try the service themselves and hopefully then recommend it for their friends as well. After a year they can redeem the device. Everybody wins, this is crowdfunding at its best.” Lahdensivu continues.

Venture Bonsai has put special emphasis on ease of use, functionality and legal requirements of the crowdfunding process both for companies and investors. Venture Bonsai is the leading Finnish equity crowdfunding service and you can learn more about it at www.venturebonsai.com

Additional information:
Varaani Works Oy, Kimmo Lahdensivu, tel +358 40 5285058
Venture Bonsai Oy, Antti Hannula, tel +358 40 5447586

Varaani Works Oy (www.varaani.com) is a startup company founded in January 2010 and is based in Tampere, Finland. Varaani’s mission is to create a leading experience for home and SME business users for keeping their digital content safe and accessible in one place. The core innovation in the on-line backup efficiency ensures large storage capacity with a price tag of a consumer service. On top of the core technology Varaani has built a complete customer offering that creates a seamless combination of content and storage services. Varaani Works Oy was selected as a 2013 Red Herring Europe Top 100 winner as one of the most promising European startups.

Venture Bonsai Oy (www.venturebonsai.com) is the leading Finnish equity crowdfunding platform, established in 2010. Joining the service is for free, it’s open for everybody and the service follows the financial regulation. For private investors the service offers unique access to start-ups and growth companies. Venture Bonsai operates in the Northern Europe.

Helsinki 13.2.2013

AALTO START-UP CENTER AND VENTURE BONSAI TO COLLABORATE IN EQUITY CROWDFUNDING

Start-ups of Aalto University’s business incubator first in line to use equity crowdfunding

Aalto Start-Up Center, a Helsinki-based business incubator, is the first in Finland to offer its start-ups the chance to use equity crowdfunding as part of their funding options. By partnering with Venture Bonsai, it offers startups benefits and training related to equity crowdfunding. Venture Bonsai, a 2011-founded pioneer and expert of equity crowdfunding, has a versatile web-based platform for handling the equity crowdfunding process (www.venturebonsai.com).

Equity crowdfunding enables a company to get funding from the public so that individual investments can be as low as few thousand euros. For the investors this offers a tool for diversification, essential for any investment strategy, by offering a possibility to invest in promising early-stage private growth startups beyond the traditional investments in stock markets and funds.

”We are very satisfied with the crowdfunding platform offered to our companies by Venture Bonsai. Funding is fuel for our growth companies, and a key component, which we want to offer for our start-ups”, says Start-Up Center’s Project Director Marika Paakkala. “In my opinion it would be good if companies increased their use of social media and other modern tools also when searching for funding. At the same time, of course, it is important not to forget the basics – it’s always easier to get additional funding at a later stage when things have been done right already from the beginning”.

Venture Bonsai has put special emphasis on ease of use, functionality and legal requirements of the crowdfunding process both for companies and investors. Venture Bonsai’s platform offers the companies tools to run an investment round, for example the “virtual deal room”, where the entrepreneur is in full control of the investment round privacy.

Also the recently introduced angel investor tax reductions in Finland are expected to accelerate private investments made in early-stage start-ups in need of funding.

To get familiar with the service and registering, visit: www.venturebonsai.com

Additional information:

Venture Bonsai, Antti Hannula, mobile: +358 40 5447586

Start-Up-Center, Marika Paakkala, mobile: +358 40 829 2286

Venture Bonsai (www.venturebonsai.com) is a Finnish equity crowdfunding service for start-ups and growth companies. It enables companies to run investment rounds of up to 1.5M€, with individual investments ranging between 1.000 and 20.000 euros. The service is free of charge for the investors and has been built to strictly follow the Finnish and EU financial regulation

Aalto Start-Up Center (www.start-upcenter.fi) is an acceleration environment for innovative start-up companies, combining business, engineering and design know-how. We offer a diverse array of entrepreneurship training, high quality business advisory services and broad expert networks, as well as modern facilities.

Recent changes in the law accelerate equity crowdfunding in Finland
FINNISH VENTURE BONSAI BRINGS EQUITY CROWDFUNDING FOR PRIVATE INVESTORS

Equity crowdfunding is a new and exciting way to get funding for startups and growth companies. Its use has been previously restricted by the Finnish law, now the changes in the regulation as of 1.1.2013 enable a financing round up to 1.5M€ to be marketed to anybody interested in investing in startups. Also Internet and social media can now be used as marketing channels of the share issue. Venture Bonsai is a Finnish crowdfunding pioneer, whose service will today be opened for a wider audience.

Equity crowdfunding means that a startup or a growth company can run an investment round targeted for the general public. The individual investments can be as low as few thousand euros. The first Finnish crowdfunding service Venture Bonsai (www.venturebonsai.com) launched its service in 2011. Venture Bonsai offers Internet-based tools for the companies to easily run a share issue. Anybody can register to the service as private investor or entrepreneur.

With equity crowdfunding the companies can be financed in a new way enabling more growth, offering at the same time a new channel for the investors to support private companies. Crowdfunding also offers a diversification for the investors, adding a new category in addition to the investing in public stock market. Another new law change in Finland regarding additional tax breaks for any private investment of at least 10.000 € in a startup is further expected to accelerate equity crowdfunding.

Venture Bonsai has from the beginning offered the easiest possible investment process and best investment tools while strictly following the related financing regulation. Venture Bonsai is the only equity crowdfunding service available offering the investment tools such as the round deal room, which keeps the entrepreneur in full control of the investment round privacy.

Equity crowdfunding is also all about getting “back to the roots”. When the first Finnish Public Stock Exchange was established 100 years ago, the idea was at that time to enable the Finnish public to fund Finnish companies instead of requiring the companies to get funding abroad.

“Equity crowdfunding is getting more and more attention as an investment tool and all this is greatly helping the Finnish startups and the growth companies. It’s all about responsible investing because without funding even promising companies may even go out of business before the business has even started. We’re really in the early phase in Finland with this at the moment, but it looks really promising regarding the number of companies and investor interested”, Antti Hannula, the Chairman of the Board of Venture Bonsai says.

Learn more about the service and register for free at www.venturebonsai.com

More information:
Venture Bonsai, Antti Hannula, tel. 040 5447586, email antti.hannula(at)venturebonsai.com

Venture Bonsai is a Finnish equity crowdfunding service for startups and growth companies. It enables companies to run share issue up to 1.5M€ with individual investment being as low as few thousands of euros. The service is free of charge for the investors and has been built to strictly follow the Finnish and EU financial regulation.

An entrepreneur looking for funding from investors has to understand a whole new terminlogy related to the investment terms. We thought it would be useful to give you basics of the most important ones, along with examples or further real-life implications. By the way, it is not uncommon that the other side (for example less experienced Angel Investors) are also not familiar with these terms, so this list  can be useful for both sides of the table.

Have any words or phrases to suggest? Let us know in the comments!

Accredited Investor (US+UK): A high-worth individual allowed by their government to make risky investments in private equity.

Angel: A high-worth individual who invests in startups. Generally speaking, Angels are less afraid to take greater risk, and usually invest with their own money.

Common Stock: The unit of ownership of the company typically owned by the founders. Common Stock is also the lowest level of financing. If the company goes into bankruptcy, money is only repaid back to common stockholders once the liquidation money is first paid to debt and preferred stockholders.

Convertible note: A form of financing where the company is lent money which acts like debt, unless the lender decides to convert it into a predetermined amount of shares of company. The issuer of the convertible note is also usually allowed to buy stock at a discount the next funding round (up to a certain limit). This reduces risk for the issuer of the note, and is beneficial for founders because it puts off their company’s valuation until the next round.

Crowdfunding: The general term for the pooling of money from a large number of people to fund projects. Can refer to receiving equity in return, but normally ‘appreciation gifts’ are given in return (Like Kickstarter’s model).

Crowd-investing: A form of crowdfunding that refers to a large number of investors independently pooling money to fund projects for equity in return. It’s what we do at Venture Bonsai.

Dilution: Reduction in the percentage of ownership of one’s shares due to the issuance of new shares. This can take place when an option is executed, or during a new funding round.

Down Round: Issuing shares at a price lower than the previous financing round. Disliked by investors as it is a sign of a failing company. Some agreements allow preferred stockholders protection in the case of a down round, but the method of protection can be very disadvantageous for the founders’ ownership in the company.

Due Diligence (DD): The examination of an investment by reasonably evaluating the company and management. Achieved by reviewing the company’s standing and asking key questions. Can be broken down to Financial, Technological, and Legal due diligence, which focuses on specific areas. See Social Due Diligence for our own brand of DD.

Exit: Any path that allows financiers to sell most or all of their equity in a company, usually an IPO, Merger and Acquisitions, or a redemption. Exits can be broken down to financial and strategic exits. Financial exits create value by assigning value to their future profits after an IPO or trade sale, while strategic exits create value on what exploited by their purchasing company.

Friends & Family round: A seed round financed by your network of friends and family. Take care of your Friends and Family round legally and securely on Venture Bonsai!

Initial Public Offering (IPO): When a company “goes public” and registers its securities, which can be traded publicly on an exchange.

Investment Round (Share Issue): When a company raises money by selling equity. Investment Rounds on Venture Bonsai involve issuing direct shares of stock.

Liqudation Preference: In a liquidation event such as a merger or acquisition, some investors get their money back (often with interest or at a multiple) before common stock is paid from liquidation. Because the preference does not treat everyone equally, founders and other common stockholders can be paid little or nothing after a liquidation. Our seed Shareholders’ agreement does not have this included, but a common A Round Shareholders’ agreement will have one.

Merger and Acquisitions (M&A): Usually a larger company acquiring a smaller company. This is the most common exit strategy.

Mezzanine round: Also known as Bridge Financing. This is the funding round used to prepare a company for an IPO or merger.

Series Seed (Seed round): Normally the first funding round. Used to launch a company and is often financed by family and friends.

Preferred stock: Stock normally held by VC’s and Angels. Usually comes with provisions that benefit these stockholders before holders of common stock.

Pre-money valuation: Valuation of a company before a new funding round. For example, a €500k pre-money valuation with 500 shares is looking to issue 100 shares sold at €1 000. This results in a post-money valuation of €600 000 and 16.67% of the company owned by the shareholders.

Post-money valuation: Valuation of a company after an investment. Post-money = pre-money + new amount invested. Investors may wish to talk to you with the post-money valuation because it sounds larger, so be aware of which valuation you are talking about, as well as the underlying math. For example, a €500k post money valuation with the same amount of shares offered is the same as a €400 pre-money, and 20% of the company. This results in giving up more shares for less money.

Private Equity: Securities in a company that is not listed on a public exchange.

Redemption: When a company owner is forced to buy back shares, usually at a premium. This can be enforced by a “buy back” clause in the terms between the entrepreneur and investor if an IPO or Acquisition does not happen within a given time frame. This is rare occurrence, but is good to know when negotiating a deal.

Series A: The first Venture Capital financed round. Usually between $1M-$30M. Use Venture Bonsai to get seed money to get to this point.

Series B: The second VC financed round. Further series continue alphabetically.

Shareholders’ Agreement (SHA): An agreement between the parties. Common provisions include: Control and management of the company, voting rights, and restrictions on transferring shares. Venture Bonsai offers free legal documents, including the SHA, if you need them to run a funding round, or wish to use them as a starting point. Here’s our legal framework for Europe.

Social Due Dilligence: The due diligence process where questions are asked by the community and answered by the founders for all available investors to see. A “crowdsourced” take on making smart investments when crowdfunding.

Stock Option: The right, but not the obligation of a convertible note issuer to convert its debt into stock of the company. Your convertible note holder will exercise this when your company is running well.

Term Sheet: a bullet point document outlining the material terms and conditions of a business agreement. Usually not a binding agreement, but is a document used to negotiate terms between entrepreneurs and investors.

Venture Capitalist: An employee of a fund that invests in early stage growth companies. The fund makes money by steering the company towards exits, so it can be repaid for its shares.

Warrant:  An agreement to allow a certain amount of stock to be purchased over a given period of time. Used as a “sweetener” to make a deal better for investors.

There are investors from almost all European countries by now – it’s a great thing for both the entrepreneurs and investors. It’s a win-win for everybody so remember to tell your fellow entrepreneurs and private investors to sign-up now (it’s free). There are great examples of successfully using Venture Bonsai for a crowdinvesting round already, maybe you are the next one?

If you would like your company to be covered on our blog, please email responses to the following questions to info(at)venturebonsai.com. Also feel free to get in touch with us if you have any questions or would like to change up the format.

The first company we have featured is AppGyver.

What is the quick pitch for your company?

AppGyver makes App Factories. AppGyver App Factory enables our customers, such as Mobile Operators, to enter the Mobile App business to make money with their existing customer base. The App Factory users are able to easily create customized Apps for specific business verticals based on the predefined App Templates, and easily sell and distribute the final Apps to their business customers and consumers alike.

What does your team look like and what are their backgrounds?

AppGyver is founded by three people: Marko, Antti and Henri. They have backgrounds from serial entrepreneur to highly professional tech skills and mobile business.

All together AppGyver team includes ten professional technology, software, sales and marketing people from different kinds of backgrounds. AppGyver has also five advisors to bring their skills and connections to the table.

Do you have any customers/have you spoken to potential customers?

We are currently in private beta and have had discussion with mobile operators, ad-agencies, software companies and individual developers. Actually, our product has been shaped partially based on the feedback we’ve received in the pilot project in the last 12 months. There is huge potential in the market. There’s also a strong interest on the market to this kind of approach, and now it’s our opportunity to deliver exactly that to our customers.

What is your marketing strategy?

We believe that the best marketing is based on the results and benefits our customers and partners get. At this stage we’re making sure our developer tools become the easiest, fastest and most cost-efficient way to build cool apps. When they can deliver great results for their own customers, that’s good. At the same time, we’re building the first App Factory to start mass-customizing and distributing the first apps. So our marketing strategy is based on happy customers and happy partners.

How do you plan on funding your company?

Until now the company has been funded by the founders and small friends&family investment round. As we’re growing fast, we’re also raising money all the time. Next year it’s time for a bigger investment round.

What is your exit strategy?

We’re currently in the middle of building something really exciting and disrupting. Our main strategy is to build something valuable, something that will last and something that is fun to build. We do acknowledge that the field we’re in is extremely hot in the Silicon Valley right now, for example two of the main competitors have been acquired in the last two months. We also know that investors will only invest in companies which have an exit value, and we believe that this value in our case is going to be in the way how we combine new technology, new business and existing customers.

Logged into Venture Bonsai? Click here to be taken to AppGyver’s profile or Request an Invite to Venture Bonsai.

There are investors from quite many countries by now, including:

• Austria
• Estonia
• Finland
• Czech Republic
• UK
• Denmark
• France
• Germany
• Greece
• Ireland
• Israel
• Italy
• Latvia
• Netherlands
• Norway
• Poland
• Russia
• Spain
• Sweden
• Switerland
• Turkey
• UK

and also from non-European countries such as

• Australia
• Brazil
• India
• Malaysia
• US

Sign-in or sign-up to learn more!

Product Page with Multiple Products

The first thing you’ll notice when you click to view some product pages is that they can be split in several parts. You can easily add multiple products by clicking “Add New Product” in the toolbar on your company’s product page.

The main benefit of doing so is to organize your different products or business areas into different areas. This allows us to keep our  tool’s for investors separate from our funding platform for entrepreneurs, which makes everything easier to follow. Also, a “deeper” profile provides your investors with more than a quick glance of information.

An Individual Product Page

It is possible to upload pictures, PDF’s, video, and Movenote presentations to your product page.

The first picture or video you upload becomes the default media for that product page. Armed with this knowledge, you can highlight a particular video or attractively brand information for your potential investors.

When an investor clicks “Yes” to “This product will be a success,” a notification is published to the dashboard. Motivating viewers of your profile to click that button can be part of a successful strategy to build attention around your product.

And lastly, don’t forget about promoting the discussion area at the bottom of the page! An engaged investor is an interested investor.

Have any questions? Let us know at Support@VentureBonsai.com

Big companies buy small companies because small companies are simply better at innovation than larger companies. Employees of a big company do not want to be seen as trying out a new idea and then abandoning the venture midstream if it does not work. The career of managers wishing to move up the corporate ladder do not want to have failures in their history. Now the world of innovations is such where small companies develop new products and services, gather early customers at high cost, and then sell the business to a large company. These large companies can use their existing distribution and/or manufacturing organization to turn the company bought into a large profitable business.

Employees of a big company do not want to be seen as trying out something and then abandoning the ventures midstream if they are not working out as expected.

Should Your Company Be Valued Based On Financials Or Strategic Value?

Many entrepreneurs view the value of their company as being tied to generating revenue and profit growth, but fail to appreciate how this view limits their ability to fully exploit their company’s potential. The key to the strategic value is having developed a product which has the potential to reach a very high level of sales, if it is given the proper resources. A company can also turn out to be very valuable if it targets the existing customers of a large company, solves a compelling need, and has good sustainable competitive advantages.

It’s also worth remembering that in an acquisition process it’s not the buyer who will remind you about the strategic value of your company!

Valuing A Small Company In A Strategic Acquisition

Strategic value of a small company is often biggest part of the purchase price paid by a large company. Quite often it’s the case where:

• The small company has developed a product or a service to a new market segment
• The product contains such Intellectual Property which is hard to work around or takes long time to replicate
• The product is a threat to the acquirer or can boost the sales of the acquirer if bought
• If the product would be bought by a competitor, would cause serious trouble to the acquirer

Strategic value occurs when a small company creates an asset or capability which large company can exploit over a large customer base. Since the value to the acquirer is based on the revenue which they can make rather than the revenue or profit which the small company has achieved (or could achieve in the future), the acquirer may be willing to pay many times the conventional market value. Just imagine how valuable your company would be if the customer base would suddenly be 50 or 100 times larger.

The value to the acquirer is based on the revenue which they can make rather than the revenue or profit which the small company has achieved (or could achieve in the future)

The best (and only) way for the small company to get this value is by creating some competitive tension between competing acquirers.

It’s Always A Complex Formula…

When you are talking to professional advisers, investment bankers, and business brokers they will often focus their analysis of your business on what profit you are achieving now, and what your likely revenue and profit growth will be in the near-term future.

Most private companies are heavily constrained because of lack of finances, limited capacity, poor access to large distribution channels, or lack of some skills (just to name some obstacles). In the hands of a better resourced and more capable buyer, the underlying potential can be achieved quicker.

Growing Serial Entrepreneurs Makes Sense

So why should you consider the exit anyway? It may not be the most important thing to focus on the early days of a startup, but on the other hand, having no ideas regarding an exit may mean that you’re building something that turns out to be of low value. Worst of all, focusing on some specific segment at the same time as somebody else has already implemented it (copying) is not clever either.

But finally, after you have successfully sold your company, you can either start a new business, buy a stake in someone else’s business, or become a private investor in Venture Bonsai. Serial Entrepreneurs are, after all, those who have started and exited businesses. Just starting many businesses doesn’t count.