Survey: Exits by Finnish BA’s are profitable, but the risks are high
A new study on the profitability of angel investing, made by the Finnish Business Angel Network (FiBAN) together with Ruben Moring (Åbo Akademi University), is the first broad study on the national angel activity in Finland. This is the largest study made about the angel exits in the Nordics.
By Claes Mikko Nilsen
For professional angel investors, the role of exits is vital and maintains interest towards startup investing. The study covered 126 business angel exits measuring the Internal Rate of Return (IRR) that observes the profitability of the whole investment lifecycle. The key results of the study show that the pooled IRR is 25% and overall realization multiple is 3.75. This shows that the IRR of the exits of professional business angels in Finland is excellent and in line with international studies. However, more than a half (54%) of the exits that were reported during the survey were unprofitable. Also these results are in line with the general risk level of the business angels.
The survey included only one IPO and no unicorn exits. Therefore, the results show that also smaller exits can be quite successful. The average holding period in Finland was 5,5 years, which is longer compared to the international level. Finnish business angels have also been very active with their portfolio companies; on average they have used 28 hours in a month for a company.
“This survey is an excellent initiative to raise understanding on the profitability on angel investing, and compare the activity internationally. By these means, the results seem excellent. Even if an entrepreneur is not expected to actively think of the exit possibilities, for many investors this is a matter that needs to be planned.” comments Torsti Tenhunen, Chairman of FiBAN, in a press release.
Investors with exits behind them bring positive returns
Even though the returns have been excellent it’s important to notice the high risk of angel investing. Investors’ experience and activity in the startup scene avails the probability of making positive exits.
“It’s been interesting to compare the results of the survey to my own exits. I can see that gaining more experience in angel investing, and having wider network covering the startup ecosystem really supports my possibilities towards positive exits. In my experience, many investors that have made exits will do new startup investments.” says Riku Asikainen, Vice Chairman of European Business Angels Network (EBAN).
FiBAN will continue making and developing IRR survey also in the future, aiming to make Finland one of the leading countries comparing startup data to business angel activities.
A hands-free mobile ticketing solution is being publicly tested in Estonia
Estonian travel tech company Turnit is starting a public beta test for its hands-free mobile ticketing solution Turnit BiBo, which enables seamless public transportation usage for the passengers. The test is conducted in the city of Tartu, Estonia under the brand Jiffi and is planned to launch at the beginning of 2018.
The road to hands-free mobile ticketing started in 2015, when the founder of Turnit, Andres Osula, had an idea to make the public transport paperless and as convenient as possible. Enter Turnit BiBo, a mobile ticketing solution for urban and suburban mass transport systems. It started as a startup called Jiffi, which won Ajujaht 2015, the biggest startup contest in Estonia. On the 1st of October 2017, Jiffi moved under one company and brand Turnit. Thus Turnit Bibo was born. The name Jiffi will remain in Tartu as the name of the application the passengers will use.
Turnit BiBo as a platform uses custom-made, secure Bluetooth Low Energy (BLE) beacons and micro-locating technology to detect accurately when smartphone-equipped passengers enter and exit the transport vehicle. It detects when the passenger enters and exits the vehicle meanwhile taking care of the payment automatically. The passenger doesn’t even have to take their phone out of the pocket. „The validation works seamlessly without any user action needed. This results in superior user experience for the passenger,“ explains Osula.
But the seamless experience for the passenger is only the first half of the solution. The CEO of Turnit, Andres Birnbaum, says that in addition to ticketing, Turnit BiBo functions as a source of information. „It provides highly valuable check-in and check-out data that is crucial for efficient route planning, multimodal transfer management and flexible pricing based on customers’ actual needs,“ adds Birnbaum.
Currently, Turnit BiBo is being piloted in the city of Tartu, Estonia, where the initial phase of closed group testing was successful. By the end of the first test, there were 2840 trips done with Jiffi in Tartu. The next step towards commercial launch is the public beta testing that began November 13. It involves around 2000 testers, who are actively testing the system until the end of 2017. „The goal of this next stage is to collect more data from a bigger user group, because there are many different types of phone models that we need to test. A bigger test group brings out the specific needs and problems of different phone models that we can solve before the official launch. Making the system as reliable as possible for every user,“ said Birnbaum.
Turnit BiBo is planned to launch in Tartu at the beginning of 2018.
Turnit is a travel tech company with more than 20 years of industry experience. They provide mission-critical software technology and consultation to passenger transport industry. Company’s Turnit Ride platform is targeted for operators who require complex logistics management, dynamic pricing, and flexible responsiveness to the market situation, maximizing their revenue while streamlining their business processes. The platform, delivered as full service, processes around 8 million seat reservations annually and its services are used by over 40 operators across the world, including industry leaders like Transdev and Nettbuss. Their second product, Turnit BiBo, enables hands-free ticketing and crucial data collection in urban public transportation. Company headquarters with 50 employees is located in the digitally driven country of Estonia.
Tetrao Wins BNP Paribas International Hackathon 2017
Tetrao is an artificial intelligence company aiming to automate processes that are currently done manually in order to help its clients save time and money! We chatted (in June) with Christian Gillot, founder and CEO of Tetrao, after being awarded at the International Hackathon organized by bank BNP Paribas in Luxembourg.
What is the purpose of Tetrao?
The purpose of Tetrao is to enable faster connections between businesses, which we are able to do thanks to our Robotic Cognitive Automation technology. It is an artificial intelligence that takes control of an Internet browser to do work. It is unique because it simulates the behavior of a human being to understand web pages and interact with them to complete a task.
What products/services do you offer?
We offer automation services for our clients who use online processes, typically performed manually and clearly have business needs that would benefit from automation of these processes. After an automation audit, we automate these processes quickly, offering a clear Return On Investment for our clients. We are also developing a product that should launch during the second half of 2017. It’s called Live Business Graph and it automatically aggregates all the information that companies publish about themselves online.
Who are your clients?
We have two very different client profiles. We work with startups such as All Square, TheBarCorner and PopWork. For them we collect, at scale, the information they need to develop their businesses. We also work with corporates in fintech, which have a culture of innovation and a big volume of processes that could not previously be automated. For instance, we work with BGL BNP Paribas, BNP Paribas Securities Services, PwC and Editus.
Do you have a business case to share with us?
Definitely. We work with an initiative of BGL BNP Paribas called MyFundMatch. It’s a social network that aims to change the relationship between asset managers and investors. For them, we developed a specialized version of our artificial intelligence for the funds industry. It knows how to go to an asset manager web site, download fund information and automatically structure this data to make sense out of it.
You participated in the last International Hackathon. What were your expectations?
Our intent was to collaborate with the bank experts to find a project that makes people’s lives easier. We brainstormed several ideas with the experts and decided on a great idea that we want to make a reality. So our expectation was to demonstrate the feasibility and the value of implementing the idea.
You won! What was your project about?
We worked on company bank account creation. It’s a lengthy, troublesome and complicated process that can take months. It’s a big pain point for customers at any bank. So, in collaboration with the experts of the bank, we created a company onboarding assistant that can reduce that process from several months to just three days, by providing a digital-only experience and leveraging our automation technology.
What are the next steps for Tetrao?
We are very much focused on doing what is necessary to integrate this solution and give it to users. To achieve this, we are starting a co-working phase with BGL BNP Paribas that will solve the legal, business and compliance issues. More generally, we have several projects with different customers going on and we will be profitable by the end of this year. Stay tuned!
Open Banking Is Here.
The use of APIs will accelerate the digital transformation of the financial landscape already sparked by the emergence of financial technology (or FinTech) companies.
Open Banking is just around the corner for European countries, with banks having to open up their data through application programming interfaces (APIs) by January 13 2018.
With public APIs, customers will have more options to interact with their bank. In this scenario, the bank will serve as a platform, on top of which third-party companies (such as startups) can build their own applications using the bank’s data to engage with customers.
Instead of doing all of their banking through one or two firms, customers will most likely have their current account with one provider and then aggregate financial services through other providers, all under the user interface of their choosing.
The Portuguese one-stop for all main banks data
In Portugal there’s an even more straightforward approach that will allow startups to access all main Portuguese banks data in a single platform instead of going to each bank API and adjust their solution in a case-by-case scenario.
Here, SIBS, the country main Fintech innovator, is already working together with the main banks to create an open API standard. This will mean for startups a one-stop access to the main Portuguese banks costumer data.
Startups will be able to build new products and services by accessing and integrating customer’s banking data – with their permission – into their applications.
But, more than this, startups can also have access to further support from SIBS in moving forward their solutions, including the co-development of new solutions, through the new edition of SIBSPAYFORWARD acceleration program, which as applications open until December 15.
Open door to deliver the Fintech Promise
For Fintech startups this changes mean an opportunity to fulfill their promise, the promise of groundbreaking technologies that will transform completely the financial landscape and the way consumers interact with financial products, by generating solutions that consumers will want to use in a widespread way.