Front banner: Invesdor hopes to support the crowd and develop the digital ecosystem as part of the shift away from traditional finance. Photo: Peter M Forster/gettyimages
Lasse Mäkelä is not really one for following the rules.
While working in the banking sector, he spent four years in London at Merrill Lynch around the end of the last century working on capital raising as part of his brief to facilitate IPOs. So far, so conventional you might say. But, rather than make his home among the traditional banking circles in money-soaked Hampstead Heath, Chelsea or Mayfair, Mäkelä instead pitched his tent up in unloved and unfancied St Johns, in southeast London.
If you’re not a London native, you won’t have heard of St Johns. There might even be more than a few Londoners who have never heard of this neglected part of the capital, but they will at least have heard of Lewisham, of which St John’s forms a part.
Neither pretty nor cool (at least back then), Lewisham has in its recent history been most synonymous with the race riots of the late 1970s when pitch battles run through the streets between warring factions on either end of the political spectrum. And, while it is now enjoying something of a boom on the back of the Canary Wharf development and the concurrent infrastructure that has made it a much more attractive proposition for London’s financial elite, that wasn’t even on the horizon in 1997.
“I’ve never been the kind of person who does something just because he is expected to do it,” says Mäkelä. “A lot of colleagues went to Chelsea and the like simply because they were expected to, but it didn’t appeal to me.
I’ve never been the kind of person who does
something just because he is expected to do it
“St John’s was convenient, the connections by London standards were relatively fast and I could also be out into the countryside relatively quickly,” says the Helsinki native. “For someone from Finland, that is very important.
“It was edgy of course with lots of people from different backgrounds but that is also what could make it exciting,” he adds. “And if I wanted something a bit more genteel, then Blackheath and Greenwich were just around the corner.”
Ditching the rule book
And it was perhaps that desire to ditch the rule book, that made Mäkelä so perfectly suited to his current venture as founder and CEO at Invesdor, the Finnish equity crowdfunding platform with whom Nordea partners to help fund early-stage and start-up ventures.
“I’d moved out of banking when I returned to Helsinki and was for some time in the elevator business working for Kone Corporation,” says Mäkelä, in a skype interview. “Kone was buying something like 25-30 companies a year and this experience showed me the importance of tight and simple processes.”
From there, Mäkelä moved on to another M&A finance role with Finland’s Consti Group in 2009 (where he first developed a relationship with Nordea), coinciding with the fallout from the great financial crisis of 2008 and just at a time when the traditional routes towards raising finance were being questioned, if not exactly challenged.
“The concept of funding differently had actually first started to grow when I was at Merrill Lynch where it remained at the back of my mind for years, but it didn’t really start to crystallise in any real form until 2011,” says Mäkelä, whose infectious manner and obvious enthusiasm for his work is evident all the way down the phone line from his hotel room in Vienna. “In essence, I started to see that people trusted in the internet enough to put their money into it and that’s where the idea really moved on.”
Using the network
Mäkelä, as is the way in the Nordics and it seems particularly so in Finland, started to lean on his immediate network, bringing together five friends with a range of skills to begin working on the idea that was percolating like a fine coffee in his brain.
“What we saw was a scenario where new or early-stage ventures were trying to gain finance in more difficult times and it was a very unequal battle,” says married Mäkelä, who has a 10-year old son as well as two pet dogs. “The bankers, the lawyers and the investors would charge a lot of money and it did not seem very transparent.”
It was this unequal battle that particularly raised Mäkelä’s heckles and, mission established, he and his cohorts got to work.
“We saw that it was often taking 1-2 years to raise finance and that the new ventures were being squeezed by the investors and business angels,” says the 48-year old. “We felt that if we could make the whole negotiation more balanced to everyone on the table, a ‘play fair’ concept if you like, then we would have a system that could work.”
New or early-stage ventures were trying to gain finance
in more difficult times and it was a very unequal battle
So it was that after much hard work and development, the Invesdor platform was born in 2012, neatly dovetailing with the equity crowdfunding concept that had begun to flourish at about the same time.
Since then, the platform has gone through some evolution. It has staged 157 successful rounds, up from an initial success rate of 40% to an approximate 70% premised on the ‘all-or-nothing’ model that legislates a fundraiser must hit its minimum target before the end of a round or else all pledged funds return to the investor.
It’s also teamed up with one of the Nordics bigger banks (we’ll not mention names here) only to ditch that particular partnership when the possibility of working with Nordea came along in 2017.
“We’d always seen Nordea as a potential partner and it was a no-brainer really,” says Mäkelä. “Firstly, it’s a Nordic bank and a very large bank and it’s really beneficial to us as it helps with visibility. It’s very good to be associated with such a large bank.
“Nordea has the customer base as well of course with 10 million and our association with them reflects the fact that we want to be seen as a Nordic player too,” he says. “We have funded across the Nordics and we would very much like to do more. We think Nordea can help with that.”
So far, Nordea has through its crowdfunding board given its ‘collaboration’ stamp to seven crowdfunding rounds on the Invesdor platform, enjoying success in six (documented on the Open Insights pages in ‘And breathe … how a Finnish startup is tackling air pollution’ focusing on clean-air provider Naava and ‘Crowdfunding: Having your cake … and eating it’ that sketched the story of POWAU and its sugar-free cakes and café brand).
Mäkelä’s confident the partnership will see more ventures work their way through the equity crowdfunding circuit and has his eyes on developments in Austria and Germany where Invesdor has merged with a local player that gives it significant access to the local market.
More importantly, Invesdor’s consolidation has been such that it has gradually managed to shift into a position where it can make more sustainable choices in the kind of company it chooses to support, a transition that has left it very much aligned with Nordea’s values.
“It certainly has become a focus for us to concentrate our efforts on selecting our targets better,” says the Finnish entrepreneur. “We like to help companies which not only have a viable business but also have a bigger agenda.
“We have our fair-play principle, and this fits in with that,” says Mäkelä. “It’s all about transparency, openness, and honesty, and if we can establish that, then we have nothing to hide.”
At this point, the equity crowdfunding specialist turns even a touch messianic.
Building the ecosystem
“In ten years time, pretty much everything in this arena will be digitalized,” he says. “The investors and angels are fully on board with what we do now and we are dealing with educated, switched on people on all sides that completely get it.
“In time, we can develop an outstanding digital funding ecosystem here that builds a better Europe and promotes a bigger agenda.”
It’s a big vision and a world away from St John’s two decades ago. But those same principles of getting to know the micro and then building towards the macro are very much at work in the Invesdor framework.
“It’s very true,” he says. “Start small, build and develop. It’s the ecosystem.”
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