Many entrepreneurs are used to being shunned, ridiculed, and passed up by investors. But no more! The Finnish startup firm BackingMinds is here to offer relief for those who have typically been overlooked in the past. Their new €50 million fund will invest in companies that may not have met “traditional” standards of success.
BackingMinds was founded by Heikki Takala, Tero Ojanperä, and Timo Ahopelto and has already invested in several startups including the online language-learning technology firm Lingvist and the at-home blood test company Happay. Their ability to invest in companies that may not have an established track record shows they are a forward-thinking fund ready to take risks on those who need financing.
In a press release, Mr. Takala states “Our aim is to take less risk, yet in doing so provide a better-than-usual return,” which makes perfect sense. Investors do not have to worry about their wealth being invested in companies that may struggle or not turn out successful. The firm uses a more holistic approach to evaluate companies by, for example, looking at the business model, customer base, and vision.
BackingMinds also has a list of “qualifying” criteria that many investors would disapprove of. They take into account the company’s ability to maintain quality control, how committed the founders are to the product or service that they are developing, and whether or not they have been honest with investors in the past.
Here is the list:
1. The company, product or service that the entrepreneur wants to invest in has to be truly innovative.
2. The company, product or service must be scalable and re-investable.
3. The company must have a business model without minuses (customers are willing to pay more than it costs to make and sell).
4. The entrepreneur must have a large shareholding (info=power).
5. The company must have a high-quality development team and/or startup hub
6. The company must be based in Finland. The founders should not have any financial issues.
7. The founder must not have any serious legal issues (for example, charges for insider trading).
8. The company does not need to be profitable at this stage, but it does need to show the signs of being sustainable in the long term.
9. The company should have a vision.
10. The products or service must not be too similar to existing ones (i.e., the market is not saturated).
Those criteria do sound a little frightening, but on the other hand the ability for BackingMinds to invest in companies that are able to attract large followings and make money is very intriguing. Imagine being able to get into a startup with a product or service that has huge demand and brings revenue into the company in the form of subscriptions, but you are still able to make money!
This is a very exciting time for startups where money may have been too hard to come by in the past, but now is a game-changer for those who have traditionally been overlooked. We will have to wait and see how many successful companies BackingMinds invests in, but it seems like they are off to a good start.
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