Ari Korhonen — angel investor of year 2014 in Finland — shares his secrets to success
I sat down with ARI KORHONEN, an exprienced business man turned into business angel, after a great meetup of world’s top class business angels. in Helsinki. ARI is a a member of FIBAN, the Finnish business angels network which named him the angel of year 2013. ARI is also into basketball, like me.
ARI invests in innovative and fast growing companies globally. Apart from financing, he also provides knowhow and experience to the benefit of the companies.
This interview will be a part of my book on equity crowdfunding & angel syndicates in Europe. Equity crowdfunding & business angels are interesting ways to raise initial funding for startups and more and more young companies go this way.
Here is the most interesting part from our chat:
How did you get started with angel investing?
Some 8 years ago I was an entrepreneur earlier in software. I had more than 100 hundred employees in my company and then a bigger company bought my company. I worked there for another two years before I started to become an Angel Investor full time. I was considering to start another company but decided to dedicate my time to more separate companies instead of just one, and I found angel investing to be an interesting way to do that. I wanted to work with young, exciting company founders. I invest mainly on my own. I work together with my wife, but she also has her own investments. I don’t have anyone recruited so I am a typical business angel, but often working alone but working often with other angels.
Your portfolio is impressive. Also, congratulation to being selected the Angel of year 2014 in Finland.
Thank you.
ARI’s portfolio is impressive — 23investments, two exits. One man show but the portflio looks like a medium sized VC portfolio. He is a valuable mentor for the companies where he invests. He is also close to 500Startups (US) and Seedcamp (Europe).
How and where are you looking for new investment opportunities?
I go to the pitching sessions, feedback pitching sessions and of course some others many other entrepreneurs directly approach me. Of course I try to keep contacts to universities and incubate those and accelerate those.
What are you looking at?
Now, I’m in IT only. Software, internet software, mobile Apps, games, content.
What are the main criteria how you invest?
The first is the team which must be capale to execute the business plan and modify it when needed. The second is scalability.
Why is angel investing exciting ?
I can offer my skills and network to companies I work with. Also, I learn a lot every day with young exciting companies and every day is different.
You invest alone or as member of syndicates?
I often invest with other angels. It is case by case. Sometimes syndicates are created around a lead investor. It’s also coming from EBAN who’s are interested, on that it’s not coming from EBAN the company, then it is sort of case by case who have shown interest in a company. It is good to invest in groups — you learn from others and you diversify risk, as well. Normally, angels don’t compete with each other, it’s very seldom competition between Angels. But there might be competition with venture capitalists or some other player. When you invest within syndicates, you divide the risk, because you can invest in more companies.
All angels need to create a portfolio because only one in ten will be your success story.
How does your typical working day look like?
I go to board meetings. Like today I had one meeting and Wednesday I will have one and Thursday. Usually, I’m a board member and I am focusing on the board seat. So that’s the normal week sort of, and then looking for new companies and going to some events, meeting entrepreneurs here and meeting entrepreneurs at their own premises
How long does it take to build relationship with company founders or lead investor before you invest?
I think that in an angel round typically two to three months. I like to spend some time to get to know the entrepreneur better and get to know if he/she is dedicated. Sometimes I must be faster if there is competition, maybe crowd funding or more angels.
What is your view on cross-border, pan-European angel syndicates?
That’s good. You get to know people around Europe. Then when you meet some people several times maybe you then start to co-invest with those people in their country, or they could co-invest with me in Finland. So it must be a trusted party who is already participating with the round in maybe the lead position, or somebody local taking the lead position and then they are sort of adding on with the inter-nation. That can be very good for the company because if the company wants to expand to other markets, then it is good to get one investor from those markets because then that angel can help a lot.
And you would not have a problem investing in a company that is incorporated in eastern Europe?
It still depends on which country. For me, the European Union is okay.
What is your take on equity crowdfunding ?
It’s quite a new thing that is growing and it’s very good for entrepreneur to have one more opportunity. I believe in the hybrid model in the longer term, that an angel may first put one fourth or half of the money, take the lead. also, I like it when a crowd funding round is like coming to the company as one one entity.
ARI support one women basketball team in Finland
Who are business angels?
Business angels are private individuals who invest their own money in high potential startups in exchange for a share in the company, and also contribute their expertise in business management and their personal network of contacts.
FiBAN is a member of the European Business Angels Network (EBAN) and was chosen as the “Business angel network of the year 2012". The FiBAN network is today one of the largest and most active business angel networks in Europe with over 400 approved members and over 100 events held year 2013. FiBAN is a member of the European Business Angels Network (EBAN) and was chosen as the “Business angel network of the year 2012".
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Pavel Curda
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