By Karoliina Liimatainen on 30th May 2018
After closing down its own crowdfunding platform, Nordea attempts a partnership with Invesdor. The two will form a formidable pair in digital financing in the Nordics.
Nordea, the largest bank in the Nordic countries, is partnering up with a Finnish crowdfunding startup Invesdor to offer digital financing to growth companies in Finland.
Lasse Mäkelä, the CEO of Invesdor, said in an interview that the collaboration benefits both Nordea and his company: the bank will gain customers that have already other sources of funding mitigating the risk, while Invesdor will gain new clients through Nordea.
Invesdor, founded in 2012, operates an investment crowdfunding platform that has so far helped to raise more than €55m to 120 companies. Small and medium-sized enterprises can raise money by selling shares to the public on Invesdor’s platform.
“The idea behind the new collaboration is that Nordea can make conditional financial decisions. For example, Nordea could say that a company can get a loan of one million euros if it first raises one million euros in equity crowdfunding using our platform. This is symbiotic for all,” Mäkelä said.
Crowdfunding is still considered a niche funding method, although its popularity is rapidly increasing. Last year, the size of the investment-based crowdfunding market grew to €56m in the Nordic countries.
Invesdor is an international company. Its client companies come from Finland, Sweden, Norway, Denmark and the UK. It has investors from more than 70 countries. But when it comes to all SME financing, Invesdor is a small player. Partnering up with a banking giant can open many doors, Mäkelä said.
“Nordea is the largest bank in the Nordics. And according to them, they have a 75 per cent market share of the corporate loans for the SMEs.”
In late 2016, Nordea ventured into crowdfunding by setting up its own platform. However, the independent approach didn’t work, and the bank recently scrapped Nordea Crowdfunding. Its website no longer exists.
“They have the internal processes ready and companies in need of funding in the pipeline. Now instead of serving them on their own platform, Nordea will channel them to us,” Mäkelä said.
Invesdor will work closely with Nordea’s Startup & Growth unit, which has a growing lending portfolio that amounts to over €250m.
“At the moment, Startup & Growth serves about 2,500 startup customers in Finland. The crowdfunding collaboration with Invesdor is a highly welcome addition to our financing solutions, and I expect our customers – both growth companies and private equity investors – to show a lot of interest in it,” said Vesa Riihimäki, the head of Startup & Growth Finland in a press release.
This isn’t the first time Invesdor is teaming up with a large bank.
“We had a similar collaboration arrangement with Danske Bank a couple years ago. But that project ended. We hope to gain more benefits through our partnership with Nordea, as their market share is much larger,” Mäkelä told AltFi.
Big banks around Europe have been buying promising startup companies or establishing partnerships with them.
At the moment, Nordea is not a shareholder in Invesdor. Mäkelä emphasised that the duo is engaging in “operative cooperation and that’s all”. He didn’t rule out any future changes in ownership.
“We have always been staunch supporters of collaboration. Our strength is in making old-fashioned processes digital and more efficient. Will we keep doing that independently, be part of a bank that buys us or join forces with another fintech company? There are many paths we can choose. But the most important thing is that customers will get improved services."
Now in its sixth year, the AltFi London Summit returns on 18th March 2019 to 155 Bishopsgate. Last year proved to be a crucial turning point for the key players building the future of finance. Leading platforms launched oversubscribed IPOs, digital banks proliferated and mainstream financial institutions started their own disruptive propositions. With 2019 certain to be another landmark year, more questions will be asked by regulators with investor interest in disruption also poised for more rapid growth.