More exchange-based activity in the equity crowdfunding space, this time originating in Sweden.
FrontOffice Nordic AB – a Swedish company reconstruction firm – is currently hosting a fundraising round on FundedByMe, one of Sweden’s largest equity crowdfunders. FrontOffice has applied to be listed on Nordic Growth Market (NGM) – an authorised exchange operating in Sweden, Norway and Finland, which was founded back in 1999. If confirmed, FrontOffice would become one of first Scandinavian equity crowdfunding campaigns to offer investors the promise of liquidity in the form of a regulated exchange.
The round opened on 25 November 2015, and is currently 96% completed, with participation coming from 124 individual investors thus far. The fundraising target was set at €533,000, and FrontOffice will have until 15 February to reach it. Though we won't delve too deeply into the merits of the campaign as an investment proposition in this article, it's worth noting that investors are being offered B Shares, and that FrontOffice carries a pre-money valuation of 27.5m SEK. A full memorandum for the issue is available to registered FundedByMe investors.
There is in fact some precedent for exchange-based liquidity in Nordic equity crowdfunding. Finnish equity crowdfunder Invesdor helped to finance part of an IPO offering for Aloha Transport in June of last year. Aloha was then in the process of listing on the Swedish Aktietorget, and had already ensured the success of the offering through existing subscriptions, but turned to Invesdor for what was, in effect, a crowdfunded top-up.
Some crossover with the public markets feels like a healthy development for the equity crowdfunding sector, if only as a means of offering investors more in the way of diversity. A business like FrontOffice arguably provides less potential upside than a pure startup might, but the risks of investment are to a certain extent mitigated too. The ability to liquidate shares at a mark-to-market price, in a timely fashion, is a rare luxury within the equity crowdfunding space.
Pontus Frohde, FundedByMe COO, weighed in:
“A few years ago crowdfunding was seen as a trendy, alternative way of getting your CD launched, or your T-shirts printed. Today equity crowdfunding is a serious financing alternative for established and profitable companies, which might not have succeeded in the crowdfunding realm back then. FundedByMe is one of the few platforms in the Nordics to offer an opportunity to invest in a profitable company – and FrontOffice is one of the few campaigns to propose the possibility to trade the shares on a public platform.”