Magnifier is a new Finnish startup accelerator fund investing money and effort at a pre-seed phase into new promising startups with world-class opportunity. The purpose of Magnifier is to prepare and scale the firms for the next stage where angels and early VCs can and want to invest into them.
The fund was founded by a group of ten young but experienced entrepreneurs. The founders are driven by the urge to share their experiences and learnings to other Finnish startups. Also foreign entrepreneurs are welcomed, though, as long as the firm is located in Finland. The leading idea is to help accelerate their growth and avoid the pitfalls the founders may have experienced in the past, and thus cultivate the Finnish startup culture.
The track record of the founders is quite impressive. They state having founded over 30 firms, raised over 35 million euros of venture capital, and been involved in over 25 mergers and acquisitions altogether.
According to Mika Tammenkoski, Founding Partner, Magnifier intends to identify the missing links in the startup’s team, and then use their own partners to fill in the gaps, and act in the needed roles while suitable permanent recruits are found. The effort Magnifier will put in can be anything from consultancy to part-time or full time work depending on the need. This period of intensive development to reach the next investment phase is said to last typically from around six months to over a year. Mika indicates there would be 3-5 such firms at a time in their portfolio. Magnifier takes only equity share in the companies, no fees or salary. After the firm secures more funding, Magnifier stops active hands-on working, but remains as a long-term owner. They will exit only when the entrepreneur will get the reward as well.
Mika states the founding members of Magnifier share the entrepreneurial mindset in that they want to allow the entrepreneur to execute her own vision. He continues that Magnifier does not want dictate what or how to do, but will support the needed sides of the business. ´
Inevitably Y Combinator in Silicon Valley comes into mind when listening to Magnifier’s plans, and Mika admits they studied the Y Combinator model closely. Y Combinator also coaches the startups and makes small investments around $20,000 in return for 2-10% stake in the companies. Magnifier or Mika do not yet want to specify the size of investments they are willing to make, but one can suspect it to be in the same range or higher as Y Combinator. In Magnifier’s case the equity stake they request will probably somewhat bigger, though, as they also put in more effort and over a longer term.
Magnifier is not government supported at the moment, though Mika admits there are some discussions going on. It is interesting to see how entrepreneurs welcome the new fund. It may not be easy to give up equity early on against a small investment, considered you can get goverment money relatively easily without such commitments. Magnifier do their best, though, to try to convince they are capable of adding substantial added value with their experience and network.