A little over two and a half years ago, Finland saw a rise to a new kind of an accelerator program that would help early stage companies get further, faster. Back when it was first announced, the program was initially planned to be six years in length to be run in two three year cycles. Few of the goals set back then include raising €200 million in funding to the portfolio companies.
Today, the program announced five new accelerators as well as results from the first 32 months in existence. The program is a Finnish government supported initiative.
In addition to the five new accelerators, four accelerators remain from the original six. Back in July 2009, the program started with just three accelerators. The accelerators left are Cleantech Invest, KoppiCatch, Lifeline Ventures as well as Veturi Venture Accelerator.
The five new accelerators are BioAssetInvest (MedTech & lifesciences), Gorilla Ventures (technology innovation), Newentures (energy, cleantech, industrial applications), Royal Majestics Helsinki (design and industrial design innovations) and Vendep (mobile and web based service innovations).
The decision to grow the program with new accelerators has been partly helped by the good results from the first two and a half years. The results can be summarised through the following points:
- Four accelerators and 20 portofolio managers work with companies.
- More than 40 portfolio companies.
- More than €70M euros raised by portfolio companies, 60% private funding of which 50% is international.
- First A-round in 2010 in size €7M.
- First exit by Zokem to Arbitron, valued at $24 million.
- €20 million fund raised by Lifeline Ventures.
- An estimated 500 to 1000 new jobs created.
This morning’s press event was not only focused on trumping the new accelerators. The program also shared results of a survey they asked from the entrepreneurs in the portfolio companies.
According to the survey results, entrepreneurs are most satisfied with accelerators’ competence, service quality, help with financing. Furthermore, entrepreneurs feel accelerators are able to help them most (on a scale of 1=worst to 5=best) in the areas of financing (4.26), business strategy (3.95), internationalisation (3.79), marketing (3.26), sales/customer acquisition (3.16), HR management (3.11) and product development (2.95).
The above results go fairly well in hand with the program’s goals – mainly in helping achieve early stage financing.
The goals of the Vigo program are 1) to get serial entrepreneurs working with startups and help them grow further 2) secure early stage financing for startups 3) help in achieving follow up investments as well as 4) develop the Finnish investment ecosystem and bring in international venture investors.
I also asked Harry Santamäki from KoppiCatch as well as Seppo Ruotsalainen from Profict Partners (who manage the Vigo program) about the agreements between the startups and accelerators. In the early days of the Vigo program, the Vigo fees the accelerators charged the startups began arousing a lot of discussion. According to Ruotsalainen, they have clearly learned from these and in the recent years there hasn’t been any complaints about them. Santamäki also commented that they agree on a startup basis on how the fees will be charged.
More competition in this space would naturally give better negotiation powers for startups, but we’re still some time away from there. Another way to reduce the burden on startups’ early stage cash flow would be to price these into the investments the accelerators make instead of charging monthly consultancy fees.
While there is still definitely room for growth and improvement, the first two and a half years have been encouraging.
Disclosure: We (ArcticStartup) have done and do some minor consulting to Profict Partners, who manage the Vigo program.