April 10, 2019

Why business angel investing is worth 435 risks

Janne Jormalainen

Chairperson of the board of Finnish Business Angels Network (FiBAN) and a serial entrepreneur

Investing in early-stage companies is always risky. As business angels invest their personal assets, they can really feel the pain if a company goes bankrupt – as many early-stage startups do.

Despite the risk factor, business angels in Finland invested in 435 companies in 2018, according to recent statistics. People often ask me, is business angel investing worth the risk? My answer is yes, and there are three main drivers for me to be a business angel.

Firstly, it’s of course really exciting to be involved in developing startups with enthusiastic entrepreneurs. Not all startups become unicorns, but their disruptive innovations develop the market enormously. Even if the first trials failed, the mental capital that was gained during the journey could be used to develop new ventures which may grow to be huge successes.

Secondly, I want to invest in startups that are making an impact. The risk doesn’t feel so big if it could pay for meaningful improvements in our society.

Thirdly, I feel I have an ability and strong willingness to help startups to grow fast through my experience and networks. At the end of the day, many startups go through very similar problems and an angel investor can help with their previously proven solutions.

Not all startups become unicorns, but their disruptive innovations develop the market enormously.

To have a more successful investment portfolio, it’s better to spread the risk and invest together with other business angels. This also brings more diversity and makes the ride over the “valley of death” more easy and pleasant.

Even if Finland has a population of only 5.5 million, we actually have one of the biggest and most active business angel networks in Europe. The local community includes a huge number of experts who are willing to share their knowhow, with both startups and fellow investors, to make the world a better place.

Now, it’s time to share the knowledge with the rest of the world. As investment rounds are becoming more and more international, connections to other business angels from around the globe are increasingly necessary. This helps angels to fly further and startups to reach higher.

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