Matti Vanhanen – Finland’s former PM – is a crowdfunding supporter

FundedByMe Finland recently received a huge nod of support from the former Finnish Prime Minister, Matti Vanhanen, when he made his first equity crowdfunding investment ever into Beibamboo, the hospital babywear collection currently featured on the FundedByMe platform. We asked Mr Vanhanen, currently the Chief Executive Officer of the Finnish Family Firms Association, to share his thoughts on crowdfunding with us – and he graciously participated!

Matti Vanhanen and Kristiina Pääkkönen from FundedByMe
Matti Vanhanen, former Prime Minister of Finland, with Kristiina Pääkkönen, Country Manager for FundedByMe Finland.

What is it about crowdfunding that most appeals to you?
Receiving borrowed capital is going to get more and more complicated for most companies, and more equity is required. There is virtually no marketplace for unlisted companies other than crowdfunding platforms such as FundedByMe, where one can reach for the greater audience. There companies can receive feedback from a very large audience, which already itself is very valuable.

In the future Europe must move into a similar kind of structure that is adopted in the United States, where the importance of equity is emphasized. The role of banks in funding companies is going to become somewhat smaller and companies will need more equity in various forms. This clearly leads to a situation where more instruments to raise equity capital are needed. For most companies there is no marketplace to look for external funding, and this is what makes crowdfunding platforms such as FundedByMe a good form of financing, since it is a new and interesting marketplace bringing companies and depositors together.

Today you are the CEO of the Finnish Family Firms Association. Do you think crowdfunding could be a relevant option for family businesses?
The financing of family businesses is going to get more complicated, especially when it comes to receiving funding from banks. The situation is often worse the smaller the size of the company. The terms of borrowed capital have been tightened, and stronger collaterals are required. The terms in general have become tighter, and another problem is that equity capital has been constricted with tax legislation, which in turn raises the costs of equity capital in companies.

I believe that there will be demand for this kind of activity (crowdfunding), where one makes an investment with long-term profit expectations. I think there might be many owners within the family businesses who are curious to observe whether there are sensible investment targets within unlisted companies.

I am sure that in the future there will be demand for this, to receive more than discount security profit by spreading small investments with low management expenses in interesting unlisted companies. Also, there is always the possibility that if one is excited about the company’s idea, it just might become the next success story.

Is there a trend for the younger generation to break off from the family business and start their own entrepreneurial ventures?
It is very typical for family businesses to have new companies formed within. In many cases the young generation starts their own companies before they start heading the actual parent company, and especially these young entrepreneurs might be very open to new ways of financing. The younger generations often have visions about how things will be done under their leadership and are eager to pursue considerable leaps forward, which often makes them more open to new development ideas.

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