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Estonia’s Funderbeam has set up a unique global marketplace for startup investments

Estonian-founded Funderbeam has become a global marketplace connecting professional investors with startups and growth companies looking to raise funds or trade their shares. We explore, how Funderbeam works and is the next future unicorn hidden there?

Founded in Estonia in 2013, Funderbeam offers a global marketplace for growing companies. On the Funderbeam platform, investments in shares of future success stories can be made just like buying shares of companies listed on well-known stock exchanges.

Today, there are 63 companies from 11 countries trading on Funderbeam, and more than 80,000 potential investors have registered on the platform. The numbers are even larger when you consider the companies using the Funderbeam marketplace privately. “We have in total 25,000 verified investors and last year’s annual trading volume reached 16 million euros, a significant increase from the year before,” explains Kaidi Ruusalepp, founder of Funderbeam.

“Funderbeam has created a technically and legally unique trading platform in order to offer cross-border money raising and secondary market investment opportunities and to create a strong community of companies and investors. We can say that Funderbeam operates a new global marketplace for growth companies,” Ruusalepp says.

The Funderbeam platform can also be used for private fundraising – companies either raise capital from a small group of investors using the Funderbeam solution or trade their shares only among preselected investors. The latter is a very attractive option for many unicorns whose employees have stock incentives.

A marketplace of carefully selected companies

Funderbeam carefully selects which companies to present to investors. “The competition is tough and less than a tenth of those who have shown interest will be ready to raise capital on the platform,” says Ruusalepp. “We do not work with companies in the very early stage; we expect an existing customer base, a working business model or expect a significant increase in turnover,” she explains.

Funderbeam prefers to be conservative when it comes to selecting companies, and pre-evaluation by strategic or lead investors reduces risk. “Our goal is to offer trading opportunities in three years’ time and more,” says Ruusalepp.

There are various opportunities to raise funds on Funderbeam. “Companies can raise investment in a private round or from pre-selected investors, in a semi-private round where some investors are already involved through angel networks such as EstBAN, or in a public round of financing starting with a minimum required amount while raising most in public fundraising,” explains Ruusalepp. “Angel and investor networks are the growing client segments that tend to use Funderbeam to manage private rounds. In this case, the angel network itself preselects and validates companies.

Shining success stories

Funderbeam already boasts several success stories. Ruusalepp brings the example of Ampler Bikes. “In summer 2017 they raised 400,000 euros through our platform and two years later another 2.5 million euros. Later, the founders and employees began trading their shares on our platform,” she notes. “Today Ampler already has 2,000 investors and their market value is 72 million euros – it is one of the most traded companies in our marketplace.”

The cryptocurrency investing platform Change has also received a warm welcome from the investors on Funderbeam – they did not raise capital but made their shares tradeable. Producers of soundproof pods and booths Silen and ÖÖD House, a company offering accommodation in mirror houses have been successful in raising capital and trading. “Among international companies that investors value most include, for example, Bikeep and Settle.“

Next potential unicorn on Funderbeam

As Estonia is already the unicorn factory of Europe, having 10 unicorns and leading Europe in unicorns per capita, we used to seeing unicorns everywhere. So we have to ask Ruusalepp, is there a next potential unicorn on Funderbeam?

Ruusalepp recommends we keep an eye on everything to do with blockchain and specially mentioning a technology company called Algorand, located in Boston, the U.S.  “It is a special solution for financial services, which has created its own community and its own venture capital fund,” she says. “Algorand and the applications built on their technology is the future.”

The secondary market has the biggest competitive edge

Ruusalepp emphasises that Funderbeam is special in comparison with its competitors because it is not only possible to buy shares during fundraising but also to trade afterwards. “The secondary market is our strong advantage, offering global trading 24/7,” she says.

To date, investors have carried out nearly 126,000 transactions with shares on Funderbeam and, in the last year, the total trading increased from 4 million to 16 million. “Our secondary market is more active than that of Seedrs, an equity crowdfunding platform headquartered in the UK that is ten times bigger in funding,” says Ruusalepp.

“In addition, the Funderbeam platform has been developed using the latest technology and this is a value in itself. Our competitors have actually told us so,” she adds.  In addition, all operations are “in-house”, from identifying customers to billing.

Funderbeam has the necessary licenses from Estonia that allow it to operate in European markets, the United Kingdom and Singapore. “Our goal is to serve investors and companies globally, and in the finance sector this entails having a license to operate in those markets,” says Ruusalepp. She also explained why Funderbeam has taken its activity to Singapore, “In Singapore, Funderbeam has the secondary market license, which supports our business model with the newest approach. In fact, not only companies compete in the finance sector, regulations compete as well. Up to date regulations attract progressive companies to the country”.

Aiming to be number one

In the future, Funderbeam aims to grow into the world’s most popular platform for company funding and trading.

“It is our goal to serve founders all over the world. It does not matter whether we help to raise capital or offer liquidity to employees and investors. If there are strong companies on our market, we will have equally professional investors,” Ruusalepp says.

The Singapore branch helps Funderbeam to fulfil this mission. The Head of the Singapore branch Jacqueline Yee emphasises that the company has been received well there. “In Singapore we are attractive to rapidly growing local and Asian companies who wish to expand to Europe. Asian investors hold Funderbeam in high esteem due to the successful liquidity to European investors and the community of investors covering 133 countries is also impressive.”

“The challenge we are currently working on in Singapore is bringing European and Singapore investors and growth companies together,” Yee explains. “On one hand, we want to help Singapore investors to find European growth companies and on the other hand, we want to introduce ambitious Singapore companies – those that become known when they reach our platform – to European investors.

The international team created over the years helps Funderbeam to work towards its goals. “They are the absolute top professionals in their field, and this is what differentiates us from many competitors,” says Ruusalepp proudly. “Innovation in the finance sector can only be based on knowledge of the sector – similarly to the companies on our marketplace we are also international and it is common to hear four or five languages spoken in our office on any given day.”

Read more about the FinTech opportunities that Estonia offers here. If you wish to do business in Estonia feel free to send us a request for 1:1 e-Consulting.

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