A column written by Naava’s Founder and CEO Aki Soudunsaari, first published in a Finnish financial publication Summa magazine in May, 2017.
Growth company Naava’s innovation is the Naava smart green wall, which purifies indoor air with the combination of nature and technology. We have received growth funding of 8 million euros in a matter of a few years, as well as a few million worth of grants, loans and benefits from different institutions.
In addition to an innovative product, we aim for inventiveness in collecting funding. We have investors from entrepreneurs and Naava employees to angel investors, institutional investors and corporate venture capital businesses, among others. Recently, we closed a €2,2 million crowdfunding round, which was open for everyone in the Nordics, and turned out to be the largest Finnish B2B company crowdfunding campaign, as far as we know.
Finland is a good training field, but due to its markets’ small size and “purity”, the biggest demand is abroad. In order to get there, you need outside funding.
Due to my background in education, I am familiar with addition and division calculations, but it requires professionals of the field to do expert financial reports and predictions. Imprecise financial reports will not get you international investors.
We have strongly invested in our know-how in accounting and auditing: our own team has been strengthened and we have partnered with Greenstep and PWC. CFO Johan Palm and Global Controller Ullamaija Tyrväinen have a strong background in multinational public companies.
In the field of growth companies, you have to be constantly prepared for due diligence and fundraising. Negotiations are always ongoing. Both parties have to be able to speak the same language, as a risk investment decision cannot be made based on a hunch. Shared values lead to interest. Combine this with professionally made finance materials and you are one step closer to achieving the goal.
Prior to receiving external funding, Naava had a positive cash flow, which helped in acquiring investors. Before, the growth and development was paid by the customer, as they are the best partners in finance after all.
We sold the first twenty-something products without any ready Naavas. With this funding, we built the first, not-so-smart green walls. The deal was half now, half later, satisfaction guaranteed. We multiplied the money we received from customers with product development benefits.
It is not always possible to go through the company’s first years without outside funding. In this case, one has to think about the mindset of the entrepreneurs or the owners. Are they ready for an olympiad of constantly trying to get higher, further and faster? It is especially challenging to try to get the ball rolling internationally with nothing but cash flow.
Many young companies have a limited idea of financing and investing opportunities. They take out risky money and outside help. Could this be re-considered? Would it make more sense to acquire resources from companies which already have them as “empty resources”? Often it is more important for startups to acquire strategic partnerships instead of funding. This repeats a common pattern for business: direction x quantity x quality = success.
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