Taikina Capital Oy
We offer access to professionally selected, diversified portfolio of unlisted growth companies. We plan to list our shares on a public marketplace, enabling our investors to reach liquidity for the value growth of the portfolio.
We believe Taikina Capital Oy (“Taikina”, English translation Dough Capital Ltd) is the first of its kind: An investment company with focus in digital fundraising. We aim to pick the most promising and attractively priced shares and loans from the digital platforms in Northern Europe.
Do you want to invest in unlisted companies but don’t have the time to select the most promising ones?
We provide access to a professionally selected portfolio of unlisted growth companies.
Are you worried about the long timelines? It typically takes ages for the unlisted companies to grow and make an exit.
In our anchor investor model we will invest in unlisted companies and add to our stake in the follow-on financing rounds when justified. We will be very transparent in our equity holdings and any increase in value will be reflected in our own net asset value (NAV) based valuation. Our strategy is to materialise this value by listing our own share on a public marketplace or make an IPO.
Democratization of finance is generally a good thing, giving retail investors access to new opportunities and bypassing much of the old legacy structures of the financial industry. Digital ecosystems include equity crowdfunding, debt crowdfunding, peer-to-peer lending and unlisted equity marketplaces. Widely distributed shareholder base with many consumer-shareholders can be very powerful strategic strength if utilised correctly, particularly in consumer products. Meanwhile, credit platforms have emerged to offer flexibility and return for idle capital waiting to be employed in equity investments.
Unfortunately, not everybody has time and money to act as full-time business angels, screen the companies properly or follow the company development and ensure investor interests are taken into account post-round. Shareholders short of time and possibly with just a small amount of money invested per case can be indifferent towards company performance. More importantly, the liquidity of unlisted start-ups is poor since there is no secondary market to sell the shares to, even when the business develops well.
Our founder Tero Weckroth discussed these issues in a blog post in May 2018, arguing that a bigger shareholder in addition to small investors can help maintain corporate governance and hold the companies to account. We believe there is a natural role for new type of lead investors like us in private equity placements involving crowdfunding. Our strategy is not to replace the venture capital funds (“VCs”), business angels or retail crowdfunding investors. Between these actors, our position is that of a long term anchor investor.
What is an anchor investor?
In stock market listings (Initial Public Offerings or IPOs) the company raising funds often meets bigger investors before publishing their share offerings or deciding the terms or valuation. The lead investors include institutional investors, mutual funds, family offices, high net worth individuals and other professional investors. In specialised sectors, they include sector specialists. Since the digital finance ecosystem is still very young, our kind of digital lead investors have not emerged until now.
We believe we will be the first to explicitly take this role in unlisted digital fundraisings and most likely will be followed by others. We will evaluate on general level every new case, first in the Nordic countries and eventually also in Germany and the Benelux countries. We are available for pre-round meetings with the target companies to give feedback on deal terms and company valuations. If we find the opportunity attractive, we can invest in the company. Depending on the public / private nature of the financing round our investment can be made public so that the target company can use it in their communication if the round is opened to the wider public and we can use the “crowd” to leverage our investment.
In addition to the lead investor role in a financing round, we can make soft or hard commitments to invest more in the next rounds if the company meets pre-agreed milestones. If the company develops their business well and the corporate governance remains good we can play the lead investor role again in all the financing rounds until the IPO. This long-term commitment makes us more than a lead investor in a particular round, into an anchor investor on the company’s growth path until exit or public listing.
In short, our strategy is to act as an anchor investor for unlisted companies that use or plan to use the digital platforms to widen their shareholder base. Our vision is to become the best known anchor investor in digital fundraisings in Northern Europe with reputation of reliability and responsibility.
Benefits to Shareholders
Taikina offers multiple benefits for its shareholders:
- Liquidity. We aim to make our own share liquid as soon as possible. Unlisted growth companies often take a long time to develop and create value. This will be the case with most of our investment targets too and by investing in them directly, an investor will need to wait for a long time for an exit or stock market listing. Our aim is to offer possibility to materialise value increase by listing our own share in public market place. Our investment strategy will not be purely exit-focused – if justified by fundamentals we are happy to continue owning a profitable and dividend-paying company. Our evergreen structure (i.e. no pre-determined lifetime or end-date) makes this kind of long-term creed possible. We won’t need to exit promising companies for our internal reasons before the full value is realised. We aim to enable our investors to realise the value increase by making our own share liquid.
- Diversification and stock selection. As a bigger and more professional investor, we are able to follow the deal flow more widely than a single shareholder can and compare a prospective deal to peers on a wider scale. This will enable us to diversify the risk over bigger number of cases and to avoid cases where valuation, company quality or other terms are out of line with peers. We also can gain access to deals where larger minimum ticket size or swift action is required, hence investing in cases that would be inaccessible to smaller investors acting alone. Separately, we can occasionally offer bridge financing for companies that are not yet ready for the platforms or distributed shareholder base and need help from us.
- Valuations. Bigger ticket size will improve the bargaining position in valuation discussions, including later follow-on financing rounds if the company raises more capital. Over time, we expect to build a reputation as a reliable anchor investor and hence gain leverage to negotiate crowdfunding discounts, comparable to IPO-discounts in public stock market listings.
- Better follow-up and control. Having a larger stake in the company and being able to participate in the future rounds, we will have a bigger influence on the target company governance than multiple small shareholders alone would. We believe the best corporate governance is reached when company has both big and smaller investors in the cap table.
- Cost synergies. In many platforms the investor fee depends on the size of the ticket (smaller percentage for big investments) and the fixed costs of becoming an investor are common, particularly in Peer-to-Peer platforms. In many equity platforms there are typical €100k or €200k minimum ticket sizes before the investor can invest directly in the target. Smaller investments are directed via an Special Purpose Vehicle (“SPV”), a separate holding company for one investment target only. Administration of the SPVs is costly even in case of failed investments. In successful exits they often cut the profits without ability to offset losses elsewhere against the capital gain. While running Taikina will cost some money too, we believe our costs are very competitive compared to SPV and fund fees. Additionally our success costs are based on profits on the portfolio level instead of separate cases.