Private exchanges enable liquidity, exit potential for enterprises: Funderbeam CEO

Kaidi Ruusalepp, CEO and Founder of FunderBeam. Credit: Funderbeam

Blockchain-powered global startup stock exchange Funderbeam, which has roots in Estonia and the UK, is keen to expand into the Indo-Asia Pacific riding on the region’s strong startup ecosystems and its investor community.

In an interaction with DEALSTREETASIAKaidi Ruusalepp, founder and chief executive of Funderbeam explains, “Because of the technology, the world is more connected than ever before. This is also the reason why companies can be built tens of times cheaper and faster than 30 years ago: Companies are born global and so is the team, staff, investors and mentors.”

“When we look at the funding trends of startup companies, the APAC region is a booming one. Funderbeam has been built to unite global, like-minded companies and investors and obviously, we have to be in the heart of growing markets,” she adds. 

Backed by Japanese investment firm Mistletoe, headed by Taizo Son (who recently relocated to Singapore to refocus on Southeast Asia), Ruusalepp notes that Funderbeam has not decided on a specific base in Asia such as Tokyo, Hong Kong or Singapore but maintains a network of local offices and is intent on “building up a global ecosystem of startups and investors.”  Mistletoe will act as a facilitator in its efforts to grow its footprint in the Asia Pacific.

Funderbeam does not have a specific sectoral focus or thesis for its Asia strategy.  Ruusalepp says, “We have not set any real restrictions nor are we biased to particular sectors. We are looking for companies with superb teams who have already been able to validate their business idea and are financing their rapid growth. As in Europe, the same applies in Asia, where crowdfunding often is used for marketing more than purely for financing the operations. Your clients can become your investors and vice versa.”

Also Read: Japan: Incubate Fund invests in Paneo, Funderbeam

Ecosystem fit

Despite the array of crowdfunding options available in Southeast Asia, Ruusalepp sees a strong fit with the regions’ entrepreneurial ecosystem.

The region has a cluster of equity crowdfunding (ECF) platforms like Crowdo, FundedHere and private investment platforms such as Singapore-based Fundnel.

Funderbeam was incorporated as an early-stage investment marketplace in June 2013 combining startup analytics, investing, and trading on the secondary market. Designed to deliver capital to growth companies and on-demand liquidity to investors worldwide, it serves private investors and startup ventures by analysing startup performance, as well as automating the funding process and issuing investment notes.

Its decision to expand into Asia comes at a time when the potential for a private secondaries exchange is being explored by various players in the startup ecosystem. Such a platform grants startup ventures and small and medium-sized enterprises (SMEs) a venue for raising capital and offers investors greater choice, without the constraints of being listed on a traditional stock exchange.

She explains: “Funderbeam is not just an equity crowdfunding platform, we provide trading with the investments which is the missing link when we talk about crowdfunding or investing in private companies in general. With the trading, Funderbeam gives investors the opportunity to choose not just how much to invest, but also how long to hold on to their investment. On top of this, we offer free data for both investors and founders, giving them all the tools they need for learning and becoming a successful investor.”

Asked whether Funderbeam would be establishing a base for itself in the commercial centres of either Singapore or Hong Kong, Ruusalepp notes, “Funderbeam uses blockchain as underlying technology and legal structures, which should enable investing and fundraising globally, so the location matters only when we talk about the regulations and how forward-looking are the local policymakers and regulators.”

“After talking to many regulators all around the world, the attitude of the regulator is what makes big difference. From the Asian region we have been having especially productive discussions with MAS from Singapore, and we highly appreciate their future-looking and innovation-supporting attitude,” she adds. 

Also Read: Singapore: MAS coaxes competing banks to collaborate on fintech

Growth strategy

Funderbeam has disclosed total funding raised of $7.36 million with a valuation of $14.76 million as of its last round, which saw it raise convertible debt.

Asked about its future growth plans and its performance to date, Ruusalepp said, “2017 has shown tremendous growth for Funderbeam, especially in the size of the rounds we have been doing. This is moving us from startups towards more established companies and SMEs. We’ve also more than doubled our number of investors since the beginning of the year and we are working hard to make our platform appealing to the institutional investors.”

“The aim of the Funderbeam is to be the service provider for the post-IPO world by introducing liquidity and exit potential for any Funderbeam “listed” company. But with the help of new technology, we can do it much more efficiently.” 

On plans to form strategic partnerships with stock exchanges in Asia, Ruusalepp observes: “We often use the slogan “IPOs are so 2015”, as we see fewer and fewer companies going for them. With our service, you can have liquidity for your investors and continuous fundraising, without the massive costs of an IPO. However, we have had really good results in Southeast Europe where we have partnered with Zagreb Stock Exchange, giving us visibility for startups and SMEs that are at the perfect stage for our service.”

On potential impact of ICOs as an entrepreneurial finance instrument, Ruusalepp notes: “ICO is the newest tool to raise funds for ideas. Massive funds for ideas without even a prototype, to be honest. Funderbeam is playing in the fields of the ICO, as we do tokenised equity. However, we do not think it is time for us to enter to the utility token business as it is today. It is too soon yet, as very strong companies and investors still need to work with the instrument to make it a sound investment opportunity.”

Also Read:

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APAC Digest: Jobbatical gets $4m led by Mistletoe; Foxconn, KTB back Kinova

Entrepreneurs should approach ICOs cautiously: John Fearon, Sugar Ventures

M&A to outpace IPOs in ASEAN as entrepreneurial ventures mature: Sze-Hui Goh, Eversheds Harry Elias