Estonia's startups finding it harder to raise funds
Estonia's startups are finding it harder and harder to raise capital due to the economic downturn. Some companies have already laid off staff, but believe the future will be brighter.
Friday's "Aktuaalne kaamera" spoke to several businesses that have been impacted.
Hagen Bikes, which makes steel cargo bikes, recently told the stock market it had borrowed €10,000 for development from professional cycling ace Tanel Kangert.
Raising money has become more difficult over the past two years, company head Kaspar Peek said. The firm has also laid off staff members.
Peek told AK nobody knows when the financial markets may bounce back.
He said the company is still doing well and have a bike rental scheme contract with the German city Kiel which has expanded.
Almost all —95 percent — of the company's production is sold abroad. But there is hope the Estonian market may grow.
"In Germany, we see everything continuing to grow and this year we want to be more active in France, which is our number two for sales, but we haven't been active there," he said. The company makes around 20 bikes a month.
Robus Group which trades on First North, Tallinn Stock Exchange's alternative list, makes training equipment and videos for home gyms.
Last spring, the company raised €77,000 with its first share sale, but the market has cooled since then.
"We are focused on bringing a cheaper starter package to the market, and these last three months have shown that we have been able to leapfrog in terms of increasing our turnover, increasing our margin, or gross margin, and also lowering the cost of acquiring a new customer," explained Robus Group board member Mikk-Alvar Olle.
He also said it is harder to find funding at the moment, but said the company is still growing.
"The number of strategic partnerships has increased, i.e. it is no longer so easy to invest for the sake of profit if you are an investor, but if two companies see possibilities for cooperation it is logical for an entrepreneur to make an investment," said Olle.
Investors are being more careful with their money, however, climate, energy or infrastructure technology startups have not seen a reduction in interest, AK reported.
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Editor: Merili Nael, Helen Wright
Source: Aktuaalne kaamera