Provided personal security in the million loan from Innovation Norway and had to shell out when the start-up went awry
Last year, Stine Andreassen took a hard line against Innovation Norway’s start-up loan.
According to the terms, the loan will be repaid in full after four years, but in order not to “stifle liquidity and further growth in the company”, the entrepreneur had to refinance the loan in DNB.
– It would remove all liquidity and action power in the company if we had paid Innovation Norway NOK 1.5 million on the day now, Andreassen stated.
In 2017, Wa.works was among the first, younger than five years, to receive the loan – which together with investor capital will provide more money in the coffers than a start-up grant.
Innovation Norway has since granted 829 start-up loans. Over 65 percent of them have been granted after March 2020, and among these patrons is Lifeplanner founder Lillian van Cuilenborg. The Fintech company, which went bankrupt in the new year, received NOK 2.4 million.
The co-founders had provided personal security in the loan.
– It is clear that it feels painful when it has been great from the start and along the way, it is also what gives the cruel end, says van Culienborg.
Start-up loans are the only scheme in Innovation Norway with an explicit requirement for a personal purchase of normally 20 per cent of the loan amount, from land or other owners.
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Got blank after
When Lifeplanner was granted the start-up loan in 2020, the company had managed to test a beta version of the digital safe they wanted to build, and received good feedback, says the entrepreneur.
Lifeplanner had also raised a total of more than NOK 3 million through public funding.
– Now we could take a new step and a real lifting company, says van Culienborg.
Unfortunately, a tough one awaited next year, and the reasons had to bankrupt the company.
– It has been a fantastic journey, she says now, half a year later.
– I am incredibly grateful for the last four years, and that we got so far that we had paid customers with a third-party distributor, but when we saw it was no longer possible, we had wanted a controlled liquidation. That we had to file for bankruptcy and go bankrupt is partly due to the loan from Innovation Norway, says van Culienborg.
She explains:
– Before we had to report a riot, we tried to hear if it was possible to get some scheme to reverse this, but it was not interested in.
– Blank after?
– Yes, it was completely irrelevant. We had to pay and fulfill that guarantee. That’s understandable.
At the same time, she now fears that many like them will end up in a similar situation and struggle.
Has made up for it
Innovation Norway made a number of adjustments in its financial offer in the face of the pandemic. According to Geir Ove Hansen, director of financing portfolio, for example, the start-up loan increased from up to NOK 1.5 million to NOK 2.4 million.
The requirement for bail was also reduced from 20 to 10 percent of the loan amount.
– We had a pandemic two years ago, and then both the authorities, the policy instruments and the business community were good at adjusting, says van Culienborg.
– Innovation Norway came on the scene quickly, and we gained access to new schemes, including extraordinary start-up loans, but we thought that the pandemic would only be short-lived.
She points out that the pandemic took longer than expected, and then came the war.
– We also notice the ripple effects of it, with higher prices, higher inflation and higher rents. Investors also reallocate their capital, as does the policy instruments.
Also read: Investors’ warning and best advice to Norwegian founders in times of crisis
– I think it will be cramped for many in the future, says the entrepreneur – and aims for hopeful founders who have provided similar personal security in a start-up loan.
– We were fast on the ball and have both made up for it, she says about the private debt.
– But it may not be possible to…
– No, exactly.
– There is a reason why you stand there, says van Culienborg.
Lifeplanner bankruptcy: – It is tough to have to tell large and small investors that they will not get the return we predicted them
– Must work as much as possible for the least possible money
According to van Culienborg, the founders went a long way with reduced wages in 2021, and completely without wages for the last four months.
– In addition to the personal guarantee, you also have quick costs and agreements that may take some time to terminate, so I think many can get it tough.
– Do the reasons take a disproportionate share of the risk?
– Yes, I can feel it.
– I remember I felt a little that the whole environment is rigged for the entrepreneur to take great risk all the way. You should work as much as possible for the least possible money, she says.
The founders chose to go without pay as an attempt to save the company.
– It was both right and important for us, says van Culienborg, but:
– There is an expectation that the entrepreneur will enter everything.
– But there is rarely room for an extra buffer. You have large ongoing operating costs, and even if you rig down, and rig down, there are monthly costs, she says.
– Everyone can make mistakes, but you never think that it will apply to your own project
– Could have contributed more constructively
Van Culienborg stated that she has been grateful to Innovation Norway from the start, that they have been a good supporter, and that they had an “absolutely fantastic caseworker”.
– But no one wants to end up in a situation where you actually have to report a riot, she says.
Now the entrepreneur is calling for a change in the loan conditions and the handling along the way.
– What do you think Innovation Norway should have done instead?
– When you go bankrupt, there is very rarely a lot of money in the estate, so there could be, for example, a requirement for matching capital or partial payments of the loan with reporting of use. Possibly a conversion option for parts of the loan.
When decommissioning becomes the only way out, she believes Innovation Norway should also contribute to constructive work in this work.
– For example, with assistance in realizing values in the company. Towards the end, they could also have contributed with a debt forgiveness to carry out a controlled liquidation instead of an injunction, which is charged to both the judiciary and entrepreneurs, says van Culienborg.
Lifeplanner received an innovation grant the same year. According to the founder, there was much stricter follow-up, with a total of three reports, along the way and a final report. With the start-up loan, no reporting followed along the way, she says.
– There is no control over what the money is used for, but I think it could have been a solution to drive as tight there as on the subsidies.
– What could it have revealed?
– It is about creating a little more security for creditors, see that you use the money sensibly and according to plan. If, for various reasons, you have not followed the plan, because you lack capital along the way or any other obstacles, then they could, for example, have held back the loan, says van Culienborg and continues:
– I grant scheme you get little by little, and the last amount after submitting the final report. The same could have been done with the loan. Not paid everything at once, had more control, and security could have been provided accordingly, she says.
Nöffe was on the cliff, and the rescue operation failed
– Someone must dare to talk about it
The entrepreneur is in a new job, but can not yet put a stop to it.
– It’s not just packing the boxes and turning off the lights, and then we were done, she says.
– You fight and fight in the belief that we will get over this problem as well. You need to motivate the team to believe it together, but then lay off, and then motivate those who are left as long as possible. When you realize that it is not possible, a race awaits that requires much more than you might think, she says and aims at the work with the housing board.
– It’s nice that we talk a lot about trying and failing to learn, but almost no one talks about the consequences of actually trying. The big risk it is. As an entrepreneur, you do not think that will apply to you, but when you still fail, you stand there and think; what now?
– Provocative to hear?
– A little. We at Lifeplanner have been very open and honest all the way, to both employees, customers and shareholders, and we have received a lot of warm feedback on that. At the same time, I feel that we actually failed. We did not make it, even though it is part of the game.
– Should more people talk about it?
– Yes, for the next few years, I’m afraid many will end up in difficult and tough situations, and someone must dare to talk about what awaits.