Inyova, a Swiss startup known for its impact investing platform, has faced backlash from its crowd investors due to concerns about dilution.
The announcement of a significant new investment from the Abendrot pension fund has caused alarm among the approximately 3,000 crowd investors who collectively contributed around 8 million Swiss francs to the venture. The entry of a major institutional player has led to a substantial dilution of shares, resulting in a plummeting share price and leaving smaller investors feeling marginalized and misled.
The promise of "Your money can do more" that initially attracted these crowd investors now seems empty in light of these developments. Inyova's management attempted to reassure investors by claiming that the prospects for the company had improved significantly, but many crowd investors interpreted this as an attempt to downplay the negative impact of dilution. This lack of transparency and communication regarding the share price drop has sparked outrage within the crowd community.
Inyova's management has attributed the recent turmoil to a changing market environment for startup financing. Since mid-2022, institutional investors like pension funds have gained greater negotiating power compared to individual crowd investors. This shift has resulted in more favorable terms for larger investors, including cheaper shares, which has further exacerbated the dilution issue for smaller stakeholders.
The issuance of over 100,000 new shares, including 88,000 preference shares, has effectively sidelined crowd investors, who are now grappling with the reality of their diminished stakes in the company.
Despite reporting a modest increase in customer numbers and assets under management, Inyova acknowledges that a turnover increase of four to eight times is necessary to maintain its previous valuation. This stark contrast between the company's optimistic outlook and the harsh realities faced by crowd investors has created tension within the investor community.
In response to the backlash, Inyova organized a webinar to address the concerns of its crowd investors. However, some investors criticized the decision to conduct the webinar in English, feeling that their specific concerns were not adequately addressed. The communication surrounding the price drop has been perceived as insufficient, with many investors feeling left in the dark about the implications of the dilution and the company's future plans.
The sentiment among crowd investors is one of disappointment and anger, as they feel that their interests have been overlooked in favor of institutional investors. The initial excitement surrounding Inyova's impact investing model has been overshadowed by the realities of the financial landscape, where larger players dictate terms and conditions. Rebuilding trust with crowd investors while addressing the fundamental issues that have led to the current state of affairs will be a challenge for Inyova.
Inyova's situation serves as a cautionary tale for startups that rely on crowdfunding. Investor relations can shift rapidly, and the interests of institutional investors often take precedence over those of smaller stakeholders. Moving forward, Inyova will need to find a way to balance the demands of its diverse investor base while pursuing its growth objectives in an increasingly competitive market.