In the first half of 2021, both well-established growth companies and startups, often operating in traditional industries, raised significant funding – a total of EUR 929 million. euros. Of the total amount of 653 million. EUR 276 million were investments by foreign investors and million by Finnish investors.
Venture capitalists invest in both startups and larger, more established companies. Investors often specialize in companies in a certain stage of growth.
“The term active ownership is a good word to describe venture capital. Whether it’s an idea-level startup or an industrial company with a turnover of 100 million, venture capitalists help accelerate the growth of their portfolio companies not only with funding but also with their know-how. says Pia Santavirta, President of the Finnish Venture Capital Association (FVCA).
Finnish private equity funds have also raised a lot of new capital from domestic and foreign fund investors. During the first six months of this year, a total of EUR 640 million has been raised in private equity funds. Over the past year, private equity funds raised a total of EUR 879 million to invest in growth-oriented companies in Finland and abroad.
“There are a lot of companies in Finland that have the potential to grow into Finnish market leaders, for example, as long as their growth plans are clear and there is funding for them. Hopefully, the latest news, such as the acquisition of Wolt. Santavirta continues.
Uptrend: ESG, Mega Rounds and Tech Investments
Pia Santavirta, CEO of FVCA and chairman of the association Janne Holmia, a partner in the international venture capital firm Verdane, lists five directions they believe the venture capital industry is heading for:
Impact and responsibility
According to Santavirta and Holmia, private equity investors are increasingly investing in companies that have not only growth potential but also a positive impact on the environment and society. Investing in sustainability offers interesting business opportunities. “I believe that both innovative startups in the fields of energy and materials technology and more traditional companies that are ready to change old ways of working are at the forefront of solving the big problems of our time, such as climate change.” Santavirta commented.
More mega laps grown by Startups
Ten of the 15 largest rounds of financing for Finnish startups have been collected in the last two years. The € 440 million round collected by Wolt broke all records in the Finnish startup scene, but there are many other success stories behind it. This year, Iceye (EUR 74 million) and Aiven (EUR 84 million) have won big rounds.
Technical companies and digitalisation are attracting investment
Increased investment has been made in both technology companies and companies in other sectors that are taking advantage of digitalisation for growth. “A pandemic, if nothing else, has forced companies to digitize their operations. Investments by venture capitalists where digitization is not part of a company’s value creation plan are low.” commented on Santavirta. “Finnish technology companies are also of interest to international investors, and Finland has a lot of know-how and innovation in the field of health technology, for example.” Holmia continues.
Investments in venture capital funds
Private equity funds have been one of the most lucrative asset classes for fund investors for more than a decade. Historically, the majority of institutional investors’ investments in Finland have been made in buyout funds that invest in established growth companies, and the fundraising of buyout funds has remained stable. On the start-up investment side, there has been strong growth in recent years. The returns of private equity funds have risen, which in turn has made them attractive investment opportunities for institutional investors.
More growth funds and investments
Growth investors are looking for potential portfolio companies between early-stage startups and larger companies targeted by buyout investors. The strategy could be, for example, investing in technology companies after their start-up phase or in smaller companies in more traditional industries. Investments by growth investors can also be applied for in situations where a family business is undergoing a generational change. “The diversifying group of private equity investors and their expertise in different stages of growth offer more and more Finnish companies support for their growth path.” Holmia decides.
Source: Finnish Venture Capital Association
Source: The Nordic Page