Matias Kaila, Juha Lehtola and Jussi Hattula assessed the development of the Finnish venture capital market.

Seeking global influencers as the market evolves

Finland’s venture capital and private equity industry has made great strides in growth and internationalisation over the last decade. The next decade will reveal how many companies, supported by active owners, can step up to become solvers of global challenges.

The directors of Tesi’s investment teams – Matias Kaila (Funds), Juha Lehtola (Direct Investments, Venture Capital) and Jussi Hattula (Direct Investments, Growth & Industrial Investments) – formed a panel to review how Finland’s VC&PE industry has fared since 2009 and what the future holds in store for it.

The availability of capital has reached unprecedented volumes, facilitating access for companies to a fast growth track.


“A ten-year perspective shows up how much progress has been made. The availability of capital has reached unprecedented volumes, facilitating access for companies to a fast growth track. The industry itself has also become more international ,” sums up Kaila.

Slush, Finland’s world-famous startup and technology event, has greatly helped Finnish companies create international networks. Capital volumes have increased manyfold and the industry has diversified: different types of investors are now on the move. This is evidence that there are more startups in Finland than ever before and that they are more and more attractive to investors.

The international venture capital market has also lived through ten good years. Finland is a mature market for its size, and relative to its size raises more venture capital than any other European country. The country has lessons to learn, though – for example, from Sweden as well as from hi-tech leader Israel. Finland’s favourable development needs to continue over the next ten years if it is to catch up to their level.

Hattula points out that international investors have not reached the Finnish buyout market to the same extent. Of course, there are some individual cases where a large international player has cherry-picked a Finnish project.

TIME TO REDEEM PROMISES IN THE 2020s. “We’re currently at a watershed, and it’s time to redeem promises over the next decade. We’ll see which companies join the team of global influencers that manage to solve problems affecting the whole of mankind,” asserts Kaila.

Awareness of responsi- bility has grown among both investors and founders, and we’ll continue to give it high priority in future, too.


“Venture capital funds are beginning to adopt a thematic and sector-specific approach. Typically, ten years ago, venture capital funds assigned the same team to, for instance, IT and life sciences. Fund managers were generalists. For some time now funds have become more specialised, and I believe they’ll fragment in this way even more. Investors increasingly operate at the cutting edge, so a fund must be able to pick out the best companies from the pool,” adds Kaila.

VERSATILE TOOLBOX FOR GOING GLOBAL. Tesi’s directors unanimously agree that Finland will look more international in 2030 than now. They remind us that there is not only one way to grow and internationalise. For this reason, Tesi will diversify its toolbox to match companies’ differing needs and development paths.

“We must maintain adequate numbers of both companies and sectors that are national champions and globally competitive. Businesses elsewhere are not letting the grass grow under their feet. The way I see it, we should build on the opportunities presented by our achievements so far, and in particular in fields adjacent to them, rather than try to create new skills from scratch. If we start from scratch, we could find that we’re too late and that we have insufficient resources,” concludes Hattula.

IMPACT ALONGSIDE GROWTH. Making an impact is one of Tesi’s strategic themes. Impact is inbuilt into all Tesi’s investment decisions, because the most promising future success stories are those companies that will generate sustainable business by solving global challenges. Tesi seeks out and supports these frontrunners. Tesi also works towards making its own activities more responsible and more impactful.

For Tesi, simply supporting growth is no longer a sufficient mission. Instead our solutions will aim to make tomorrow’s world a better place to live in.


“We embedded corporate responsibility objectives into all our investment operations in 2019. We constantly ask ourselves whether our objectives are ambitious enough, and we find there’s always plenty more to do. The awareness of responsibility has in any case grown among both investors and founders, and we’ll continue to give it high priority in future, too,” promises Lehtola.

Kaila notes that Finland can hold its head up high in international comparisons. Finnish fund managers, for example, are highly conscious of corporate responsibility issues.

“We’re one step ahead, and if we can do slightly better, responsibility could give our funds and companies a powerful competitive edge. We are raising the level of our own objectives, and we also want to help Finnish investors pursue this theme in their portfolio companies,” he says.

Tesi’s new portfolio companies commit to corporate responsibility objectives that are also monitored.

“Nevertheless, we can’t rest on our laurels. Making an impact encompasses a lot more than jobs and other elements of corporate responsibility. For Tesi, simply supporting growth and internationalisation is no longer a sufficient mission. Instead our solutions will aim to make tomorrow’s world a better place to live in,” states Hattula.

“We screen projects also from the viewpoint of how they will impact global megatrends. Furthermore, we see being impactful as a profitable business opportunity. In future, only those companies that solidly base their operations on impact will succeed. Otherwise, a company will face risk reputation damage and customer flight. Corporate responsibility and impact are powerful values that shouldn’t be underestimated,” Hattula continues.

Tesi’s investments in 2019

In 2019, Tesi made investments amounting to €133 million in total. Tesi made commitments to 10 funds totalling €89 million and direct investments in 25 companies amounting to €43 million.

We have a natural role as a network facilitator because we know the full spectrum of investors.

STRENGTHENING THE FINANCING ECOSYSTEM. Tesi strengthens the overall VC & PE ecosystem in Finland by investing in funds. Tesi’s collaboration with Finnish and international funds, such as Evolver and Lifeline Ventures as well as Creandum, Atomico and Northzone, makes more expertise on international expansion available for Finnish companies. Tesi invested in all these new funds during 2019.

“Our investments in DevCo and Armada V represent our objectives of diversifying companies’ ownership and financing structures, as well as introducing changes in ownership and financing as an element in companies’ strategic planning. We supported sector-specific investment by investing in, a venture capital fund in the education sector. We also invested in Capman Buyout XI to support a generation shift within the team,” reports Kaila.

In 2019, Tesi arranged a number of events that offered investors and technology companies opportunities for networking and sharing best practises. Tesi and Finland’s Ministry for Foreign Affairs arranged a trip to Israel for Finnish investors to get to know the local startup ecosystem.

“We have a natural role as a network facilitator because we know the full spectrum of investors. Networking helps boost the market supply of money and expertise, and that is one of our strategic objectives,” says Kaila.

OPENING BOTTLENECKS. Tesi works together with the VC & PE market, assisting its smooth functioning. Lehtola says that the Venture Capital team’s focus in 2019 was opening bottlenecks in later-stage venture capital.

We have recently shifted our investment focus towards even larger financing rounds.

“It’s fairly easy for start-ups to raise financing, but finding capital is more challenging for a company looking to scale up. We’ve recently shifted our investment focus towards even larger financing rounds, and the European Investment Bank’s EFSI financing mechanism has been a useful tool for this,” he continues.

Intended for growth-oriented SMEs, one-half of the financing comes from EFSI and one-half from Tesi, with private investors participating to an equal extent in the funding. Wirepas, builder of a wireless connectivity platform, was the first to take advantage of this mechanism. The company’s financing round attracted much positive attention.

“Another one of our focus areas is deeptech that has long development horizons. In 2019, we made a new investment in IQM, a company developing a quantum computer. We’ve financed spearhead projects in the health technology, industrial technology and materials technology sectors, and I believe they’ll also be a high priority in future,” comments Lehtola.

SHARING RISKS. The Growth & Industrial Investments team has traditionally operated as a co-investor in buyout investments, sharing risks together with buyout funds and other investors. Director Jussi Hattula points to Picosun, a provider of ALD thin film technology, which raised share capital through collaboration between buyout funds and other private investors in 2019.

Each IPO was important to the development of the investment market.

“Making an impact has become increasingly important in all we do. We invested in the scaling-up phase of Endev, which bases its operations on utilizing wastewater treatment sludge in energy production and nutrient recovery,” Jussi Hattula says.

Internationally, the construction sector has performed rather poorly in terms of productivity. Tesi decided to step in by acquiring a stake in Fira, a construction company that is internationalising and aims to change the industry.

Scaling projects requiring new technology often need large investments. Hattula explains that Tesi has been involved in many such projects, but raising private financing has been challenging because investments can run to tens of millions of euros.

Since only six companies listed on the Helsinki Stock Exchange in 2019, each listing was of importance to the development of the investment market. Tesi was an anchor investor in the listing of importer and technical wholesaler Relais Group, and was involved in the IPOs of its portfolio companies Optomed (producer of fundus cameras) and LeadDesk (provider of contact centre software). These IPOs were successful and strengthened the companies’ valuations.