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 Sparkmind.vc, 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.