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Exit = The Moment of Truth

written by Tomi Riihiranta

3.4.2018

A good exit means success. Entrepreneurs, management, employees and the venture capital investors that believed…

Text | Tomi Riihiranta

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Finnish venture capital funds perform better than ever

Investment data collected by Tesi highlights a large difference in the returns produced by Finnish venture capital funds between the two periods 2002-2008 and 2009-2015. Funds raised during the latter period, meaning after the financial crisis and the beginning of the Finnish startup boom, have generated 11% in returns for investors (IRR). At this level, venture capital funds perform well in comparison with stock markets and buyout funds.

The improvement in returns is largely due to a greater degree of professionalism and internationalisation in Finnish companies and technologies, as well as investors. According to the Finnish Venture Capital Association’s statistics, write-downs of investments fell from 40% to 20% during 2012-2017. During the same period, Finnish companies have increasingly often succeeded in raising large follow-on financing rounds. It is likely that in the future we will see a further improvement in returns as M&A activity among Finnish technology companies continues and as the investment portfolios of younger funds develop.

“Although Finnish venture capital funds have in recent years successfully grown their portfolio companies and generated good returns, investors still imagine venture capital to be the same as at it was at the turn of the millennium. We want to bring the facts about today’s returns to the attention of private investors, so that venture capital funds will once again be an attractive option. Innovative companies would then have access to more financing and expertise to help them grow to the next level,” says Tesi’s Investment Director Riitta Jääskeläinen.

Text | Tomi Riihiranta

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