State of VC in Finland

The Finnish Venture Capital Association FVCA held its 2018 spring meeting on April 12 to gauge the state of VC in Finland. The atmosphere was positive and rather excited with a record number of members – over 320 – attended the meeting.

The positive sentiment is also reflected in the growth of FVCA membership: there are now an all-time high 69 member firms making investments and 59 affiliate members supporting the industry. A great big shout out to the FVCA team for doing such excellent work: Pia, Pauliina, Markus, and Jonne!

The most excellent FVCA team: Pia, Pauliina, Markus & Jonne

Below are some highlights from the meeting (however, due to space constraints, I had to skip many good presentations, sorry!).

Responsible investing

One important earlier decision was reviewed and reiterated: the principles of responsible investing were adopted as part of the binding rules of FVCA in the 2018 spring meeting and the new rules come into force on June 1, 2018.

The state of VC in Finland: a study on Finnish VC returns

Perhaps the most anticipated and interesting presentation was the Tesi (Finnish Industry Investment) survey of Finnish VC returns by Enni Rautio and Petteri Laakso.

Methodology-wise, all funds carried the same weight, i.e. the results reflect the returns of an investor who invests in the industry with steady commitments. Some of the smaller venture capital funds were combined in the study for clarity.

Net IRR based on fund vintage: 2002-2008 vs. 2009-2015 (Credit: Tesi)

Nexit take on the results and the state of VC in Finland:

• The development of venture capital funds is very promising: Finland progressed from negative returns to a very decent 11% IRR
• VC funds were on par with buyout funds
• Finland is still slightly behind the global or European levels

Additionally, we believe even better things are to come. Growth entrepreneurship is extremely hot amongst well-educated youngsters and if this trend continues, who knows what might happen…

Mentoring for new venture capitalists

FVCA announced a new initiative to provide guidance and mentoring from seasoned VCs to new funds and teams to help them get started and develop their skills.

Many experienced industry veterans (including yours truly) have already signed up as mentors. This is a further indication of how the Silicon Valley culture of sharing information has landed in Finland, as well.

If you are interested in becoming a mentor, you can sign up using the form here (in Finnish only)

Awards galore

Several awards were given to industry players for their contributions to the venture capital scene.

• Sami Lampinen:  Venture Capitalist of the Year
• Jyrki Tähtinen: the most read FVCA blog article Syndication reborn
• Unisport: The winner of the Growth Builder 2018 award, an investment by Vaaka Partners

I am proud to report that our hard work with this Activist VC blog was awarded the “Communicator of the Year” award. I am humbled and gratified by this recognition and try to measure up to it in the future, as well. And as I mentioned in my short (thankfully so, said many) thank you speech, please show some love to the blog. Spread the news: I think it is actually pretty good stuff.

Valuable industry best practices research

A very interesting study called “Outperforming Peers: The Corporate Governance of Private Equity-Backed Companies “ by Simon Witney was presented at the event.

The key findings of the study resonate also well with our Activist VC principles – the governance and board best practices brought by Private Equity does add substantial value, including:

• Higher quality of strategic decision-making
• “Professionalization” of the decision-making process
• Saleability of the companies
• Controlling risks

One additional interesting data point: 75% of the companies included in the research sample had an independent chairman.

VC and the Board

Next week’s blog post will delve deeper into boards of VC funded startups: how should they be constructed and managed, what can be expected, and what specific value does a good board add.

Stay tuned!