Fundraising guide
Is venture capital or private equity the right option for you? How to find the right investor? What do investors look for in a company? How does the cooperation with the investor look like?
Our guide for entrepreneurs answers your questions!
Fundraising guide (PDF)
Is venture capital or private equity the right option for you?
Finnish venture capital and private equity investors focus on accelerating the growth of their portfolio companies. Therefore, companies generally need to have the necessary prerequisites for growth. Some of the signs investors typically look for are clear growth potential, a diverse and committed team and management as well as a favorable market situation. Other potential reasons to search for venture capital or private equity are a generational transfer, a need to change ownership structure or large investment requirements. Signs that can deter an investor can for example be a low growth rate, weak financial viability, a difficult market situation, misaligned vision or an owner’s unwillingness to share decision-making power.
Finding the right investor
Venture capital and private equity investors can be roughly divided into two groups by the types of investments they make. They either invest in startups or more established growth companies. In the case of startups, investors typically make minority investments. While minority investments are an option also with growth companies, in these cases, majority investments are more common. The determining factor is the need of the investee company and its owners. Investors can also specialise in a certain industry or company size, depending on the investment thesis of the fund they manage. When it comes to venture capital or private equity investments, personal chemistry is the key. While the role of the investor in the company’s operations varies, a good, effective and confidential relationship is always a vital part of a successful investment.
Finding the right investor that operates in a specific industry and a specific stage of development, as early as possible, will accelerate a company’s capital raising and also save costs.
It is recommendable for a company to familiarise itself with an investor’s criteria, portfolio companies and their ways of operating before seeking investment.
Working with an investor
Making an investment
Before making an investment, the investor familiarises themselves with the company and start building a growth strategy together with the company.
Increasing the value
The investors will grow the company and increase its value by providing help with, for example, board work, recruitment and internationalisation.
Exit
Venture capital and private equity investment will always end with a divestment of the company. The investors and other owners receive a return on the growth they have built together.
Investors typically exit the investment after 3–7 years.