Venture Capital and Buyout Investors Active in the First Half of the Year: More than €700 Million Invested in Finnish Companies Amid the Pandemic
According to the January-June 2020 statistics of the Finnish Venture Capital Association, Finnish companies received a total of €707 million in investments from domestic and international venture capital and buyout investors. Finnish investors have been particularly active, on both the startup and SME side, with a total of 175 companies receiving an investment from them. Venture capital investments broke records: the first half of 2020 was the most active ever in terms of both the total sum invested and the number of companies that received an investment. The number and size of buyout investments stayed at the level of previous years.
In the first half of the year, Finnish and foreign venture capital and buyout (together referred to as private equity) investors invested a total of €707 million in Finnish companies. A total of €463 million in buyout investments were made in established growth companies. Venture capital (VC) investors financed young innovative startups with a total of €244 million. In total, 139 Finnish companies received an investment in the first half of 2020.
The sum of VC investments made in Finnish startups rose to the highest level in history in this year’s H1 statistics. Finnish startups raised a total of €244 million in VC investments in the first half of 2020. Of this amount, €145 million came from foreign investors, accounting for 59% of all investments. In both the short and long term, Finnish startups have received the most VC investments in Europe when measured as a percentage of GDP. The same pace seems to continue in 2020 despite the pandemic.
For Finnish VC investors, the first half of 2020 was the most active six-month period in history, both in terms of the amount of capital invested and the number of companies receiving an investment. In total, €128 million was invested in 140 domestic and foreign companies. Historically, Finnish VC investors have invested an average of €56 million to 105 companies over a six-month period.
Between January and June 2020, Finnish buyout investors invested a total of €205 million in 35 companies. Both the amount of capital invested and the number of companies receiving investments were in line with previous years’ half-year statistics.
During the first half of the year, Finnish private equity funds raised a total of €329 million from institutional investors. The concerns of a possible drop in fundraising caused by the pandemic did not materialise. New funds were raised by Bocap, Icebreaker.vc, Innovestor Ventures, Nordic FoodTech VC, Sparkmind.vc, Superhero Capital and Verso Capital.
“The half-year investment statistics surprised us positively. The activity in the second half of 2020 also looks lively, although the results of our new private equity barometer are worrying. The real impact of the pandemic on growth financing will not be seen until next year”, comments Pia Santavirta, Managing Director of the Finnish Venture Capital Association (FVCA).
Private Equity Barometer: Investor Relations are Weighed in a Crisis
FVCA’s new Private Equity Barometer assessed how private equity investors view different aspects of the growth financing market now, in comparison to the situation before the pandemic.
Investment opportunities seem to be fragmented, with about a quarter of investors thinking that more high-quality investment opportunities are currently available, but a quarter of investors feeling the opposite.
More than a third of private equity investors perceive that the funds’ own fundraising is now more difficult than a year ago. Although private equity’s importance as an asset class is growing, it isn’t easy to create entirely new fund investor relationships while everyone is working remotely. This has a particular impact on new teams raising their first fund.
In addition, 40% of venture capital investors who responded to the barometer now find it more difficult to find foreign investors for their portfolio companies.
“Between January and June, Finnish startups still raised a record 145 million euros from foreign venture capital investors. However, in many of these funding rounds, negotiations had started before the coronavirus crisis”, Santavirta comments.
“In these unprecedented times, it is crucial to take care of the international investor relations that Finnish venture capital investors have been building for years. We must also be able to create new relationships despite interactions largely having moved online”, Sami Lampinen, Chairman of the Board of the FVCA and a venture capital investor, comments.
After actively developing and growing their portfolio companies, private equity investors sell their stake in the company. According to the barometer, more than a third of private equity investors find it more challenging to find exit channels now than a year ago, and a record-low number of exits were made between January and June 2020. However, after a challenging spring, the situation has been seen improving during the autumn.
“Private equity investors are growth-focused owners who want to invest time and capital in companies, even in exceptional circumstances. Now is not the time to put companies’ development plans on ice, but to invest in digitalisation and new business opportunities where possible. This will generate new growth and jobs, creating overall well-being in our society”, Jussi Seppälä, Vice Chairman of the Board of the FVCA and a buyout investor, concludes.
Finnish Venture Capital Association
Managing Director Pia Santavirta
+358 40 546 7749
FVCA is the industry body and public policy advocate for the venture capital and private equity industry in Finland. As the voice of the Finnish VC and PE community and the entrepreneurs they fund, it is our role to demonstrate the positive impact of the industry on the Finnish economy. FVCA – Building growth.