Tesi’s new Venture Bridge investment programme offers financing to Finland’s innovative early-stage companies that are aiming for international expansion and a larger financing round. Companies must have completed a first financing round with professional investors. “We hope some of these companies will become global leaders in their field,” says Tesi’s Juha Lehtola, Director, Venture Capital.
Tesi’s Juha Lehtola, who heads the Venture Capital team, explains that thenew investment programme gives more time to innovation-driven companies before the next international investment round. The Venture Bridge programme will launch on 17th June.
“International investors have played a major role in scaling Finnish companies towards global operations. Finnish early-stage growth companies have raised on average well over €500 million in investments in recent years, of which some €300 million has come from international investors and funds,” Lehtola points out.
Tesi has assessed the impact of the COVID-19 situation on the venture capital ecosystem and discussed with, for instance, the Finnish Venture Capital Association the level of postponements in both international and Finnish investments. Lehtola believes that a financing bottleneck is likely.
“We’ve seen examples of how increased economic uncertainty has made investors withdraw from projects. Meanwhile, travel restrictions are causing practical obstacles to investing, an activity heavily reliant on personal relationships and face-to-face meetings. We’ll mitigate this bottleneck with the new financing programme.”
Aimed at innovative, ambitious and growth-oriented companies
The Finnish government’s latest supplementary budget made the Venture Bridge programme possible by allocating €250 million to recapitalise Tesi. The funds will be channelled flexibly, according to the market situation, into venture capital investments, the stabilisation programme for mid-sized companies and investments in funds over the next two years.
“Investments through the Venture Bridge programme will be €0.25 – €2 million in size. We’ll try to find Finland’s most promising early-stage tech companies and innovative growth companies to invest in. There are some hundreds of ambitious, growth-oriented companies in a suitable phase right now in Finland. Many companies have already contacted us, so it looks like there’ll be a good deal flow,” Lehtola comments.
Tesi does not normally invest directly in such early-stage companies, so the new programme supplements and expands its venture capital investment focus. The programme could quadruple the number of Tesi’s portfolio companies.
Investments will be made as convertible loans because this is the fastest method. Many of them will likely be converted into shares in the company when the debt falls due. Lehtola explains that this is expected to happen when the company raises its next international financing round.
“Companies can also pay off their loans, but I’m assuming that most will end up in our portfolio within three years,” he says.
Read more about the Venture Bridge program on Tesi home pages.
Employment and structural renewal are the targets
In essence, financing early-stage techs is about creating new jobs and fostering structural renewal in Finland’s economy.
“This will create jobs in Finland that produce high added value. That fosters the renewal of Finland’s economic structure, raises the value added to our production, and enhances international competitiveness. It’s a law of nature that some startups will fail, but if at least some of the companies now being supported do not blossom into global leaders in their field, we will have failed,” says Lehtola.
Juha Lehtola
Who he is: Tesi’s Director, Venture Capital.
Education: Master’s degree from Helsinki University of Technology.
Earlier experience: Investment Manager at the European Investment Fund (EIF). Also worked at Nordic Venture Partners and Aura Capital.