Finnish VC funds stand up to international scrutiny

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Matias Kaila, who joined Tesi as its Director for Fund Investments in June, is happy to see that Finnish venture capital funds are performing well and their returns are in line with buyout. The next step is to help them become more international.

What enticed you to move away from Danske Bank to Tesi?

I’m a Finnish boy at heart, and I felt that I would be able to influence the development of the Finnish private equity market at Tesi. I was born and raised in Finland, and I’ve seen how Finland has progressed by leaps and bounds in such a short period of time. A lot of young people in Finland are taking their business ideas directly to the international market. On the other hand, we also have a lot of senior-level experts who know and understand the pitfalls of entrepreneurship. Finland has a lot to give to international investors, and so do they to Finnish companies. I want to help them find one another.

How would you describe Tesi’s fund investment strategy?

Tesi invests in companies directly and through funds. When you look at the market, Finland is in great shape when it comes to funding mergers and acquisitions. That’s why Tesi’s main focus is on venture capital. The majority of our investments are in funds. We invest in both Finnish and international funds.

It is great to see that the returns from our Finnish venture capital investments are in line with buyout investments. Finnish VC funds have been succeeding well and stand up to international scrutiny as well. We want to help VC funds become more international. We need more international teams and investors in Finland.

At Tesi, we also want to provide more and more data to investors. We’re thinking of different ways to support fund managers in the evaluation of their performance and return history and in the development of their activities.

Why should people invest in Finland?

Finland has a vibrant startup scene and a lot of youthful energy. In addition, our young entrepreneurs are supported by Finland’s many senior-level experts who have plenty of experience in international business. Finland is an entrepreneurially-oriented country and we’re open to investments. Finnish funding structures are in good shape and stand up to international scrutiny. Since the market in Finland is so small, you have to do things properly, as otherwise you will lose your reputation in a heartbeat. Finland’s small size has also served as a natural catalyst for its rapid internationalisation, which has helped spur businesses that can succeed internationally.

Matias Kaila enjoys in his current job especially his ability to help Finnish growth companies go international and find funding.

What are you especially proud of at Tesi?

I’m happy that we managed to establish the KRR III fund-of-funds together with Finnish pension and insurance companies. Tesi’s role is to act as the manager of the fund’s 150 million euro total capital.

KRR I & KRR II, which are also managed by Tesi, have performed well. Between 2009 and 2017, we invested in 150 companies in total, and with KRR III’s investments, the number of target companies is set to increase to around 300.

What fields and sectors in Finland are the ones to watch?

Finland is known for its game developers, but Finland is also witnessing the emergence of a strong health technology expertise cluster. Blueprint Genetics and BCB Medical, which is also part of Tesi’s portfolio, are great examples of interesting Finnish health technology companies. In addition, our mining industry as well as companies that focus on autonomous driving and new types of service concepts deserve to be highlighted as well. One great example of a Finnish service innovation is Wolt, a food delivery service. Overall, you could say that Finland has moved on from developing merely interesting applications or technologically-advanced gadgets. Instead, Finland now focuses on solving real problems and utilises customer insight in the development of technological solutions.

Matias Kaila

  • Who: Director for Fund Investments at Tesi
  • Education: MSc Econ, Turku School of Economics
  • Previous experience: Danske Bank, Director, Leveraged Finance; Eläke-Tapiola (now Elo Mutual Pension Insurance Company), Head of Private Equity and Debt