Finnish VC & PE funds: VC returns turn upward, buyout & growth hold their ground
Tapio Parkkonen
Recently published Survey of Investment Returns by Tesi tells a two-track story for the Finnish VC & PE market. After a few difficult years, the total returns of Finnish VC funds have turned upward in 2025 for the first time since 2021–2022, while buyout and growth funds, which have held their ground throughout, continue their strong return trajectory. On the venture side, the shift is driven by more active follow-on funding rounds lifting portfolio valuations. On the buyout and growth side, rising distributions point to a gradual pickup in the M&A market for established growth companies, with secondary transactions playing a growing role as an exit channel. The exit market overall, however, remains challenging.
VC funds: what actually drove the recovery
Total returns (TVPI) improved across both VC vintages in 2025. For older VC funds (vintage 2009–2015), TVPI rose to 2.9x from 2.7x the prior year. For newer funds (vintage 2016–2021), TVPI reached 1.3x. The uptick was driven almost solely by rising asset values within fund portfolios, reflecting increased valuations for portfolio companies as follow-on funding rounds became more numerous.
Distributions to investors, however, have not kept pace. For older VC funds, DPI held steady at 1.4x (unchanged from 2024), meaning roughly half of total value remains unrealized. The exit market is still difficult, and the IPO window remains largely unfavorable for European scale-ups. The report notes that investors and companies may be deliberately waiting for better conditions before exiting.
This dynamic is also reflected in the IRR figures for these two fund groups. The annualized return for older VC funds held steady at 18.5%, while for newer funds it declined slightly to 6.5%. As the report explains, IRR is time-sensitive: even if unrealized values are strong, stagnant returns reduce the annualized return, and earlier distributions have a more significant effect on the final IRR level. For the newer funds, the sample is also weighed towards the most recent vintages, meaning that a significant share of the underlying companies’ return potential has not yet translated into concrete figures.
VC funds: a polarizing market
The dispersion of returns has continued to widen. Among older VC funds, the gap between the upper and lower quartile now stands at 2.5x by TVPI, with the top-quartile boundary at 3.6x and the bottom-quartile boundary declining to 1.1x. Top-quartile funds have sustained, and in some cases improved, their returns, while bottom-quartile performance has deteriorated further. The median TVPI for this group remains at 2.0x.
Compared to European peers, over half of the capital in older Finnish VC funds remains in the top return quartile, when compared on TVPI and IRR. In a public market comparison, older Finnish VC funds outperformed the Helsinki Stock Exchange (OMXHGI) by 67% on a PME basis, and the STOXX Europe 600 Technology index by 48%.
Newer VC funds show a more mixed picture. On TVPI and IRR, performance compares favorably to European peers, with 64% of capital in funds ranking above the European median on both metrics. On DPI, however, the newer fund group is behind its European counterparts. In the PME comparison they trail the OMXHGI and European Tech indices, while outperforming the OMX Nordic Small Cap.
Buyout & growth funds: stable performance and consistent returns
Finnish buyout and growth funds continued to deliver returns in 2025. Older funds (vintage 2009–2015) are now approximately 90% realized, with the group’s TVPI having settled at 1.8x and IRR at 15.8%. DPI rose to 1.7x — up from 1.6x the prior year. As TVPI remained stable while funds exited their portfolio holdings; this indicates that no significant write-downs occurred during the funds’ harvesting periods. This is likely a testament to managers’ robust portfolio company valuations. With only around 0.2x of total value unrealized after 2025, the report suggests that the final performance picture for this group is now relatively clear. Given the current market’s lower exit premiums, a meaningful further increase in TVPI is unlikely unless there is an exceptional recovery in the exit environment.
The liquidity profile of buyout and growth funds is structurally different from VC: portfolio companies tend to be more mature, and significant dividends can often be distributed prior to a full exit. The survey data shows that older buyout and growth funds returned investor capital on average by year eight, compared to year nine for VC funds.
In the European peer comparison, 75% of capital in older Finnish buyout and growth funds is allocated to funds ranking in the first or second quartile by TVPI. For DPI and IRR, the figure still stands at over 60%. The report attributes part of this relative strength to fund size: European medium and small-cap buyout funds tend to be larger than their Finnish counterparts, which may limit their exit options in a constrained market. In the PME comparison, older buyout and growth funds continued to outperform all three public indices in 2025, with multiples of 1.26x against the OMXHGI, 1.11x against the STOXX Europe 600 Technology index, and 1.03x against the OMX Nordic Small Cap. However, the margin against the latter is modest, partly explained by the fact that a significant share of capital calls and distributions occurred during a period of peak market indices.
Buyout & growth funds: newer vintages improving
Newer buyout and growth funds (vintage 2016–2021) showed clear improvement in 2025, with TVPI reaching 1.5x (1.3x in 2024) and IRR increasing by 1.5 percentage points to 11.8%. At the same time, DPI grew to 0.6x, reflecting both increased distributions and ongoing value creation within portfolios. In the PME comparison, the group outperformed all three public benchmark indices, with multiples of 1.13x against the OMXHGI, 1.10x against STOXX Europe 600 Technology, and 1.17x against the OMX Nordic Small Cap.
In the European peer comparison, TVPI and DPI show positive development, with a growing share of capital moving into the upper quartiles. Still, the lower quartiles remain overrepresented across all three return metrics, and particularly in IRR. This indicates that European peers have so far been more efficient at generating returns within a shorter timeframe. The report urges caution in drawing conclusions from this group: the sample is skewed toward newer vintages, and the inclusion of 2021 funds has lowered the average fund age and the maturity of underlying portfolios considerably. Compared to the older vintage group at a comparable point in time, newer buyout and growth funds still lag in terms of DPI.
Takeaways: recovery underway, exit market still the constraint
The 2025 survey points to a market in transition. Valuations are recovering, follow-on activity is increasing, and Finnish funds continue to perform competitively against European benchmarks. At the same time, the exit market remains the key constraint for both VC and buyout funds, and dispersion between top- and bottom-quartile performers is widening.
The survey covers 53 funds with a combined capital base of approximately EUR 5.3 billion, providing a comprehensive view of the Finnish VC & PE market.
For investors in or alongside these funds, the central question is no longer whether Finnish funds can generate returns, but how long the gap between unrealized value and actual distributions will persist.
Read the whole survey by clicking the link below or here.
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