Tesi’s Interim Review 1.1.–30.6.2023 – slowdown in Finnish and European economies impacted Tesi’s result

  • Share on Twitter
  • Share on LinkedIn

A decline in the valuations of startups and growth companies, combined with weaker economic prospects in Finland and Europe, was unsurprisingly reflected in Tesi’s (Finnish Industry Investment Ltd’s) net loss for the first half of 2023. The deteriorating business climate is impacting the venture capital and private equity (VC & PE) market through the considerably higher challenges in fundraising, follow-on financing and exit prospects.

Tesi gave commitments and made investments totalling EUR 108 million in the first half of 2023.

Tesi gave fund commitments amounting to EUR 83 million: to three VC & PE funds and to Kasvurahastojen Rahasto fund-of-fund (KRR V). KRR V’s share of this was EUR 64 million, and it will make investments over the next three years. Managed by Tesi and established together with Finnish pension & insurance companies, the KRR are funds-of-funds that invest in Finnish venture capital, growth and buyout funds.

Tesi made 24 direct investments in startups and growth companies, amounting to EUR 25 million. Of these, five were initial investments and 19 follow-on investments.

Declining valuation levels contributed to the net loss of EUR 36 million for the first half of the year.

Tesi also repaid to the Finnish state EUR 90 million, received as returns from the corona-specific special investment programmes. Tesi will repay to the Finnish state the capital returned from the investments of the programmes.

“The valuation decline in startups and growth companies was reflected in Tesi’s performance in the first half of 2023, as was expected. There are no signs of a change, either, as witnessed by the slowdown in the fundraising of venture capital and private equity funds, and by sluggish growth financing and exit prospects,” says Tesi’s CEO Pia Santavirta.

“We have experienced such turbulence before. Tesi operates on market terms, and profitably over the long term, giving us the capability to act as a counter-cyclical force,” Santavirta adds.

During the first half of 2023, the Finnish VC & PE funds in which Tesi has invested raised new capital at the same slower pace as the previous year. Investments by Tesi’s international investor partners in Finnish growth companies were at a slightly higher level than a year ago.

“We take risks and share these risks with private co-investors. To succeed in today’s global competition, we must concentrate on attracting more international capital to Finland and using it to boost the size of Finnish venture capital and private equity funds, startups and growth companies to match international levels,” concludes Santavirta.

Tesi’s key figures H1 2023 (H1 2022 in brackets)

  • Investments and investment commitments EUR 108 (109) million, of which
    • fund commitments EUR 83 (45) million, of which 3 (4) commitments to external VC & PE funds and 1 to the KRR V fund-of-funds managed by Tesi
    • direct investments in companies EUR 25 (64) million, 24 (24) investments
      • initial investments 5 (13) and follow-on investments 19 (11)
    • follow-on investments from special investment programmes to mitigate pandemic impacts EUR 2 (51) million
  • Exits from companies 3 (8)
  • Tesi’s profit/loss for the period EUR -36 (12) million
  • International capital into Finnish companies from Tesi’s investor partners EUR 73 (27) million
  • New capital raised by Tesi’s Finnish portfolio funds EUR 221 (203) million
  • Tesi’s investments under management as at 30.6.2023 EUR 2.5 (2.4) billion.
    • fund commitments 118 (112), of which funds-of-funds 5 (4), and direct investments 130 (130)
    • 2 fund commitments and 52 (52) direct investments made from corona-specific special investment programmes now closed for initial investments. 

Read more in our H1 2023 Interim Review!

More information:

Pia Santavirta, CEO, Tesi, pia.santavirta@tesi.fi, +358 40 546 7749
Susanna Aaltonen, Director, Communications, Tesi, susanna.aaltonen@tesi.fi, +358 40 593 4221

Photo of Pia Santavirta

Tesi (officially Finnish Industry Investment Ltd) is a state-owned, market-driven investment company that invests in venture capital and private equity funds and directly in Finnish startups and growth companies. tesi.fi | X (Twitter) | LinkedIn | Newsletter