Tesi’s performance and results H1 2020: Ensuring financing for Finnish growth companies amid corona pandemic

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Highlights of the review period:

  • Tesi made new investments and commitments amounting to 183 M€ during the first half of the year. These included:
    • a 65 M€ commitment to the KRR IV fund-of-funds
    • a total of 45 M€ in commitments to venture capital and private equity funds
    • direct investments amounting to 23 M€
    • altogether 50 M€ in stabilisation investments
  • The KRR IV fund-of-funds managed by Tesi raised a total of 175 M€
  • Tesi’s Finnish portfolio funds raised new capital amounting to 333 M€
  • Tesi’s international partners invested altogether 49 M€ in Finnish companies.


Tesi’s CEO Jan Sasse comments on the review period:

“The COVID-19 pandemic produced a shock both in the global economy and in Finnish companies. The full effects of this shock will not become clear until well into the future. Tesi’s role in this special situation is to ensure through financing that there are still innovative, viable companies providing employment in Finland after the crisis has passed. Towards this end, we have collaborated extensively with growth companies, our state owner, the venture capital and private equity sector and other stakeholders by creating new financial instruments for growth companies as well as by producing status reports to aid decision-making.

Growth companies financed by the VC/PE market play a crucial role in achieving transformative and sustainable economic growth. Tesi invests in companies’ growth and over the long term develops the VC/PE market. Just before the coronavirus crisis, together with Finnish pension and insurance companies, we established the new KRR IV fund-of-funds that invests in Finnish VC/PE funds.

Before the COVID-19 struck, Finnish funds had raised large volumes of capital, specifically on the venture capital side. Consequently, the pandemic has not hampered fundraising to a large extent, apart from some individual funds. In the spring, the prospects for follow-on financing for venture capital and private equity backed companies were also good. More traditional SMEs encountered difficulties the most, as COVID-19 had a direct impact on their business operations. We launched a fast-track stabilisation program precisely for these companies that were facing an acute liquidity crisis. In the first half of the year, we invested 50 M€ from the stabilisation program in altogether nine companies. We will continue to offer stabilisation financing as the market situation demands.

On the venture capital side, Finnish start-ups raised a record amount of capital in the first half of the year, despite the COVID-19 crisis. Time will tell whether the pandemic will impact the operations of international investors in the future. Tesi was involved in large venture capital rounds (Swappie, Varjo Technologies, ICEYE), where we utilised the EFSI investment programme set up in collaboration with the EIB. For earlier-stage companies, we offer Venture Bridge financing that will give start-ups more time for raising larger financing rounds.

Despite the challenging business environment, our net profit for the review period was €7 million. Tesi has solid resources for long-term investment operations that emphasise sustainable development and positive societal impacts. Capitalisation by the Finnish state has also given Tesi the resources to ensure the supply of financing for the duration of the crisis should the pandemic be prolonged.”


Business environment

Before the COVID-19 pandemic struck, Finnish funds had raised large volumes of capital, especially on the venture capital side. As a result, the coronavirus pandemic has so far not widely impacted the fundraising of Finnish funds to a large extent. Individual funds have faced some difficulties in raising the target size on schedule due to the market uncertainty.

Based on the market pulse survey conducted by Tesi, Finnish Venture Capital Association and Business Finland Venture Capital in May, Finnish investors are fairly well placed to provide follow-on financing for their portfolio companies.

In the first half of 2020, Finnish startups raised a record amount of capital, 330 M, despite the coronavirus pandemic (Source: Talouselämä). Valuations of venture capital backed companies have remained broadly the same.

The more conventional venture capital backed companies and business models (software, digitalisation) have been the winners of the COVID-19 situation. The business operations of these companies have mostly fared well. Securing financing is more challenging for companies that are raising Series A funding rounds yet lack a longer-term track record, and for more atypical business models, in which the presence of, for instance, industrial investors has become emphasized in recent years.

The main concern now with regard to Finland’s GDP is the prospect of falling demand on the global market for the goods and services of more traditional SMEs and of Finland’s export sector. Also, established consumer-driven businesses have encountered serious challenges.


During the first half of the year, Tesi made new investments amounting to 183 M (76 M€ in H1 2019). These included a commitment to the KRR IV fund-of-funds, commitments to VC/PE funds, direct investments, and stabilisation financing.

Tesi made commitments to funds totalling 45 M. Four of these commitments were to Finnish funds (Superhero Venture Fund 2020, Icebreaker Fund II, GOS Private Debt I, Verso III), and one was to an international fund to be announced later. New capital raised by Tesi’s Finnish portfolio funds totalled 333 M€. Tesi made a commitment of 65 M€ to the 175 M€ KRR IV fund-of-funds. Co-investors in KRR IV are the pension/insurance companies Ilmarinen, Keva, State Pension Fund of Finland, Elo, LähiTapiola and Veritas. The KRR fund-of-funds managed by Tesi invest in Finnish venture capital and growth funds.

Tesi made direct investments amounting to 23 M€ in 14 companies. Three of these were initial investments totalling 11 M€ (Upcloud, Nordic Rescue Group, Swappie). Follow-on investments totalling 12 M€ were made in altogether 11 companies.

In April, Tesi launched a 150 M€ stabilisation financing program for mid-sized companies in response to the COVID-19 pandemic. Stabilisation investments differ from Tesi’s normal investments and offer companies facing an acute liquidity crisis financing to overcome the situation. Tesi made nine investments amounting to 50 M€ under the stabilisation programme. These companies employ some 8,200 people in Finland.

In mid-June 2020, Tesi launched Venture Bridge for companies that have previously raised at least seed financing from professional venture capital investors and have had to postpone their next external financing round due to COVID-19. No investments under the programme had yet been made in June. By 10 September 2020, Tesi has made investments decisions totalling 2.4 M€ in altogether five companies (Blidz, Disior, Matchmade, Fake Production, Revonte).


Profit after taxes for the review period was 7 M€ (13 M€ in H1 2019). The strong result of 36 M€ by funds can be explained by the good first half of the year, which saw several positive exits. Direct investments produced a net loss of 12 M€, which mainly resulted from the decrease of the fair value of the portfolio companies at more mature stages, and the weakening of their business environment due to the corona pandemic. The weakened market situation also reflected to financial securities as they produced a loss of 10 M€.

The balance sheet total amounted to 1.288 B€. The largest change in shareholders’ equity, 1.245 B, was the state capitalisation of 150 M€ intended for Tesi’s new investment programs.

In preparation for any worsening of the economic situation, the Finnish state committed a further 250 M€ for capitalising Tesi in the 2020 supplementary budget IV. The additional capital will be channelled flexibly, according to the market situation, into venture capital investments, Tesi’s stabilisation program and investments in funds over the next two years to mitigate the disruption caused by the COVID-19. The appropriations from the supplementary budgets already paid, and those to be paid in the future, will be returned to the Finnish state after Tesi’s exits.

Tesi’s investments under management at the end of the review period totalled 1.6 B€. In addition to Tesi’s own investments and commitments, the figure includes investments made by the KRR funds-of-funds and managed by Tesi as well as the European Investment Bank’s capital earmarked for the EFSI co-investment programme.

Events after review period and prospects for year end

After the review period, Tesi gave a commitment to CapMan Growth Equity Fund II and made a direct investment in Varjo Technologies. Tesi also made Venture Bridge investments totalling 2.4 M€ in five companies.

Despite the coronavirus pandemic, Finnish start-ups raised a record amount of capital during the first half of 2020. The impacts of the pandemic on international venture capitalists’ activity remains to be seen. The negotiations for many of the large financing rounds that took place in the summer and early autumn were already initiated before the pandemic struck.

The second half of the year is likely to be challenging for more traditional SMEs. The challenges are, however, sector and company-specific. Shortened order books will have wide consequences for engineering companies. Furthermore, Finland having a post-cyclical economy, the full impacts will not be seen until later.

Tesi’s deal flow is normalising. Tesi is, however, well prepared for worsening conditions for growth companies by ensuring the fund-raising of VC/PE funds, expanding its role in direct venture capital investments, both in Venture Bridge and in larger financing rounds, and by offering stabilisation financing to mid-sized companies that were profitable pre-coronavirus.

The key driver of Tesi’s operations is to make a positive social impact. The main methods for promoting positive social impacts are channelling capital to companies that will use their expertise and solutions to make a net impact on society that is as beneficial as possible and producing information on the impacts of operations.

Read in more detail:

Tesi’s performance and results H1 2020

For further information, please contact:

Jan Sasse, CEO, Tesi
jan.sasse@tesi.fi, +358 40 861 9151

Tesi (Finnish Industry Investment Ltd) is a state-owned investment company that wants to raise Finland to the front ranks of renewing economic growth by investing in funds and directly in companies. We invest profitably and responsibly, hand-in-hand with co-investors, to create the world’s new success stories. Our investments under management total 1.6 billion euros. Ambition for ownership and success www.tesi.fi | dtg.tesi.fi | @TesiFII