Tesi’s survey of investment returns 2025: returns from Finnish VC & PE funds competitive compared to the listed market and European peer funds
The latest survey published by Tesi (Finnish Industry Investment) shows that investment returns of Finnish venture capital and private equity (VC & PE) funds compared well to both European peers and the listed market – especially in the case of venture capital funds. Higher returns from buyout & growth funds indicate that the M&A market for more established growth companies is picking up.
Mature venture capital funds outperformed the listed market across all benchmark indices
The annual investment returns of mature venture capital funds (inception 2006–2015) have been gradually declining for a few years now while nevertheless remaining at a good level, 18% (IRR). Compared to their European peers, the total investment returns of Finnish funds have on average improved: over one-half of these funds are in the best-performing quartile, while the proportion of Finnish funds in the lowest quartile has decreased.
In 2024, mature venture capital funds outperformed the listed market across all benchmark indices. The PME (Public Market Equivalent) for the OMXHGI index remained unchanged at 1.79x, while still continuing to easily outperform the listed market. Compared to the STOXX Europe 600 Technology Index and the OMX Nordic Small Cap Index, investment returns from these funds were 1.41 and 1.36 times higher, respectively.
Returns from new venture capital funds (2016–2020 vintage) seem to be modest as yet. The internal rate of return declined to 7% from the previous year’s 11%. According to Arttu Suominen, Investment Associate at Tesi who compiled the survey, the sample focused on funds at the end of the review period. Consequently, a large majority of these funds have only just completed the investment phase, so there have not yet been any return-generating exits or follow-on funding rounds with a higher valuation level. Furthermore, the funds made initial investments in a particularly expensive market, which is now reflected in the figures for investment returns. Capital calls and a slight decline in the valuation levels of the funds’ portfolio companies have also depressed annual investment returns.
“IRR, or the internal rate of return, indicates how much return per year the investment will yield, taking into account all the related cash flows and valuation levels of the portfolio companies. The returns of funds often follow the “j-curve”, meaning that returns initially fall and then rebound as exits from portfolio companies occur. IRR is also a time-sensitive indicator: during a slow M&A market, funds’ IRRs may decrease. That’s because even if imputed returns remain at a good level, they are returned to investors more slowly,” Suominen explains.
New venture capital funds outperformed the broader listed market, with the exception of the STOXX Europe 600 Technology Index, which slightly outperformed younger Finnish VC funds in terms of returns.
“So far, the Finnish market still lacks larger, domestic VC funds that could act as anchor investors capable of both accelerating the funding rounds of the best Finnish startups in the scaling phase and of strengthening domestic ownership,” comments Pia Santavirta, Tesi’s CEO.
Buyout & growth investors investing in established growth companies have improved their returns
The returns of buyout and growth funds investing in more established growth companies are mainly stable, and 2024 is no exception to this: the internal rate of return (IRR) is 16% in older (2009–2015 vintage) funds and 15% in newer (2016–2020 vintage) funds.
Older (2009–2015 vintage) Finnish buyout and growth funds are doing very well compared to their European peers. Over 60% of these funds ranked in the highest return quartile in the 2024 comparison. They also outperformed return indices when compared to the public market, although in some cases only slightly.
Younger buyout and growth funds have improved their performance: over one-third of these funds rose to the top quartile, compared to about one-fifth last year.
European medium-sized and small funds are larger than their Finnish peers. This may partly explain Finnish funds being better placed to exit in a challenging market situation.
“On the other hand, Nordic funds have performed well on average, regardless of the size of the fund, merger or acquisition, which in turn indicates high-quality fund managers and favourable market conditions for building companies,” Suominen points out.
Suominen believes growth in the returns of buyout and growth funds indicates that there is an upturn in the M&A market for more established growth companies.
“Domestic buyout and growth investors are the main group interested in growing the Mittelstand group of companies. These companies strengthen the backbone of the economy, employ a lot of people, and have plenty of potential for creating value,” comments Santavirta.
About the survey:
Capital calls and capital repaid by funds, as well as unrealised value, were indexed in the survey against the public stock market on the value dates of the events. The Nasdaq Helsinki’s OMXHG Helsinki General Index has been used as the benchmark index. In addition, this year, the STOXX® Europe 600 Technology and OMX NORDIC Small Cap indices were added to the comparison.
The survey is extensive and covers, in practice, Finland’s entire venture capital & private equity market. The survey separately examined venture capital funds investing in startups, and buyout & growth funds investing in growth companies on a more established footing. The funds in both these groups were further subdivided into two vintages: funds that made their first investment in 2009–2015, and funds that made their first investment in 2016–2020. The returns on newer funds were reviewed for the third time in this survey.
The survey includes 45 Finnish funds, comprising 22 buyout & growth funds and 23 venture capital funds. The survey included 19 mature funds (vintage 2009–2015) and 26 newer funds (vintage 2016–2020). These funds collectively raised a total of some 4.35 billion euros.
The survey of investment returns analyses returns from investments in the Finnish venture capital & private equity market as at the end of 2024.
Additional information:
Arttu Suominen, Investment Associate
arttu.suominen@tesi.fi, +358 50 403 5626
Saara Vettenranta, Communications Manager
saara.vettenranta@tesi.fi, +358 40 723 3516
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, and to new industrial scale businesses. tesi.fi | X (Twitter) | LinkedIn | Instagram | Bluesky | Threads | Newsletter