Growth Entrepreneurship 2.0 and Venture Capital 2.0 / Artturi Tarjanne

A few weeks ago I walked in to the annual Slush-conference at Kaapelitehdas in Helsinki. The entrepreneurial energy was very tangible from the first moment I stepped in.

I was not the only one surprised and overwhelmed by the experience. For example, Pekka Pekkala described the atmosphere in Helsingin Sanomat as follows (translated):

“Three years ago the main focus of Slush was still on the speakers on the main stage. The people dreaming of entrepreneurial career were listening all serious to the entrepreneurs who had managed to succeed with anti-virus protection or databases in the first wave of Finnish entrepreneurs. A few new entrepreneurs were also seen presenting their businesses.

This year the ambiance was very different. The new companies were presenting their operations very professionally at their stands.  The pitching stage had an endless queue of entrepreneurs waiting for their chance to market their ideas to the public. The popularity of the already succeeded entrepreneurs of the main stage seemed to be taken over by the new wave of entrepreneurs.”

Finland is clearly moving to the next stage of growth entrepreneurship – are the venture capital firms able to match the growing demand?

The Finnish venture capital industry has gone through major changes recently. Many of the significant players, such as CapMan and Eqvitec or already earlier 3i and Biofund, have left the VC market. Teams with entrepreneurial backgrounds, Open Ocean Capital and Lifeline Ventures, represent new blood. However, their fund sizes are quite small. These changes have led to a decrease in the number of funds as well as average fund size – VC funds over 100 million Euros are non-existing in Finland. The total capital available for initial investments in the Finnish VC funds is around 100 million Euros.

The funds’ limited resources can already be observed in the dangerous downward trend of initial investments: FVCA’s recently published statistics show that VC investments in the last 12 months sum up to 77 million Euros. This is the second consecutive quarter when we significantly fall short of the approximate 100-million-Euro level that had become the norm in the first decade of the new millennium. A comparison with the well functioning VC markets in Europe shows that the GDP-adjusted level of VC investments in Finland should be double the current level.

Growth entrepreneurship 2.0 and Venture Capital 2.0 are surfacing in Finland as well as in other parts of Europe. Unfortunately, the size of the funds raised in the recent years has been alarmingly small: public funding is reasonably available, whereas private funds are very scarce. The concern now is that the promising accelerating growth and development will stop in many ways due to the lack of competent VC funding.

P.S. Thank you for the brilliant Slush event. Go Finland!

Artturi Tarjanne Nexit Ventures Oy                                                     Chairman of FVCA