Do you have questions about Tesi or the private equity and venture capital industry? Here we have compiled a list of the most frequently asked questions, complete with answers.
What is Tesi’s role compared to other state-owned investment companies?
Tesi is a state-owned investment company that invests in private equity funds and makes direct market-based investments in growth companies together with private investors. Other state-owned investment companies are:
Business Finland – a public actor that offers funding for innovations and internationalisation and promotes travel and investments to Finland.
Business Finland Venture Capital (BFVC) – a public actor that invests in early-stage venture capital funds.
Climate Fund – invests in large-scale climate and digital projects in which the fund’s investment is crucial to enable the project’s realisation in the first place, on a larger scale, or earlier than it would with funding from elsewhere.
Finnvera – funds the founding, growth and internationalisation of SMEs and exports of large companies with various loan and guarantee instruments.
What kinds of companies does Tesi invest in?
Tesi makes syndicated minority investments in Finnish companies together with other Finnish and international investors. Investments can be venture capital, growth equity or industrial investments.
Tesi invests together with private investors, on equal terms and with equal expectations for returns.
Read more about Tesi’s direct investments here.
What kinds of funds does Tesi invest in?
Tesi invests in venture capital and private equity funds that develop Finland’s most promising growth companies. Tesi’s investment focus includes venture capital funds, growth and small-cap buyout funds and mid-cap buyout funds. In addition to Finnish funds, Tesi also invests in international venture capital funds when the fund strategy has a true value-add to the Finnish ecosystem.
Read more about Tesi’s fund investments here.
Who are Tesi’s co-investors?
In fund investments, Tesi’s co-investors include e.g. institutional investors, European Investment Fund EIF, family offices and foundations.
In direct investments, Tesi’s co-investors include Finnish and international private equity and venture capital companies, pension insurance companies, industrial investors and private investors.
What are KRR funds-of-funds?
KRRs are funds-of-funds managed by Tesi. In addition to Tesi, investors in the funds include major Finnish institutional investors. KRR funds-of-funds act as anchor investors in Finnish venture capital, growth and buyout funds. This successful concept has already supported the scaling up of dozens of new funds and the growth of hundreds of companies.
Read more about KRR funds-of-funds here.
Does Tesi channel EU funding to Finland?
The European Investment Fund EIF is a long-term partner of Tesi. Together with Tesi, EIF acts as an anchor investor in Finnish funds. In direct investments, Tesi and the European Investment Bank EIB cooperate through the EFSI co-investment programme. EFSI channels financing from the European Investment Bank to Finnish companies, enabling them to participate in larger funding rounds. One-half of the financing comes from the EFSI programme and one-half from Tesi, with private investors participating at least to an equal extent.
Does Tesi have certain focus areas in its direct investments?
Focus areas at the moment include circular economy, health tech, deep tech and other business sectors with societal impact.
Where does Tesi’s funding come from?
Tesi is a 100% state-owned investment company. During Tesi’s 26 years of operation, the state has invested €819 million in the company’s shareholders’ equity, and as a result of successful investment operations, the company’s consolidated shareholders’ equity has grown to €1,629 million. Returns from investments are ploughed back into new investments.
PRIVATE EQUITY AND VENTURE CAPITAL IN GENERAL
What are private equity and venture capital?
Private equity (PE) or venture capital (VC) investment is a great way to accelerate the growth of a company. PE and VC investors invest in unlisted companies that have been deemed to have high growth potential or which have demonstrated high growth. PE and VC investors are not permanent owners of the company but rather they aim to generate revenue from their investment through an eventual exit event, such as an initial public offering (IPO) or a merger. In addition to funding, PE and VC investors provide companies with active, professional help in growing their companies. Investments are made to both startups and established growth companies with several millions of euros in revenue.
How do private equity investors and venture capitalists benefit companies?
The involvement of PE and VC investors increases a company’s credibility in relation to its other stakeholders and improves access to other forms of financing. Moreover, the portfolio company has access to the investor’s domestic and international contact network.
What are the benefits of private equity and venture capital for Finland?
Private equity and venture capital have a significant impact on domestic employment and productivity. PE and VC investors increase the growth aspirations and abilities of their portfolio companies and accelerate the creative renewal of the ecosystem. An efficient PE/VC market ensures that Finnish growth companies have sufficient funding and know-how to keep growing and enter international markets.
Read more from Tesi’s Impact Review.