According to the market pulse survey conducted by Tesi, Finnish Venture Capital Association and Business Finland Venture Capital in May 2020, 49 % of Finnish venture capital backed companies and 61 % of growth or buyout stage companies report negative impacts of COVID-19 on their business. The investors’ estimates have, however, remained roughly the same in comparison to the previous survey conducted in April 2020. Adjustment measures made by the companies have had a slight positive impact on the outlook.
The sufficiency of current funding has increased especially in growth & buyout companies. However, on average 31% of companies have a runway of less than six months. Fewer companies are in an immediate liquidity crisis. Follow-on financing capabilities have increased, but other sources of finance remain uncertain, especially on the venture capital side.
Investors’ fund value is concentrated in companies which have a better outlook than on average: less negative impact on business, longer runway, and sources of follow-on financing better recognized.
“Even fewer companies are facing an immediate liquidity crisis, which might relate to sufficient financing options and support measures as well as to the owners reacting quickly. Short-term problems having not increased is positive in itself. It is nevertheless important to ensure follow-on financing in case the crisis prolongs by a year or two and a need for additional financing to accompany the current owners’ funding emerges,” says Tesi’s Matias Kaila, Director of Fund Investments.
The survey results include outlooks by Finnish Business Angels Network (FiBAN) in order to build a wider picture of the market. The survey reveals that angel investors set a record in investment activity during the years 2018 and 2019 which may affect their investment activity this year. The deal-flow of angel investors saw a slight bend in March 2020 but has since recovered quickly.
The purpose of the Market Pulse survey is to build a snapshot of the business and financial situation of Finnish venture capital and private equity backed companies. The pulse survey was conducted the first time betweeen 9.–16.4. and the second time between 15.–16.4. The latter covered 306 Finnish venture capital and private equity backed companies of which more than a third were at growth & buyout stage and less than two-third venture capital stage. The company sampling covers different fields and growth stages comprehensively and represents Finnish private equity backed companies well. The next pulse survey will be conducted in August-September.
Matias Kaila, Director, Funds, Tesi
Matias.Kaila@tesi.fi, 040 720 1324
Tesi (Finnish Industry Investment Ltd) is a state-owned investment company that wants to raise Finland to the front ranks of renewed economic growth by investing in funds and directly in companies. We invest profitably and responsibly, together with co-investors, to create the world’s new success stories. Our investments under management total 1.3 billion euros. Ambition for ownership and success – www.tesi.fi | www.dtg.tesi.fi | @TesiFII