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ANNUAL REPORT 2014

Venture capital investments

Finnvera makes venture capital investments in early-stage technology enterprises and in technology-intensive or innovative service enterprises that have potential for developing into international growth enterprises. By strengthening enterprises’ equity, the investments enable, start and accelerate the growth of enterprises and their access to international markets.

Finnvera’s operations aim for the active increase of shareholder value, and Finnvera participates in, among others, the Boards of portfolio companies. Finnvera serves as a minority shareholder in its portfolio companies and other providers of financing are always involved in the financing round.

During 2014, Finnvera’s portfolio companies collected over 60 million euros of new private capital. Between 2006 and 2014, Finnvera made direct venture capital investments in altogether 228 enterprises. In all, private investors have invested over 260 million euros in the portfolio companies of Seed Fund Vera.

Early-stage portfolio companies by sector, 31 Dec 2014

Computer and consumer electrics Business and industrial products Life Sciences Communications Energy and environment Consumer services Consumer goods and retail Business and industrial services Chemicals and materials
32 31 31 11 8 6 6 5 3

In keeping with the policy of Finnvera’s Board of Directors, the company will gradually give up its venture capital investments in regional funds. In addition to direct investments, Finnvera had investments in eight regional funds at the end of 2014.

At the beginning of 2013, the business angel operations administered by Finnvera were transferred to the Finnish Business Angels Network (FiBAN), which was founded by Finnish business angels in 2011. To ensure the continuity of operations, Finnvera has supported FiBAN in the development of business angel activities. Potential investment targets are offered to FiBAN’s business angel network not only from FiBAN’s own deal flow but also, among others, from Finnvera’s deal flow.

Venture capital investments are organised through Finnvera plc’s subsidiaries Veraventure Ltd (100 per cent ownership) and Seed Fund Vera Ltd (94 per cent).

 

Venture capital investments remained high

The demand for venture capital investment financing has remained steadily high since these activities began in 2005. In 2014, a total of 116 enterprises sought investments (134).

Direct investment project stream, number of projects

  2010 2011 2012 2013 2014
Seed Fund Vera Ltd 221 248 178 133 134
Angel financing 0 36 117 117 0

The number of investments made was somewhat greater than the year before: there were 94 (85) direct investments. The value of the investments declined slightly from the previous year and was EUR 16 million (16 million). Of the projects financed, 12 were initial investments (19). Their total sum was EUR 3 million (5 million). There were 82 (66) follow-on investments made, totalling EUR 12 million (11 million).

In 2014, there were altogether 11 full or partial exits where the portfolio company was sold either to an industrial buyer or to another venture capitalist. Eight portfolio companies went bankrupt.

Finnvera sold its holdings in Vigo funds to Tekes Venture Capital Ltd

In accordance with the policy decision made by Minister of Economic Affairs Jyri Häkämies in autumn 2012, Finnvera gave up its early-stage investments in funds in 2014. At the same time, Tekes launched similar activities, implementing them through Tekes Venture Capital Ltd. Finnvera’s holdings in six Vigo accelerator funds were sold to Tekes Venture Capital Ltd in 2014. Similarly, holdings in five regional funds were sold to private investors. Finnvera is still negotiating about the sale of its holdings in funds organised as limited companies to private parties.

Finnvera will continue its direct investment activities in early-stage, technology-intensive small enterprises and will make initial and follow-on investments until the end of 2017.

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