A more talented generation of startups has emerged in Finland, says the Lifeline Ventures team of Timo Ahopelto, Petteri Koponen and Juha Lindfors.
It’s a rare occasion at Lifeline Ventures’ small office in the heart of downtown Helsinki: all three partners of the private equity firm are in the house.
Timo Ahopelto, Petteri Koponen and Juha Lindfors are usually out coaching entrepreneurs or pursuing more early-stage startup companies for their investment portfolio.
A big screen dominates the office meeting area, but you rarely see it running PowerPoint presentations of companies seeking financing.
“We shy away from dry pitches. They’re boring to listen to and they don’t really give you a good idea of what the business is all about. We prefer going straight to the point through a conversation,” Timo Ahopelto says.
A growing number of talented entrepreneurs
The three men have plenty to keep them busy. Finland is seeing a steady flow of small startups aiming for fast growth.
“We have been active. On average, we make one new investment every month,” Petteri Koponen says.
Lifeline Ventures currently has a portfolio of about 55 companies, most of them operating in the technology and healthcare sectors.
Ahopelto says that the number of startups and the financing available to them really started taking off in Finland at the turn of the decade. Successful companies are not created from nothing; many up-and-coming entrepreneurs first gain experience working for some other company before venturing out on their own.
“Entrepreneurs are constantly developing skills, but it takes time,” Ahopelto notes.
A more international startup community
Juha Lindfors thinks there is a bit of a problem in Finland: the know-how and ambition of startup entrepreneurs has been sufficient for success only in Finland.
“Now we are starting to see a growing number of entrepreneurs who have demonstrated that they can do the same on a global scale.”
Some of the Finnish startup entrepreneurs head directly to Silicon Valley. Petteri Koponen doesn’t believe this undermines the Finnish startup community – on the contrary.
“Many of the startup entrepreneurs who are successful in the United States still have one foot firmly in Finland. They bring their international expertise, networks and funding here,” Koponen says.
Ahopelto points out that international investors have in any case discovered Finnish startups.
“And now it’s easier to find domestic financing. Angel investing has actually become trendy,” Ahopelto says.
We shy away from dry pitches."
Team’s talents determine success
Ahopelto and Koponen are seasoned serial entrepreneurs, and every member of the Lifeline team is an experienced angel investor. As investors, they want to come into a company at the earliest possible phase, preferably when the firm is being established.
A key factor in an investment, says Ahopelto, is the ability of the startup’s founding team to grow with the company and to attract the needed expertise.
“We know from experience that an A-class team will perform well also in C-class markets. But a C-class team will not succeed – not even in A-class markets,” Ahopelto illustrates.
According to Ahopelto, the ambitious growth of Finnish startups is mirrored in the amount of funding sought by the companies.
“Just a few years ago startups were typically looking for 2-3 million euros in a growth-driven funding round. Today the best companies might seek ten million euros in the so-called A-round,” Ahopelto compares.
Koponen anticipates more and more Finnish startups being able to grow their turnover and profit in the upcoming years and becoming companies of significant calibre. As an example, he points to the gaming company Supercell, in which Lifeline Ventures was an early-stage investor.
“I calculated that Supercell’s share of Finland’s service exports in the two past years has been above ten percent. This is just one company that was established in 2010. If we can get more companies of a similar size or even somewhat smaller, it will be reflected also in the macroeconomic indicators.”
An envy of the Swedes too
Petteri Koponen says that in the years ahead successful startups will likely emerge in applications related to virtual or augmented reality. Also machine vision and digital healthcare technology are on the upswing.
Juha Lindfors hopes to see more anchor companies in Finland that can drive growth for the entire sector. These are also the kinds of companies that Lifeline Ventures is looking to grow.
“For example, Sweden has clearly more anchor companies than Finland,” Lindfors notes.
However, Timo Ahopelto mentions something that even the Swedes envy about the Finns.
“Everyone who has come from somewhere else notices the unbelievable startup community that has emerged in Finland and how it networks better than the startup communities anywhere else.”
Koponen is pleased that attitudes towards startups have changed in Finland. People no longer snicker at the notion of a “good drive”. Now government ministers and executives of big companies alike mingle together in the Slush event crowds.
- A fund investing in early-stage healthcare, gaming and technology companies.
- Since 2009, it has invested in about 55 startup companies together with some of industry’s most recognised international investors.
- Lifeline co-founders Timo Ahopelto and Petteri Koponen are seasoned entrepreneurs. The team’s investments range from tens of thousands to millions of euros. Supercell CEO Ilkka Paananen is an advisor and investor.
- Lifeline Ventures Fund I, established in 2013, and Lifeline Ventures Fund III, established in February 2016, invest in healthcare, gaming and technology companies that are aiming for international market leadership. Industry Investment and FoF Growth are investors in both funds.