FVCA Finnish startups raise half a billion

Finnish startups have maintained steady funding momentum in the first half of 2024, with €497 million raised, matching last year’s pace, according to the Finnish Venture Capital Association (FVCA). A sentiment survey conducted among Finnish venture capital (VC) investors reveals a cautiously optimistic outlook, suggesting the market downturn is easing. Positively, early-stage investments remain robust, supporting a pipeline of emerging startups, while international VC investments hit a record €89 million, reflecting Finland’s growing global footprint. However, challenges persist, with exits at a historic low due to sluggish M&A and IPO markets, highlighting an area where recovery is still needed. The proposed changes to the strategy of the state-owned investment company Tesi have also raised concerns about potential hurdles in fundraising, which could ripple through the ecosystem.

Funding for Finnish startups remained steady in the first half of 2024, matching levels seen last year. Domestic venture capital (VC) investors were highly active in both investments and fundraising, and a recent investor sentiment survey indicates the market’s downturn may be easing.

Data from the Finnish Venture Capital Association (FVCA) shows that Finnish startups raised €497 million in growth funding during the first half of the year. This total includes contributions from venture capital investors, angel investors, and other sources like corporate investors. VC investments accounted for €137 million of the total raised.

This year’s pace is on track with 2023, when total startup funding reached €871 million. Key recipients of early 2024 investments include tech-powered hospitality operator Bob W, biotech company Enifer, satellite company ICEYE, and food tech firm Onego Bio.

“During the booming years of 2021 and 2022, large funding rounds pushed annual totals to around €1.5 billion. In early 2024, we’re seeing fewer big later-stage rounds,” said Anne Horttanainen, Managing Director of the FVCA. “On the other hand, early-stage investments have stayed at a strong level, supporting a new generation of potential success stories.”

Active year for Finnish VCs in investments and fundraising, while exits hit a low

Finnish venture capital investors invested a total of €200 million into domestic and international startups in the first half of 2024, marking the third-highest investment amount on record.

Investments made in international startups reached an all-time high of €89 million, while investments in Finnish startups also exceeded the recent years’ average at €110 million.

“The growth in international investments suggests that our VC market is becoming more mature and globally oriented, with funds increasingly looking for opportunities across the Nordics and Europe. We’re also seeing more niche funds, which often need to look globally to meet their investment criteria,” noted Horttanainen.

Exits, however, have been challenging due to a sluggish mergers and acquisitions (M&A) and IPO market, with only five successful exits in the first half of 2024 – a historic low.

Despite this, fundraising among Finnish VC funds remained strong, with €198 million secured in early 2024. In the spring of 2024 Nordic Science Investments and Equilibrium VC published their first funds. Maki.vc’s new fund also started operating in the spring and was launched officially in November.

“Globally, fundraising has been tough for several years as exit difficulties affect VC investors’ ability to return profits to their investors. Still, it’s impressive that many Finnish VC funds have succeeded in raising capital despite a challenging market,” added Horttanainen.

Investor sentiment suggests market recovery is underway

A recent market sentiment survey tracking the views of Finnish venture capital investors reveals that future expectations have largely turned positive.

Investors report more high-quality opportunities available now than before, with further improvements expected over the next six months. Exit markets remain challenging, but overall future outlooks are showing positive momentum.

“The exit market is clearly improving. Lower interest rates have boosted activity, and successful acquisitions, like those of Silo AI and M-Files this summer, indicate a shift in sentiment. We expect the market’s gradual recovery to continue, with optimism for 2025,” said Jussi Sainiemi, Deputy Managing Partner of the venture capital firm Voima Ventures and Chair of FVCA’s Venture Capital Committee.

Fundraising sentiment took a steep decline in spring 2022 and remains difficult, though there are early signs of recovery. While there are cautious signs of improvement, the barometer remains in negative territory, indicating a generally pessimistic sentiment.

“Additional uncertainty in the Finnish market comes from a new strategy proposed by Ministry of Economic Affairs and Employment for the state-owned investment company Tesi. If implemented, it could significantly impact fundraising capabilities, making it in turn harder for startups to secure funding and slowing their growth,” Horttanainen commented.

Read more about the statistics here.

Read the investor sentiment survey results here.

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