Two years of deep tech investments – Voima Ventures’ 2nd birthday! 🥳

To celebrate our 2nd birthday our founding partner Mikko Kumpulainen makes his blog debut. He reflects on what we have learned during these years and what’s to come in the future.

A look into Voima Ventures’ past, present and future.

Voima Ventures is celebrating its second anniversary, we just had the final closing of our second fund, and last week we co-hosted the second Science Startup Day. A perfect moment to reflect on what has gotten us here and what are the main streams of development we are seeing in the deep tech startup space.

During these two years our team has grown from 4 to 10 people. Our team is diverse both in terms of age and gender. We have learned to work remotely and closed nine new deals during 2020 despite the challenges brought about by Covid-19 times. During the first 2 years we have put a lot of effort into setting up our own internal processes, tools and templates. We have, for example, started hosting quarterly CEO exchange seminars where the CEOs of our portfolio companies discuss topics such as ESG, recruiting, funding and growth culture. Based on the results of our ESG survey we have started an initiative to increase the diversity in the board of directors in our portfolio companies. This initiative has raised a lot of interest and we are thrilled about the great number of women that have already contacted us.

Voima Ventures founding team in 2019.

World-class innovation from Finnish research institutions 

Voima Ventures’ focus is on early-stage deep tech, science-based companies. The amount and quality of deal flow has exceeded all our initial expectations proving that there is, indeed, a huge need for deep tech funding in Finland. 

Thus far we have reviewed over 1000 cases, many of which are spin-offs from the Finnish research institutions and universities, and the majority of  them have gone through the research-to-business (R2B) project phase funded by Business Finland. Since 2012 there have been 570 of such R2B projects that have led to some 150 spin-off companies. Aalto University, VTT, University of Helsinki and Tampere University combined have created 60% of these spin-off companies. Overall, we are seeing great potential for future spin-offs also outside these four. 

Finnish startups raising remarkably larger later stage financial rounds

Early stage deep tech investing is not easy. It typically comes with two characteristics: a long holding period and significantly bigger funding needs compared to e.g. software companies. The long holding period stems from the fact that often the technology is not ready and still requires a lot of R&D before the first sales. Usually disruptive technologies also require changes in value chain and thus require time, proof of concept, and buy-in from the end customer. To make things even more complicated, many deep tech innovations are either hardware or process innovations, which usually require a lot of capital e.g. investments into IP and capex.

Fortunately, international VCs are active in Finland and are investing more and more money in deep tech companies. According to the recent statistics from Finnish Venture Capital Association, approximately 60 % of the money received today by Finnish startups come from either foreign VCs or foreign investors. Particularly almost all larger rounds (10M+) are led by international VCs. Finnish startups have in recent years been able to raise the most money in Europe as a percentage of GDP and last year was a record-breaking year, reaching 0.95 billion euros. This growth is driven by the increase of large, over 10 M€, financial rounds.

Voima Ventures team has grown over the two years. Summer celebrations in 2020.

What does the future hold for us?

Over two years ago we defined Voima Ventures’ mission: which is to help founders to accelerate the growth of deep tech ventures to global markets. We do this by investing in science driven innovations, combining it with teams having a global entrepreneurial mindset and finally, by providing our portfolio companies access to global networks and capital. This mission has been tried and tested during these past two years and I am happy to report that still today we can 100 % stand behind it. 

This year the Voima Ventures team aims to grow our portfolio value and business, improve on ESG and diversity matters, and make 4-6 new investments and several follow-on investments. Moreover, we are setting our sights into making the first investments outside of Finland.

Written by Mikko Kumpulainen.