When M-Files, a secure document management platform from Tampere, raised a 36 million dollar investment round in March – one of the largest in the region so far this year – the news surprised many. Having a Paris-based VC firm, Partech Ventures, leading the round is not that usual in Finland either.

While Partech made headlines and the second investor DFJ Esprit was also mentioned in the news coverage, the role of Finnish Industry Investment (FII) was little-noticed. The state-owned, but market-based firm invests in many of the A and B rounds in Finnish companies like M-Files.

FII works with the mission to boost economic growth in the Nordic country that is known for success stories like Supercell and Angry Birds. It aims to find the rising stars like M-Files, invest in them in their early growth stage and with 1 billion euros under management it has the financial muscle to continue investing in the following rounds.

FII’s VC team found this then-relatively-unknown software firm years ago when one portfolio company started to use M-Files software. “As this was brought to the board, where we were sitting, our interest arose”, says Heli Ahlroos, head of FII’s VC team.

A few years later, in 2012 the team met M-Files’ founders in Helsinki at a software event and started discussions over possible investment. This lasted for a year and included many introductions to investors in Britain.

FII has two quite distinct business lines – fund investments and direct investments – but sometimes, like in the case of M-Files, they do support each other almost directly as the fund investments team had an investment in DFJ fund. By April 2013, the A-round was put together and DFJ Esprit and FII invested a total of 7.7 million dollars.

FII is active in investing in Nordic venture capital funds and on a selective basis in European VC funds that are sourcing and investing in the Finnish market. “We are looking for teams which are able to provide not just growth capital but also their expertise and networks for the benefit of the portfolio companies. At the moment we are interested in funds able to provide later stage venture funding in particular”, said Anne Riekki, head of fund investments team at FII.

The story of M-Files is a prime example of FII in action: looking for a foreign lead- and co-investors to drive the ecosystem and the economy. “Finland needs more success stories like Supercell. We are working with foreign and local investors to help this happen”, Ahlroos said. “In the well-functioning ecosystem there are many growing and profitable companies – and there is significant activity from foreign players.”

The team is involved in many of the larger investments in Finland, off the top of her head Ahlroos estimates that they are involved in every third investment of investment rounds over 4 million euros.

And M-Files is not the only success story of a growing startup scene which has been well-funded by international
investors. FII has been investing together with international venture capitalists like Intel Capital, Dawn Capital or eEquity into companies like MariaDB, LeadDeskVaadin or Enevo.

Espoo-based Enevo, which builds smart waste collection systems, has raised around 27 million dollars. The impressive investor line-up includes like Draper Associates, Earlybird, Foxconn and Ginko Ventures. In addition to FII. Of course.

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