Mediatonic Management has closed a 5 million euro fund that will begin to finance games and media products from Finland. The fund has been set up by investments from Fennia insurance, Henki-Fennia insurance as well as the Sonera Pension fund. People behind the fund include Tanu-Matti Tuominen and Marko Tulonen.

The fund is a project and catalog fund that will invest in commercial games, television formats and web services. The fund does not invest into the companies in the manner a venture capitalist would invest, but into the rights of the products and services sold. Therefore the fund’s business model is to take a commission from cash flows generated by the products and services sold.

There are a lot of advantages in this model for entrepreneurs. Entrepreneurs get to keep their independence in running the companies, but at the same time receive the smart money advice from the people running the fund. Mediatonic won’t even take a board seat for the investments.

At the moment the company invests in Finland only. Industries considered in this phase mainly include games as well as different kinds of media companies. They plan to increase their fund size after 2-3 years considerably as well as possibly increase the geographical and industrial focus. While the fund is only 5 million euros in size, it represents a fund of approximately 10 to 15 million euros due to its rapid turnover.

Tanu-Matti Tuominen told us that they have been analysing the investment industry a lot and from many different angles. These view points were the biggest motivators in setting up the company. They want to see companies create more value with their products. One of the issues for example, according to Mediatonic, is that in 2008 the game industry generated revenues of 89 million euros in Finland. According to the amount of sales it should have been about 350 million euros.

My take is that this fund will be very attractive for entrepreneurs due to its nature of not taking a slice of the company. I’m sure they will see a lot of deal flow even though they are focusing in a small niche at this time. Should you be interested in the fund, you can contact the company through their website.

Image by TW Collins

Update (March 8th, 2010 at 4.50pm): The fund is actually 2.5 million euros in size at the moment and Mediatonic is looking to double that so it will be 5 million euros by summer 2010.