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Wednesday, October 5, 2022

Is the Finnish PE & VC Market really affected by the Russian invasion of Ukraine ?

Since the Russia-Ukraine war has intensified, there has been a concern on the agenda of the grapevine: Is the war adversely affecting Finnish investors and entrepreneurs? According to the Finnish PE & VC Market Pulse Survey conducted by Tesi (Finnish Industry Investment) and FVCA (Finnish Venture Capital Association) between  11 and 18 March 2022,  the answer is “not directly”.

The survey contained 9 questions and was answered by 33 Finnish PE & VC investors to see the impact on the investment activity based upon the data gathered from the participants’ answers compared to the previous COVID-related surveys. It is simply a general evaluation of the initial effects on the Finnish PE and VC firms and their portfolio companies caused by Russia’s invasion of Ukraine.

Results from the Finnish PE & VC Market Pulse Survey

  • Russia’s attack on Ukraine has not directly affected the major part of the Finnish PE/VC firms or their portfolio companies
  • At this stage it is estimated that the exit market for portfolio companies and fundraising situation for PE/VC firms have deteriorated
  • The fundraising market // Investors who are currently raising funds have observed deterioration in the demand within fund investors

Finnish PE/VC firms have rather clear picture of the impact of Russia’s attack to Ukraine to the portfolio companies. About 80 percent of the Finnish private equity companies report that less than 20 percent of the portfolio companies have Russian or Ukrainian personnel. About 80 percent of the portfolio companies do not experience significant harm in their business activities from the Russia’s attack to Ukraine. Further financing of the portfolio companies has remained unchanged, but some challenges have been arising in the venture capital and growth segments.

About 80 percent of the respondents experiences deterioration in the exit market. The deterioration is foreseen to be more evident in the growth and buyout segment. The respondents also expect challenges in fundraising. About 40 percent of the respondents foresee that the fundraising market has become challenging within the Finnish LP community and about 60 percent fooresee the same in international LP community. The challenging outlook in the fundraising concerns particularly venture-investors.

Currently, approximately 60 percent of the investors who are raising funds experience deteriorated demand within Finnish LP community and 80 percent within the international LP community according to the Finnish PE & VC Market Pulse Survey.

Finnish PE & VC Market Pulse Survey: No Significant Affiliations with Russia for Finnish Startups and Growth Companies

Finnish private equity and venture capital investors have good outlook of the impact the Ukraine crisis has had on their target companies. Startups and growth companies possess good conditions for business and capacity for follow-on financing, and no country risk specifically concerning Finland emerged in the investors’ assessments. However, fundraising by funds and development of exit market raise concern.

Private equity and venture capital (PE & VC) investors have been prompt and thorough in charting the situation their target companies are facing. The affiliations the target companies and PE & VC funds have with Russia and Ukraine are insignificant at most, and majority assess the ones existing have only a little impact. On the other hand, future fundraising by new funds raises concern as the economic uncertainty increases.

Finnish PE & VC Market, FVCA, Pia Santavirta”Contrary to the common beliefs in Europe and in the rest of the world, Finnish PE & VC investors, as well as startups and growth companies, possess very little affiliations with Russia. This is an important fact to emphasise to prevent unnecessary negative impact on how Finland attracts capital and skilled workforce. At the moment, it seems the availability of funding for Finnish startups and growth companies remains at a desirable level despite the global situation being what it is,” states Pia Santavirta, Managing Director of FVCA.


Finnish PE & VC Market, Tesi, Matias Kaila”As a fund investor, it’s relieving to witness how fast Finnish PE & VC investors have adapted to the challenging situation. The impact of the Ukraine crisis on the businesses of target companies has been minute,” assesses Matias Kaila, Director of fund investments at Tesi.

Tesi (Finnish Industry Investment) and FVCA (Finnish Venture Capital Association) cooperated in collecting views that Finnish PE & VC investors have about the impact of the Russian invasion of Ukraine. Conducted between 11 – 18 March 2022 and sent to the members of FVCA, the market pulse survey was answered by 33 Finnish PE & VC investors. The charted outlook will be updated and specified should a need emerge.

Further information

FVCA (Finnish Venture Capital Association) is the industry body and public policy advocate for the venture capital and private equity industry in Finland. As the voice of the Finnish VC and PE community and the entrepreneurs they fund, it is our role to demonstrate the positive impact of the industry on the Finnish economy. FVCA – Building growth.

Tesi (Finnish Industry Investment Ltd) is a state-owned investment company that wants to raise Finland to the front ranks of transformative economic growth by investing in funds and directly in companies. We invest profitably and responsibly, together with co-investors, to create the world’s new success stories. Our investments under management total 2.4 billion euros.

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Nurcin Metingil
Nurcin Metingil
A permanent student, a passionate first reader and nowadays doing master’s degree in Publishing Management. Beside these, I am up for games! I have been playing games since I was 6. Now, I am whispering "Business. Business. Numbers. Is this working?"

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