enters new phase
in over 60 companies
experience put to good use
F I N N I S H I N D U S T R Y I N V E S T M E N T LT D ’ S S T A K E H O L D E R M A G A Z I N E 1 / 2 0 0 6
seed capital investor
Finnish Industry Investment Ltd’s mission is to promote the growth of
Finnish businesses. As a government-owned investor FII plays a supple-
mentary role in ﬁnancial markets. Investments are focused especially on
projects or ﬁelds in which business growth can be achieved and in which
private investors do not provide adequate risk capital.
Seed ﬁnancing volumes have started to increase in Finland. The govern-
ment’s contribution to this growth has been signiﬁcant because investments
have already been made in more than 60 seed-stage companies through
FII’s EUR 50 million Seed Financing Programme. The driving force for
each project is a private investor, who invests at least half of the capital and
is responsible for developing the business.
FII expands the supply of risk capital also to growth-stage companies.
We further aim to enhance the venture capital market by boosting our
investments in new Venture Capital funds.
Here we highlight some recipient companies, such as Rotatek – which
makes wind power generators – and the pharmaceuticals development
company Ipsat Therapies. Take a look also at the ideas that Managing
Director Elmar Paananen, our co-investor, presents about the chal-
lenges of acting as a business angel.
One of our main aims is to improve our communications. In our new
stakeholder magazine we tell you even more about our business. We
hope you enjoy reading it.
Photo: Kari Ylitalo
PUBLISHED BY FINNISH INDUSTRY INVESTMENT LTD, KALEVANKATU 9 A, P.O. BOX 685, FI-00101
HELSINKI, FINLAND, TEL. +358-9-6803680, FAX +358-9-6121680, FIRSTNAME.SURNAME@INDUSTRYINVESTMENT.COM | EDITORS-IN-CHIEF
JUHA MARJOSOLA, ASTA SJÖBLOM | PUBLISHER SANOMA MAGAZINES FINLAND CORP., CUSTOM PUBLISHING, WWW.SANOMAMAGAZINES.FI
EDITORIAL STAFF ANU VIRNES-KARJALAINEN, HANNU VIRTANEN | TRANSLATION PETER SALTER, JOHN ARNOLD | LAYOUT HANNE HUOTARI
PRINTED BY LAAKAPAINO 2006 | ISSN 1796-0266 | ADDRESS CHANGES TESI@TEOLLISUUSSIJOITUS.FI
2 Industry Investment 1/2006
4–5 INVESTORS STIMULATE GROWTH
Rotatek supplies large orders
6–7 A BUSINESS ANGEL PROVIDES
MONEY AND EXPERTISE
Managing Director Elmar Paananen
8–11 SEED INVESTMENTS
IN OVER 60 COMPANIES
12–13 BIOTECH COMPANY’S PROMISES
Ipsat Therapies is testing
its ﬁrst pharmaceutical this summer
14 ORE RESERVES ATTRACT
Senior Advisor Tuomo Mäkelä
analyses the mining boom
15 WORLDWIDE DEMAND FOR
Intune Circuits opened a plant in Finland
16 USA AND FINLAND
8 PLAY DIFFERENT GAMES
Professor William Paulin knows with tactics
17 FRESH IMPETUS FOR EARLY-STAGE
Director Anu Nokso-Koivisto
Investment Manager, FII
Industry Investment 1/2006 3
Text: Hannu Virtanen | Photos: Juha Salminen and Rotatek
Hollming Works, an expert in machine construction services,
assembles Rotatek’s wind power generators in Loviisa.
Rotatek Finland Ltd – producer Rotatek aims to generate ScanWind AS, one of the leading sup-
EUR 8 million turnover pliers of direct-driven wind turbines.”
of wind power generators, special this year, compared to Wind power plants are rapidly
electric motors and high-speed EUR 2.8 million in 2005 spreading throughout the world. The
and 1.2 million in 2004. European Wind Energy Association
motors – strongly believes the CEO Jukka-Pekka Mäkinen expects (EWEA) forecasts that wind-generated
company will grow. the company to break even. Next year electricity will grow by at least 80,000
the company should start posting megawatts during 2007–2012. This
So do investors. a proﬁt. could mean from 3,300 to 6,600 new
“Growth in turnover is derived 3 MW wind power turbines each year.
mainly from wind power generators, The EWEA calculates that 1,500 new
which account for about 80-85% 1-3 MW wind power plants will be
of our current business. We have installed in Norway and Sweden alone
collaborated closely with Norwegian by 2010.
4 Industry Investment 1/2006
high-speed motor is a component of global markets. In my opinion at least,
a larger delivery. public money invested in businesses is
“The close cooperation in our net- money well spent.”
work has also pleased our customers. Rotatek was born in Lappeenranta
Our products are designed, dimen- University of Technology ten years ago.
sioned and tailored for speciﬁc sites. The University had gained experience
Solutions are analysed in collaboration and won a reputation as a developer
with the customer and we have a solid of the properties and eﬃciency of
pool of talent to oﬀer.” high-speed electric motors. Rotatek
was established to commercialise and
BUSINESS BACKGROUND industrialise these innovations. The
IMPORTANT company has maintained a strong
Finnish Industry Investment (FII) is relationship with the university.
sharing Rotatek’s success through the “Capital has been used mainly
Seed Financing Programme. Rotatek for R&D, because that helps create
raised EUR 2 million of new capital opportunities for the company to
in 2004. FII invested EUR 600,000, succeed and it must have suﬃcient
and Power Fund I, a specialised fund capital.”
for private investors of venture capital Rotatek’s advanced high-speed
and now the biggest owner of Rotatek, motors have proven to be eﬃcient and
supplied the remainder. reliable. The company has received
In Mäkinen’s opinion, FII’s role several technology awards, including
as a co-investor not only strengthens the InnoFinland award in 1997 and
Rotatek’s ﬁnancial position but also the New Technology Award in 1999.
boosts the company’s business credi-
bility among partners and customers.
“Good technical inventions do not www.rotatek.ﬁ
themselves win sales. The commercial
business must be run professionally
and the business background must be
sound. Apart from ﬁnancial solidity,
the bottlenecks for a rapidly growing
small company are often credibility
and adopting a long-term approach.”
Mäkinen considers FII’s role as an
Last year a consortium formed by investor important, especially for early-
Rotatek Finland Ltd, Verteco Ltd and stage companies. FII oﬀers ideas and
Vaasa Engineering Ltd agreed on the know-how for business development, Wind power plants
supply of electrical systems to Norway as well as capital.
for ScanWind AS’s four 3.5 MW wind “In Finland there are very few inves-
are rapidly spreading
turbines. The volume of orders this tors willing to take a risk and contrib- throughout the world
year enables the start of actual mass ute enough to early-stage companies.
production. Big follow-on orders were Many investors want proof of business
received after the consortium earlier success before investing venture capital
supplied two similar systems. in a company.”
Rotatek has around 10 employees, “This can be turned around. Rotatek
mainly in R&D and logistics, while is a hi-tech company that has started to
subcontractors manufacture the prod- grow rapidly and could well generate
ucts. Usually Rotatek’s generator or tens of millions of euros turnover in
Industry Investment 1/2006 5
Text: Jorma T. Mattila | Photos: Juha Salminen
In Elmar Paananen’s opinion, an entrepreneur acting as a business angel must ﬁrst ensure
that his/her own company is performing well, because it normally yields the best returns.
A business angel
provides money and expertise
Many companies obtain ﬁnancing lmar Paananen, Managing leader or ownership team with a human
Director of Troll Capital face, to which the angel investor oﬀers
and other aid from business angels in Ltd, who since the 1980s not only money but also personal expe-
has represented the second rience and practical expertise.”
their early stages or when facing new generation of a family-run Paananen does not believe that a
challenges. Who are these angels, why business that acts as a business angel purely monetary investment without
while also managing his own busi- the input of expertise meets these crite-
do they invest in companies and what ness and investments, has given much ria. The many thousands of people who
thought to how to deﬁne business have invested money in a company
kind of sums are we talking about? angel investment. they know, but without participating
“It’s a minority investment in a in the company’s activities at all, thus
business or project that has an owner, fall outside the deﬁnition.
6 Industry Investment 1/2006
Similarly, professional investors, The size of angel investments
who invest money in developing com- varies greatly, ranging from EUR investment without the
panies for a living – generally in minor-
ity interests – cannot contribute their
10,000 to several millions in extreme
cases. Many business angels make
input of expertise is not
own expertise in addition to money, multiple investments, none of which business angel investment
especially if the recipient company is exceeds EUR 100,000.
small. “Angel investments of over 1 million
“If they gave 3 months of their time euros are rare, because then it is usually
to a EUR 100,000 investment, the a majority investment and a business
salary costs would quickly eat up all the enterprise.”
return on their investment.”
A business angel’s prime motive INITIATIVES
is not necessarily maximising the
return. In Paananen’s view it is more that In theory, business angels can invest in as a co-investor
acting as a business angel is an inter- companies at any stage of their devel-
esting, exciting and rewarding way of
“When you meet entrepreneurs
opment, but Paananen says the target
is typically a company in the starting
or founding stage.
F II co-invests with private investors. These include
venture capital companies, institutional investors
such as pension insurance companies, and business
or investment teams you always learn “It might, however, be a company angels – ie, experienced entrepreneurs and other
something new, and that very much that is growing, internationalising or private individuals who want to invest in growth
enhances your own expertise.” entering a new market, or a company companies.
in any situation where both capital and
When selecting investment targets
some expertise that the company lacks
Often the initiative for angel
I n addition to ﬁnancial support, private
co-investors are expected to be interested and
willing to actively participate in the recipient
a business angel considers several investment comes from the company company’s business development.
aspects: whether he/she genuinely or project that needs ﬁnancing. There
ﬁnds it an interesting business, has
the expertise that it needs, can give
it suﬃcient time, and gets along well
are also angels who actively seek
investment targets through various
C o-investing raises more capital for the target
company, integrates private equity investors’
knowledge and spreads the risks.
with the entrepreneur. Almost all the Paananen family’s
Naturally the expected return on
the investment is important, and in
the best cases investments can be very
angel investments have focused on
the projects of an acquaintance or the
friend of an acquaintance. Paananen
F II invests no more than half of the capital
In Paananen’s opinion, business
angels are typically active players
explains they have often responded
when ﬁrst asked to just discuss and see
how an acquaintance’s company can be
F II is a patient investor.
in their own ﬁeld of business, and
have often left their full-time jobs.
They have generally created their
helped. This is how involvement with
Eimo-Muovi Ltd’s business started.
Eimo became wholly owned by
I nvestment activities are business-oriented:
an investment is of deﬁnite duration and has an exit
plan for within a few years when the company’s value
investment capital by running a Paananen, and during his ownership has increased.
successful business or by selling their turnover grew from the original EUR
own company. Some, however, invest
inherited capital or capital obtained
by exercising job-related share
6 million to EUR 250 million before
it was sold in 2003 to the Taiwanese
T arget companies for investment are identiﬁed
through FII’s extensive network of contacts.
Also FII’s high proﬁle attracts companies directly.
options. Troll Capital’s main industrial busi-
The number of business angels in ness is Peikko Group, which manu-
Finland depends on the deﬁnition. If factures fastening products for the
the criterion is at least one investment construction industry, but the Paananen
of EUR 50,000 or more, to which family holds a majority share in many its activities. Currently Troll Capital is
the investor adds his/her expertise, other companies. Troll Capital is also an angel investor in Market Media Ltd
Paananen estimates the ﬁgure to be an active investor, and business angel Finland, in which Industry Investment
between 300 and 1,000. investments form only a small part of is a co-investor.
Industry Investment 1/2006 7
Photos: from companies and Jyrki Komulainen
in over 60 companies
Finnish Industry Investment Ltd is Finland’s leading
seed capital investor in terms of both euros and
number of investments. In two years, investments
have been made in over 60 seed-stage companies
through the company’s EUR 50 million Seed
n the Seed Financing Pro- 50,000 to EUR 1 million.
gramme Finnish Industry In- Investee companies need capital
vestment co-invests in Finnish especially to complete product
early-stage growth companies development, enter a market and build
together with capital invest- distribution channels. FII´s invest-
ment funds and business angels – ie, ments are divided among numerous
experienced entrepreneurs and busi- sectors and regions all over Finland:
ness managers. some 30% in the Helsinki metro-
FII’s ﬁrst-round investment in a politan area and the remainder spread Iqua Ltd’s combined Bluetooth
recipient company ranges from EUR widely across the country. handsfree and corporate badge holder.
Linseed Protein Upstream Engineering
8 Industry Investment 1/2006
AIDON LTD (Jyväskylä) develops open energy-metering and Automatic Meter ELLIBS LTD (Turku) specialises in selling and lending e-books. The system
Reading systems for energy companies and service providers. www.aidon.ﬁ enables publishers, libraries and companies to efﬁciently arrange the
purchasing, selling, and borrowing of e-books and the management of
AJAT LTD (Espoo) manufactures radiation imaging devices for medical and electronic distribution rights. www.ellibs.ﬁ
industrial applications. www.ajat.ﬁ
EMILLION LTD‘s (Espoo) identity management products allow network users to
ASAN SECURITY TECHNOLOGIES LTD (Espoo) develops web-operated visual log in securely without separate usernames and passwords.
surveillance solutions for parking facilities, ports, airports, cruise ships and www.emillion.ﬁ
industrial facilities. www.asansecurity.com
EPICRYSTALS INC. (Tampere) produces optoelectronic devices and silicon
ASPENSEC LTD (Oulunsalo) develops smart spark detection and extinguishing wafers for industrial, telecommunications and medical applications. The
systems for premises where dust poses an explosion risk, such as in the wood company specialises in laser diodes. www.epicrystals.com
processing, food, textile and paper industries.
www.aspensec.com EXESSION GROUP LTD ’s (Espoo) main product is a solution integrating
investor communications and investment analysis processes for the
AXEL TECHNOLOGIES LTD (Turku) is a software company that specialises international equities markets.
in digital TV technologies. Tickets for events can be booked and paid for
via digital TV, and infoscreens are updated on buses with real-time trafﬁc EXIFORMAT LTD (Espoo) produces interactive digital exhibition systems that
information and news. www.axel.ﬁ combine a large display screen with visitors’ mobile terminals. Viewers can
move around in the virtual exhibition and leave a personal message there.
BOOKIT LTD (Espoo) offers intelligent SMS technology and easy-to-use two- www.exiformat.ﬁ
way mobile services that can be used globally in GSM phones.
www.bookit.ﬁ FRWD TECHNOLOGIES LTD (Oulu) develops and markets sports computers that
save sporting performance parameters such as speed, distance, pulse rate,
BUILDERCOM LTD (Jyväskylä) provides information management ASP services route and height. www.frwd.com
for the construction and real estate maintenance industries.
www.buildercom.ﬁ GENESTIA GROUP INC’s (Turku) document management systems link in-depth
external information sources with a user’s ﬁle. www.genestia.com
CHIP-MAN TECHNOLOGIES LTD (Tampere) is a life science technology company
producing solutions to automate and quantify living cell biology. GREENVIRONMET LTD (Lahti) specialises in bio-energy and demanding energy
www.chipmantech.ﬁ applications. www.greenvironment.ﬁ
DELSITECH LTD (Turku) specialises in silica-based transplant technology INNOSONIC LTD (Jyväskylä) produces video ringtones that allow record
as well as in the subcutaneous and intra-muscular release of drugs and companies, ﬁlm studios and other content owners to make more money by
biopharmaceuticals. www.delsitech.com using their content as video ringtones. www.innosonic.ﬁ
DIRECT GRANULATION TECHNOLOGY LTD (Mustasaari) produces units for IQUA LTD (Espoo) specialises in exclusively designed accessories for mobile
processing efﬂuent from wastewater processing, and from the pulp & paper phones. www.iqua.com
industry, food industry and agriculture. The end product, grains, is re-used as
fertilizer, nutrient, fodder or as a renewable energy source. JRT PIPE MACHINERY LTD (Vaasa) specialises in solutions for the plastic pipe
www.dgtltd.com manufacturing industry. www.jrt.ﬁ
ECOLANE FINLAND LTD‘s (Helsinki) software for demand-responsive public KENNO TECH LTD (Espoo) manufactures laser-welded, all-metal, sandwich
transport makes it easier to travel even in the rush hour. panels for the construction industry.
WinWind Taipale Telematics
Industry Investment 1/2006 9
FRWD sports computers for sports enthusiasts, athletes Kitworks.ﬁ Ltd’s new product KitWRX is an information tool
and professionals are sold in over 20 countries. FRWD for professionals. KitWRX offers competitive advantages
saves and displays sports performance parameters such to the retail, healthcare and logistics sectors in automated
as speed, distance, pulse rate, route and height. FRWD identiﬁcation and data utilisation tasks.
displays real-time data on a mobile phone.
KITWORKS.FI LTD (Kuhmo) produces advanced information tools for the retail NORDIC KOIVU LTD (Tohmajärvi) applies leading technology to producing
trade. www.kitworks.ﬁ birch sap that is free of additives and preservatives, and conducts R&D into
using birch sap as raw material for the food, drink and cosmetics industries.
KUUSAMA DESIGN LTD (Tampere) designs for the entertainments electronics www.nordickoivu.ﬁ
industry, focusing especially on home theatres and audio-visual equipment.
www.kuusama.com ODOROFF LTD (Turku) eliminates unwanted odours from wastewater pumping
and treatment plants, efﬂuent processing plants, slaughterhouses, food
LANNOX LTD (Helsinki) reﬁnes ash produced by the metal industry, and production facilities, biowaste handling containers and transport vehicles in
heating and power plants to produce soil enrichment and road construction an environmentally friendly way. www.odoroff.ﬁ
OPENBIT LTD (Tampere) produces on-device payment, digital rights
LEMEON MEDIA PRODUCTS LTD (Vaasa) produces content for DVD marketing management and distribution solutions and services for content providers.
media. www.lemeon.ﬁ www.openbit.ﬁ
LIEKKI CORPORATION (Lohja) designs, manufactures and markets optical OPTOGAN LTD (Helsinki) develops high-brightness light-emitting diodes for
ﬁbres and optical engines. www.liekki.com the background lighting of mobile terminals, computer LCD displays, the
automotive industry, trafﬁc lights and for general lighting.
LINSEED PROTEIN FINLAND LTD (Kauhajoki) produces raw materials for the
food industry that are used in functional foods and products with health OPTOMED LTD (Oulu) produces digital imaging systems for eye and ear
beneﬁts. www.linseedprotein.com endoscopy and for microscopic skin analysis.
MAGNASENSE LTD (Jyväskylä) manufactures rapid testing equipment based on
the use of magnetic particles as labels. The methods and sensors the company ORGENIUM LABORATORIES LTD (Helsinki) designs and develops innovative
has developed can be used in, for instance, healthcare and environmental virus diagnostics methods for the healthcare sector.
measurements. www.magnasense.com www.orgenium.com
MANDREL LTD (Tampere) manufactures tools for the metal industry. PANCOMP ELECTRONICS LTD (Oulu) is a specialised applications provider for
www.mandrel.ﬁ wireless and network technologies. www.pancomp.com
MARKET MEDIA LTD FINLAND (Helsinki) builds electronic advertising channels PLUGI LTD (Kuopio) maintains an online photobank and offers photographic
in cooperation with industry and the retail trade. Display screens are already services. www.plugi.ﬁ
deployed in pharmacies, medical clinics and cosmetics stores, and will soon be
placed in restaurants. www.marketmedia.tv PLUSDIAL LTD (Espoo) is a provider of mobile ticketing services for public
MESHCOM TECHNOLOGIES INC. (Helsinki) produces wireless mesh technology
for network equipment vendors. PRIMET LTD (Heinola) provides solutions for the ﬁnal treatment of municipal
www.meshcom.com and industrial efﬂuents. www.primet.ﬁ
10 Industry Investment 1/2006
Nordic Koivu Ltd is the world’s leading producer of birch sap Market Media Ltd has built a national display system for the
and exports 99% of its produce. The company has developed pharmacy distribution network in Finland in just over one
its own automated sap collection and bottling process, which year. The company is building a national restaurant display
enables industrial-scale production. Equity investors provide system and has displays on trial in medical clinics
opportunities for expanding the business. and cosmetics stores.
PROFIMILL LTD (Kotka) is a provider of software solutions for production TARGETOR LTD (Oulu) develops software for strategic planning and
management that enable industrial companies to enhance production implementation. The products save time spent on reporting, give a clearer
efﬁciency, quality assurance and production control. overall view and collect feedback.
ROCKET SCIENCE LTD (Tampere) creates multimedia production tools, UPSTREAM ENGINEERING INC. (Oulu) develops micro-projectors, especially for
entertainment content and games for smartphones. mobile devices. www.upstream.ﬁ
VALIMO WIRELESS LTD (Helsinki) produces software systems enabling user
ROTATEK FINLAND LTD (Lappeenranta) develops, manufactures and markets authentication, mobile-based payment and digital signatures.
wind power generators, special electric motors and high-speed motors. www.valimo.com
VICONSYS LTD (Jyväskylä) produces process control and quality monitoring
SONECO LTD’s (Oulu) devices enable children, the elderly, people with poor solutions for paper, printing, plastics, non-woven and metal production lines.
memory and people working alone to communicate easily, and quickly send www.viconsys.ﬁ
an alarm. www.soneco.ﬁ
VIOPE SOLUTIONS LTD (Lappeenranta) provides e-learning packages and
STOCKWAY LTD’s (Espoo) RFID-based solutions remotely identify and verify solutions for computer programming, which the teacher can tailor for speciﬁc
products, and transmit data about products, packaging and shipments in needs. www.viope.ﬁ
real-time to the product manufacturer, subcontractors, distribution stages and
retail chains. www.stockway.ﬁ VIRTUAL ADVERTISING SYSTEMS VAS LTD (Ristiina) produces Virtual
Billboard Technology (VBR) to replace physical ads with virtual ones in live TV
SUOMEN PUHEENTUNNISTUS LTD’s (Lahti) Finnish-language speech broadcasts. This allows an ad site at, for instance, a sports event to be sold
recognition application replaces the human interface in managing routine several times and enables regional focusing of the message.
customer service calls such as orders and address changes. www.virtualvas.com
VOXPOINT TECHNOLOGIES LTD (Vantaa) develops systems for wireless satellite
SUOMEN TEOLLISUUSOSA LTD (Tampere) produces logistics services and location services and data transfer. www.voxpoint.com
warehousing management systems for industrial customers.
www.steo.ﬁ WINWIND LTD (Oulu) develops and manufactures wind power plants designed
for overall economy.
SUVISOFT LTD (Tampere) provides online services for conference and event www.winwind.ﬁ
management, and for creating contacts. www.suvisoft.ﬁ
ZIPIC LTD (Tampere) designs and manufactures SIP (System in Package)
TAIPALE TELEMATICS LTD (Pirkkala) produces technology innovations for modules and commercial manufacturing methods that drastically reduce
enhancing vehicle safety, economy and ride comfort, such as sensors that the size and weight of a product.
monitor driver attention. www.taipaletelematics.com www.zipic.ﬁ
Industry Investment 1/2006 11
Text: Maarit Seeling | Photos: Juha Salminen and Ipsat Therapies
Helsinki-based company Ipsat Therapies Ltd is testing the effect
of its ﬁrst pharmaceutical in hospital conditions this summer.
This brings it a step closer to commercialising the drug
it has developed.
psat Therapies Therapies is de-
veloping a drug to mitigate the
harmful side eﬀects of antibio-
tics. The eﬃcacy and safety of
the product has already been
proved in tests on healthy people.
“The test stage which started in
the summer will last 6–9 months. We
will test the eﬀects of the pharmaceu-
tical by giving one group of patients
our enzyme with antibiotics and the
antibiotic alone to the other group,
and comparing the results,” says CEO
A broader, international patient
study will be carried out immediately
after the results of the present phase
have been processed, which Kaarela
estimates will be no later than 2008.
It is hoped that a sales licence for the
product will be obtained by the end
of the decade.
“This would mean our ﬁrst product
will be on the market ten years after
the company was started. This is as
fast as drug development gets,” Kaarela
12 Industry Investment 1/2006
A pharmaceutical molecule
begins to make a proﬁt
10–15 years after
In addition to time and expertise, external ﬁnanc-
it takes considerable sums of money to ing is essential to
develop new pharmaceuticals. Kaarela maintain research
estimates the cost of developing a single and development
new drug at EUR 50–500 million. in this ﬁeld.
There has been public criticism of “New medi-
biotech companies’ bottomless need cines must be
for ﬁnancing. Although their basic developed despite
research is excellent by international the ﬁnancial risks.
standards, Finnish companies have not For example,
yet won much success. It is a relatively our drug will be
young ﬁeld. Moreover, a considerable greatly needed if
number of innovative pharmaceuticals bacterial resist-
never make it to the marketplace. Even ance to antibio-
a successful pharmaceutical molecule tics continues to
only begins to make a proﬁt 10–15 increase,” Kaarela Nora Kaarela started as
years after its discovery. explains. Ipsat CEO in February.
EXTERNAL FINANCING pies’ future is se-
IS ESSENTIAL cure for the next few years. In a ﬁnanc- look at whether public investors have
It is therefore hardly surprising that ing round last winter, it collected nine taken part in the business’s seed stage.
some private equity investors have million euros. Industry Investment It’s a guarantee that the company has
lost faith. Early-stage investors have committed itself to an investment of passed through at least one screen. FII’s
begun to trim their deployment in two million euros. presence also wins the trust of foreign
biotech companies. Similarly, there “This work cannot be done with- investors.”
are relatively few growth-stage private out external ﬁnancing. International
equity investors in Finland. However, growth-stage investors take a keen www.ipsat-ther.com
Industry Investment 1/2006 13
Text: Jukka-Pekka Järventaus | Photo: Lehtikuva
The ore reserves in Finnish bedrock are attracting foreign mining companies.
According to Tuomo Mäkelä, FII’s Senior Advisor for Mining, open competition
will continue well into the future.
fter some thirty years Sweden there is a great deal of ﬁnanc-
of working as a mining ing of mining operations. There, back-
specialist in six coun-
tries in three conti-
ers who understand the business get in
on mining projects. Active investors
FII responds to
nents, Tuomo Mäkelä
sees many background factors to the
are attracted by the sector. They know
that you have to study the market
the mining boom
mining boom. situation for minerals and metals and International interest in Finland’s ore reserves per-
“Raw-material prices are at a his- understand the project development suaded Industry Investment to start up a special mine
torical high. Demand for raw materials chain. People who know their stuﬀ ﬁnancing programme. The company has earmarked
in China and many other markets is can make a return on investment that EUR 20 million for investment in exploration and min-
growing sharply and supply is unable clearly outperforms what is normally ing companies operating in Finland. FII operates as
to keep up. Demand and production considered good by both private equity co-investor with Finnish and foreign investors.
are out of balance because the develop- investors and players operating on the In May, FII invested EUR 1.5 million in the Australian
ment of mining has been neglected in listed market.” mining company Vulcan Resources Limited. All of its
the past ten years and there hasn’t been “Financing for mining companies projects are in Finland, the most important of these
enough exploration. The background and projects can be broken up into being the Kylylahti multiple ore deposits in North
to foreign companies’ interest in Fin- parts. In the initial stage – exploration Karelia. The main metal of the Kylylahti deposits is
land is that we have ﬁrst-class research and research – the ﬁnancial backers are copper, but the greatest hopes are for cobalt.
data on the bedrock and because of the usually diﬀerent parties to those in the Parties interested in co-investment may con-
low number of players earlier, ore re- actual mining start-up phase. Financ- tact FII’s Senior Advisor for Mining Tuomo
serves are believed to be underused.” ing takes places in steps, starting from Mäkelä: firstname.lastname@example.org
Investing in mining is a risky and project development, typically for or tel. +358 40 540 0620.
long-term business. Finnish ﬁnancing periods of one or two years. Companies
institutions have not so far been in- in the sector are increasingly frequently
terested in participation in ﬁnancing on the stock exchange even in the re-
for projects. search stage. As the projects progress, portant minerals have increased mani-
Tuomo Mäkelä sees it as a clear both project- and company-speciﬁc fold recently. This in turn has boosted
shortcoming that Finland has no tra- sales are typical, as are reorganisations mining companies’ share prices and
ditions of ﬁnancing this sector. permitting the exit of other investors. opened up opportunities for returns
“In Canada, Australia, the London “Returns from mining are looking on investment in both the short and
Stock Exchange and to some extent in competitive as prices for the most im- the long term.”
14 Industry Investment 1/2006
Text: Jukka-Pekka Järventaus | Photos: Juha Salminen and Intune Circuits
for remote identiﬁcation
“There has not been a global player focusing
on manufacturing antennas for remote
identiﬁcation. We aim to ﬁll this gap,” as Intune
Circuits Ltd’s CEO Matti Karjanlahti explains the
need for the plant opened in Vantaa this April.
FID (radio frequency to support its existing production which opens up new markets glo-
identiﬁcation) techno- of UPM Raﬂatac remote tags. bally.
logy is used, in addition Outokumpu had world-class exper- Heikki Malinen, the chairman of
to bar codes, for remote tise in metals. Combining these yields Intune Circuits‘ Board of Directors,
identiﬁcation in indust- advantages which are harnessed at is pleased that FII was found as an
rial and commercial delivery chains Intune’s production plant,” says Matti investor for the business start-up.
to ensure the product’s authenticity, Karjanlahti. “In spite of good omens, this is a
to store product information and to It is unusual today to locate a plant very early-stage business with many
monitor deliveries. in Finland and inside Helsinki Ring risks. It will be years before success can
In order to work, a remotely read Road III when the aim is to keep costs be judged. So it’s a good thing that
code – usually a label – needs a micro- down. However, Karjanlahti says there there are several parties sharing the
chip and an antenna. Microchips are were good grounds for locating in Fin- business risk.”
made by big international semicon- land.
ductor manufacturers like Philips and “UPM and Outokumpu have their www.intune.ﬁ
Texas Instruments, but before Intune, know-how in Finland. We also have a
no company concentrated on making highly automated production process.
RFID antennas. The future trend depends largely on
The history of Intune Circuits, the customers. We are able to make
which is jointly owned by UPM, a billion antennas a year in Vantaa to
Outokumpu Technology and Finnish begin with, but with small
Industry Investment, began in 2002 readjustments we can
when UPM approached Outokumpu boost annual output
on the development of a new antenna- to three billion.”
manufacturing technology. It was not The main mar-
long before Outokumpu’s research kets for RFID an-
centre was able to demonstrate its tennas are the US,
groundbreaking idea for a technique Europe and Asia.
for manufacturing copper conductor Director Kimmo
patterns. Viertola of FII sees
“UPM had a need to get high- Intune as an example
quality, customised antennas for RFID of high-tech production
Industry Investment 1/2006 15
Text: Jorma T. Mattila | Photo: Juha Salminen
USA and Finland
play diﬀerent games
dozen Finnish companies into the US Paulin sees the understanding, ac-
market, worked with Finnish venture ceptance and harnessing of the risk
investors, Tekes and Sitra, and served capital curve as the diﬀerence explain-
as visiting professor at the University ing the results of seed ﬁnancing in Fin-
of Oulu. land and the US.
“Great work has been done in The risk capital investment cycle
Finland on starting high-tech compa- is like an exaggerated version of the
nies, but their ﬁnancing has not been normal business cycle. At ﬁrst you
handled equally well,” he notes. identify the opportunities, then you
In particular, there is a shortage in climb to the peak of overblown ex-
Finland of private seed ﬁnancing in the pectation, then slide down rapidly
early stage, whereas in the US there is shedding illusions, and then you start
considerably greater investment in this. all over again.
Also, the sums in seed ﬁnancing are “I’ve been through this cycle
smaller in Finland, somewhere around ﬁve times. In Finland it’s been gone
half a million euros. In the US, the through maybe once, so how could it
ballpark is 3–6 million dollars. be recognised here?” Paulin says.
As much as 85 per cent of seed According to him, smart Ameri-
Doctor William Paulin believes ﬁnancing in Finland comes from the can risk investors make placements in
state, while in the US its main sources start-up companies even in the trough
that proﬁts could be made are private individuals and private eq- because they know there will be
uity companies. another upswing. In Finland, by
with seed ﬁnancing in Finland “Your early-stage companies may contrast, the tendency is to wait for
if the game were played the same way not get a big enough share of the mar- the upswing to get underway before
ket to win. It’s therefore logical not to investments are made in early-stage
there as in the United States. invest in seed-stage companies, because companies.
you lose money that way. Or is it?” “You have to have faith in the cycle
Paulin says provocatively. and invest a little early, in the trough of
illiam Paulin, the downswing,” Paulin advises.
who has piloted FORECAST THE RISK In the US, the possibility of truly
early-stage Amer- CAPITAL CYCLE large returns are thought of ﬁrst, larger
ican companies, Paulin thinks there is no particular investments are placed and bigger risks
and has served reason why Finland should lose and are taken. Eﬀorts are made to avoid
as a senior director of some Fortune America gain money. It’s just a question losses, but loss is accepted.
100 corporations and been professor of what game you are really playing. Because of the larger investments,
of Business Administration at four US “As practical people who are able early-stage companies in America are
universities, is also very familiar with to change, Finns could learn to play also able to hire seasoned senior-level
the Finnish corporate community and their own version of the American- management. Also, legislation protects
venture investment market. style game in which you can make a lot managers’ homes and personal prop-
Since 1993 Paulin has visited Fin- of money and early-stage companies erty against losses in case of bankrupt-
land roughly 60 times, piloted over a can thrive.” cies, unlike in Finland.
16 Industry Investment 1/2006
Text: Hannu Virtanen and Anu Virnes-Karjalainen | Photos: Juha Salminen
Fresh impetus for corporate development
Business incubators and the corporate ups has been markedly increased. because ﬁnancing was not available.
development companies that operate For example, a person thinking of In areas in which there were active
in them are the ﬁrst growth environ- starting a business can spend a few private early-stage risk investors, all
ments for skills-based companies. The months with a preliminary assessing incubator companies which needed
aim of the Development Programme incubator to assess the chances of it received ﬁnancing. The problem is
for Business Incubators (Yrke), coor- building a company on his or her busi- that private money is not available in
dinated by the Finnish National Fund ness idea and carrying out the neces- all areas and this is why some projects
for Research and Development (Sitra), sary studies of things like markets and are left without ﬁnance in these
is to respond to the challenges of inter- copyright issues. areas.
nationalising companies, to boost the Another example is the planned On the Board of Di-
number of start-ups and to improve Born Global project, in which the rectors of the fund es-
their ﬁnance-worthiness. most promising corporate patterns in tablished for FII’s seed
The project is carried out in part- each locality are identiﬁed, groomed ﬁnancing programme,
nership with the Ministry of Trade and for the international market and as- we consciously take a
Industry, Tekes, Regional Labour and sisted into the target area. controlled risk because
Business Centres, and regional parties this is the role of a public
such as cities and local authorities. WHAT IS THE BIGGEST player. FII always works togeth-
Director Anu Nokso-Koivisto of CHALLENGE FOR THE PROJECT? er with private investors
Sitra chairs the steering group for the Developing a long-term ﬁnancing as a co-investor. This
Yrke project. She also serves on the model: the incubator business has sur- fosters certainty
Board of Directors for Industry Invest- vived on short-term project ﬁnancing. about the project’s
ment’s Start Fund I Ky, which invests credibility and its
in start-ups. HOW WELL DOES SEED opportunities for
FINANCING MATCH UP success.
WHAT ARE THE RESULTS OF TO ITS INTENTIONS?
THE YRKE PROJECT SO FAR? About 10–15 per cent of the companies www.sitra.ﬁ
Practices have been polished and in the seed stage were not established
standardised and the number of start- or there was a delay in the start-up
Kari Ståhlberg appointed
Kari Ståhlberg, M.Sc., CEFA, started dent, Mergers & Acquisitions in
as FII’s Investment Manager in June. London. His move to Finland was
He works on the team making capital pleasing.
investments in growth companies, “My new job is more varied.
both directly and through funds. FII’s contacts with the business com-
“It’s my job to assess attractive com- munity in Finland are very broad
panies as investments, to prepare pro- and the ﬁeld of capital investment is
posals for investment decisions and to interesting.”
take part in monitoring and developing He does not expect to run into
the target companies. The preparation cultural diﬀerences. “The processes
and administration of investments in and ground rules are no doubt the
funds is also my job.” same here as in other parts of Europe.
Before coming to FII, Ståhlberg I see my new job as an interesting op-
worked for JP Capital as Vice Presi- portunity.”
Industry Investment 1/2006 17
Growth is a sign of health.
Growth sparks a positive Venture capital fund
cycle with which the company
maintains its vigour, ﬂexibility
and attractiveness to stakehold- technology companies
ers. Growth is a virtue in itself,
which every company and Conor Venture Partners has set up a venture
manager should aim for. capital fund to invest in early-stage technology
companies. Its size in the foundation stage is
Frank Korsström EUR 16 million.
President of Accenture The fund has been invested in by Finnish
Talouselämä 9/2006 Industry Investment, Etera Mutual Pension In-
surance Company and Atine Group and its im-
mediate circle. “By investing half of the capital
Getting rich or even aiming for the fund’s ﬁrst closing, we aimed to ensure
for it is by no means always the First-round investment the fund’s start-up,” says FII’s Managing Director
main motivation for an entre- Juha Marjosola. “The important thing for FII is
preneur. The majority of en-
in eliminating to increase the supply of risk ﬁnancing for seed-
trepreneurs are in the lifestyle
entrepreneurs group for whom
problem odours stage companies.”
Conor Technology Fund I Ky will be closed in
entrepreneurship is all about Finnish Industry Investment Ltd and a number 2006 and its targeted size is EUR 50 million. The
independence, freedom, a of private business angels have made ﬁrst- typical size of a ﬁrst-round investment is EUR
chance to do meaningful work round investment totalling EUR 250,000 in 0.5–1 million. www.conor.vc
and to employ themselves. OdorOff Ltd, a company which has developed
a method for removing problem odours.
Elina Varamäki, There is a global market for odour absorp-
D.Sc. (Econ. & Bus. Adm.) tion reactors: the warmer the climate, the more Henri Grundstén
Taloussanomat 11.4.2006 active bacteria are and the more bio wastes
smell. Applications include waterworks, the
joins FVCA’s Board
food industry, and retailers with waste storage Matti Turunen of Eqvitec Partners has been
The transparency that belongs facilities. elected chairman of the Board of Direc-
to good governance, a clear divi- The idea is based on chemical absorption, tors for 2006 at the Finnish Venture Capital
sion of work between different in which malodorous air is piped through a Association (FVCA). The other Board members
institutions and improving the reactor. The solution in the reactor binds the elected were Henri Grundstén of Industry
efﬁciency of board work are also odours, removing them from the air. Investment, Risto Jalonen of Aboa Venture
important in unlisted companies. “Eliminating problem odours is an efﬁcient Management, Annareetta Lumme-Timonen
Transparency boosts conﬁdence way to increase amenity value in cities and im- of 3i Finland, Erkki Pekkarinen of Bio Fund
in the company’s business. prove job satisfaction and the public image for Management, Kari Rytkönen of MB Rahastot
companies,” says OdorOff’s Managing Director and Heikki Westerlund of CapMan Capital
Leena Linnainmaa, Pentti Tuokko. www.odoroff.ﬁ Management.
Senior Deputy Director of the
Central Chamber of Commerce
Instant test sets for health care
and environmental measurements
On the basis of GDP per head,
Finland still places 15th or 16th Industry Investment and Midinvest Manage- to carry out immunological testing for heart at-
worldwide. Investment has ment have made a seed investment totalling tacks, inﬂammations, cancer and infections. The
been the same since the 1980s. EUR 150,000 in a company manufacturing instant company’s customers are health-care diagnostic
As a society, Finland is clearly testing equipment for health care and environ- test manufacturers.
underperforming in terms of its mental measurements, Magnasense Ltd. “The capital investment makes it possible to
potential economic opportuni- Magnasense’s products are based on using make a fresh prototype,” says CEO Mika Laitinen.
ties.” magnetic properties to measure concentrations “This will be exploited at least in Europe and maybe
in samples of human tears, blood, saliva and America. We already have a contract in Finland and
Leader, Kauppalehti, 12.5.2006 urine. An instant test instrument can be used more are on the way.” www.magnasense.ﬁ
18 Industry Investment 1/2006
Targeted virtual ads on television
Virtual Advertising Systems VAS Ltd’s technology permits the production
of virtual advertisements in a direct TV broadcast. Capital investment from
Conor Venture Partners and Industry Investment is being used to make this
technology commercially viable and to announce this on the international
market before the end of the year.
The VAS method replaces existing ads in a direct broadcast. This means
that a physical advertising spot – such as a banner at a football ﬁeld – could
be sold several times over to target the advertising message regionally.
Photo: Pekka Ala-Aho / Kaleva
for health-care imaging Spark-detector system
Optomed Ltd is developing a new imaging instrument for basic health care
and technology for medical imaging for equipment manufacturers. The aim
improves ﬁre safety
is to go direct to the international market with the instrument, which is for Aspensec Ltd develops intelligent spark-detector and ex-
digital imaging of eyes and ears. The company already has partners in the tinguishing systems for facilities with a dust-explosion risk.
USA, continental Europe and China as well as links with the top equipment Industry Investment and Teknoventure have made a ﬁrst-
makers in the ﬁeld. round investment in the company.
“Using this instrument, a doctor can more conveniently verify and docu- “In addition to their technical qualities, Aspensec’s
ment a patient’s symptoms immediately after the preliminary diagnosis. systems are also highly competitive with foreign ones in
This also improves quality, traceability and patient security,” says Optomed’s terms of price. This enables also small companies to protect
Managing Director Seppo Kopsala. www.optomed.ﬁ themselves against ﬁres and explosions,” says Aspensec’s
Managing Director Lasse Ravaska.
EU regulations require every company dealing with
mixtures of air and dust to chart its ﬁre and explosion
risks by June this year and to take adequate precautions.
Networked video surveillance
ASAN Security Technologies Ltd, which develops digital
integrated visual surveillance systems, concentrates on intel-
ligent security solutions for networked video surveillance.
Top design Typical applications include indoor car parks, harbours,
for wireless communication airports, luxury cruise liners, corporate ofﬁce buildings and
Industry Investment and Eqvitec have invested a total of EUR 2.5 million in FII and Atine Group and its immediate circle have
Iqua Ltd. Iqua creates innovative and expressive design accessories for the made a combined capital investment of 1.1 million in
mobile phone market. ASAN.
The company’s colourful, wireless Bluetooth headsets are designed “This investment empowers ASAN’s internationalisation.
for people who want the right mixture of technology, user convenience and The world’s biggest vehicle transporter Wallenius Marine
classy design for their mobile communications. Made for personal use, the AB made a deal last autumn to install our system on ﬁve
home, ofﬁce and cars, the objects are the work of award-winning design duo of its cargo ships. In the US, we made our ﬁrst deals this
Juhani Salovaara and Tapani Hyvönen. The products are sold in many year, with Miami-based Callenberg Engineering, which has
countries in Europe, Asia and the United States. the world’s largest cruise lines as customers,” says ASAN’s
www.iqua.ﬁ President Harri Rautio. www.asansecurity.com
Industry Investment 1/2006 19
Investing in growth
Finnish Industry Investment Ltd (FII) is a government-owned
investment company. The company invests the proceeds accrued from
the privatisation of state-owned companies in promoting the growth
and internationalisation of Finnish businesses.
Capital investments are needed during the target companies’ seed
and start-up stage, to ﬁnance growth, for spin-off projects,
change-of-generation arrangements, major industrial investments
Industry Investment invests mainly in capital funds and also directly in
companies. The targets are in all sectors. FII acs as a co-investor, investing
at most one-half of the capital and limiting its ownership to 50%.
Investments and investment commitments roughly
EUR 350 million
Via venture capital funds and as a direct investor in some
Proﬁt for 2005 EUR 33 million
Finnish Industry Investment Ltd
Kalevankatu 9 A, PO Box 685
Tel. +358 9 680 3680
Fax +358 9 612 1680