Tesi’s survey of investment returns: Finnish venture capital and private equity funds outperform the returns on listed shares

Generally speaking, distributed investing in Finnish venture capital and private equity funds over the last fifteen years or so has generated better returns than investing in the listed equity market,” says Matias Kaila, Tesi’s Director, Fund Investments.

Venture capital funds excelled in the comparison, exceeding returns on the listed market by a factor of approximately 2.5.

Large institutional investors, such as Finnish pension companies, are amongst the investors in venture capital and private equity funds.

Strong venture capital market

Finland’s venture capital market has grown into a strong ecosystem since the financial crisis. “Around one-half of the investment funds that started operating after the financial crisis now rank amongst the best performers in the European league, measured by annual returns,” comments Jens Färm, Tesi’s Investment Associate, who compiled the survey of returns.

Annual returns on investment funds that started operating in 2009–2015 reached 22 per cent by the end of 2022. In last year’s survey the annual return on venture capital funds of this vintage was 25 per cent. Kaila believes that the lower percentage compared to the previous year is due to economic uncertainty and, in particular, a decline in the valuations of larger scaleups.

The newest generation of funds that started investing in 2016-2020, now included in this year’s survey, also performed well and reached annual returns of 19 per cent.

Generally steady returns on buyout and growth funds

Buyout & growth funds of 2009–2015 vintage investing in established growth companies generated annual returns for investors at a steady rate of 17%, in line with the previous year’s survey. In terms of returns, they perform very well also compared to their European peers.

Newer buyout & growth funds (2016–2020 vintage), on the other hand, generated annual returns at a lower level, 11%. Färm points out that this is partly because some of these funds are still in the investment phase, and therefore have not yet appreciated in value.

About the survey

The survey is extensive and covers, in practice, Finland’s entire venture capital & private equity market. The survey sample was divided into venture capital funds investing in startups, and buyout & growth funds investing in growth companies on a more established footing. The funds in both these groups were further subdivided into two vintages: funds that made their first investment in 2009–2015, and funds that made their first investment in 2016–2020. The returns on newer funds were reviewed for the first time in this survey.

The survey covers 44 Finnish funds, which were fairly equally divided into buyout & growth funds and venture capital funds. The survey included 19 older funds (vintage 2009–2015) and 25 newer funds (vintage 2016–2020). These funds collectively raised a total of some four billion euros.

The survey analyses returns from investments in the Finnish venture capital and private equity market as at the end of 2022.

• Tesi's survey of investment returns, full
• Review summary (in Finnish, presented in the info session on 4 May 2023)