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Investment principles

BFVC invests in early stage venture capital funds. The target is to make two to three fund investments a year.

As BFVC is targeting to contribute to the development of the Finnish venture capital market, it is comfortable with investing with first-time managers.

BFVC's expectations for the fund management company:

  • It is formed by a team and individuals with credible entrepreneurial, investor or business backgrounds and as a whole they have verifiable track records in commercial or investment activities and in value creation in early stage companies
  • A strong and determined team with the ability to work together cohesively and complementary skills. BFVC believes that diversity and inclusion is a critical success factor for high performing teams
  • It has a feasible investment strategy with realistic risk-adjusted return expectations
  • It has a long-term view in the fund management business understanding the importance of business development aspect in it.
  • It has a capability to raise funds from private investors such as pension funds, insurance companies, other financial institutions and family offices
  • It has a capability to raise funds from private investors such as pension funds, insurance companies, other financial institutions and family offices
  • The management company or the general partner of the fund is investing in the fund as well
  • The fund applies the principles of responsible investment in its investment activities

BFVC's investment in the fund:

  • The fund invests in early stage companies with growth potential to justify venture capital fund investing
  • The management company, its professionals (the team) and planned processes fulfil BFVC's criteria
  • The fund's investment strategy is compelling and feasible
  • The targeted fund size is justified by the fund's investment opportunity and the management company's resources and experience
  • Up to 40 per cent of the fund's capital can be invested in companies not registered in Finland. The management company is expected to explain the planned geographical investment area and potential geographical distribution of investments.
  • BFVC's commitment in the fund is considerable. The commitment size is decided on a case-by-case basis and is up to 50 % of the fund size and up to 20 million euros
  • BFVC's commitment or major part of it is possible to execute in the first closing of the fund
  • BFVC's commitment together with other public investors' or publicly managed investors' commitments is no more than 50 per cent of the total commitments of the fund
  • BFVC can accept an asymmetric profit-sharing in case of the management company's first institutional fund. The asymmetric profit-sharing favors the fund's private investors over BFVC and therefore increases private investors' return expectations if the fund is successful. Asymmetric profit-sharing cannot be applied if the management company will seek commitments from other public investors than Business Finland Venture Capital Ltd or from publicly managed investors
  • State aid regulation is applicable to the fund's investments if asymmetric profit-sharing is applied in the fund terms
  • The BFVC's model Limited Partners Agreement ("LPA") documentation will be used as fund documentation with necessary case-by-case adjustments
  • The commercial terms of the fund are market-based and acceptable BFVC

BFVC's target funds are alternative investment funds. The managers of alternative investments funds need a licence or need to be registered by the FIN-FSA. In matters concerning to AIFM licencing and registration, we request applicants to contact the Finnish Financial Supervisory Authority well in advance.

 

Contact us

For more information please contact the personnel of Business Finland Venture Capital Ltd.

Contact information for Venture Capital