Finnish early-stage VC Lifeline Ventures is right now saying the closing of its fifth fund, at €150m — its largest fund so far.
Whereas many different VCs within the Nordics are going past their nationwide borders, Lifeline continues to take a position primarily in Finnish startups.
The VC
Lifeline was based in 2009 by the entrepreneurs-turned-investors Timo Ahopelto and Petteri Koponen. Since then, the generalist VC has added yet one more funding companion — Juha Lindfors — and is investing in roughly 10 new startups a yr.
In accordance with information from Dealroom, Lifeline Ventures is the top-ranked early-stage VC within the Nordics. It counts microsatellite startup Iceye amongst its portfolio, has made a reputation for itself by being an early investor in six unicorns together with Wolt, Aiven and Oura and has had a number of exits, like Well.io and Supercell.
To this point it is invested in 120 startups, and has usually been a startup’s first institutional investor in angel or seed rounds. It invests between €500k-2m, and over time it could actually make investments as much as €15m in an organization.
“Usually, we put in 80% of the primary spherical, and we are sometimes the primary and final Finnish [institutional] investor,” says Ahopelto.
The LPs
Lifeline is just like different Nordic VCs, in that it is largely backed by pension funds, and within the case of Lifeline, Finnish ones particularly. For the newest fund, its LPs are largely the identical as earlier funds, together with household workplaces and entrepreneurs, with the addition of one other couple of pension funds.
“A part of our secret sauce has been to make LP relations as easy as doable, which implies protecting them as few as doable,” Ahopelto says. “With the early-stage investments that we do, we have to reduce down on all issues pointless and due to this fact it has been necessary to work with LPs that know us.”
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The ecosystem
The Nordics has the very best quantity of VC invested per capita. However whereas the top-ranked international locations, Sweden and Denmark, noticed investments drop by not less than a 3rd in 2022, Finland and Norway had the identical quantity invested in each years — about €2bn in every nation.
One cause that investments in Finnish startups didn’t drop is that the ecosystem solely began to develop 10 years in the past, says Lifeline, including that development has continued regardless of the downturn.
“We see that the variety of startups based has been fairly steady the final three to 4 years, however the high quality of them has elevated rather a lot,” Ahopelto says.
He places that down to 3 issues: the grassroots motion and Slush have created curiosity amongst top-performing college students to work at startups, the community impact has led to extra startup operators founding startups of their very own and the curiosity of worldwide VCs has elevated over time.
Attracting worldwide capital
For an early-stage VC like Lifeline, the presence of worldwide VCs has been significantly necessary, says Koponen.
“First it was an rising curiosity from the Swedish ones like Creandum, then it was the UK VCs and for the final 5 years, the US-based VCs have more and more co-invested with us.”
Lifeline takes on extra of a consultancy position as startups develop, to make the work for later-stage VCs and the founders as easy as doable. It additionally helps founders develop the smooth abilities essential to run a profitable enterprise.
“At later levels, our position modifications to serving to the founders with smooth abilities — something from private issues like issues at residence, if they’re tremendous drained, points with the administration workforce. Now we have a little bit of a special method than most VCs,” says Ahopelto.
And whereas the drop in startup investments took a toll on a lot of Europe in 2022, Lifeline’s companions truly imagine the impact will hit Finland more durable this yr.
“To this point this yr, it has been a tougher scenario from Sequence A rounds to B and C,” Ahopelto says. “It isn’t that they aren’t capable of elevate capital, however many startups choose to chop prices and decelerate on development as a substitute of elevating cash on the adjusted valuations.”
