Naturally, I have experienced a lot of failures in my investments and it’s useful (although expensive) to learn from the unfortunate cases. To be honest, it took me about 10 years of startup investing before I was able to report any decent successes.

Now, it’s time to share and learn from some of the great cases. The following four exits represent different kinds of positive cases that all have taken place fairly recently. 

Case Nordsafety: Too early exit?

Key learning: Use experts and customers to evaluate the value of the service, do careful due diligence, make sure valuation is right and that you have competent investors along with you.

Nordsafety made a nice pitch in late 2014 at FIBAN’s Xmas party.  They seemed competent, but the solution area was not that exciting. Their ask for the valuation was a bit hefty too, so I did not follow up. In 2015, witnessing the company manage well in Kasvu Open, I started to like the company. To gain some insight from the construction industry,  I arranged a breakfast meeting with my good friend Jukka Hienonen (back then the CEO of SRV) and the founders, and we tried to assess the value of the application/service together. I also called some of the key clients and they gave very encouraging feedback. In spring, the FIBAN syndicate was formed, and we were lucky to join a very competent group of investors in the seed round.

I further helped the management with their public funding to maximize the resources they have and to have a longer runway. We started international market research as we felt it was vital to enter international markets for the next funding round. It took a bit longer than expected, but finally, some traction came from DACH markets. With the funding round, the company created a professional board and recruited new resources. Software development sped up and business growth was steady.

I got the news of a likely exit in 2017. From an investor’s point of view, the selling process was easy and the price was fairly normal, based on SAAS multiples.  The exit was a safe choice for all: main reason being that the buyer, Quentic, was a well-funded German company with a complementary offering and a modern way of operating. Steady growth of the joint company has continued since. This exit earned the FiBAN Exit of the Year award in 2018.

Case Tikitin: Early exit

Key learning: Ask for an industry validation and make sure there is strong IPR (not only slides) in a deep tech case.

Tikitin was a very special case. Like in many hardware companies in Finland, it had a strong scientific background and a competent tech team behind it. I met them very early on and liked the guys but had no clue what a ” silicon-based resonator” was. Well, I knew they were aiming to disrupt a fairly large industry, so I kindly asked them to return to the topic of funding once they have some real industry and client feedback, validation for the invention and at least one commercially competent team member. Surprisingly they came back a year later. “Now we have positive feedback from seven out of the top ten industry giants in this field and a super guy in charge of business development.” He happened to be my ex-boss Tapio Sulkava.

After a few rounds of discussions, I was sure this invention should be commercialized and that the company is fundable although the business case was still at a very early stage. We managed to pull together a nice package and the company received some 24 months of runway with this funding. During that time they managed to get the PoC ready with some key clients, build a patent portfolio and establish a very productive team. Utilizing public funding and semi-public excellent laboratory facilities, the company was able to perform better than many much more heavily financed competitors.

I was a bit surprised about the potential exit as it came into sight. It happened smoothly and the strong IPR and the super team were fairly valued. The key was to have a hot invention that a number of players were after. Exit was a logical option for Tikitin as the fair value had been identified and as the factory investments would have diluted the current shareholders significantly and a possible better outcome would have only taken place after a very long time. Over ten private investors and founders were happy. 

Case Smarp: Normal exit

Key learning: Be patient and make sure the company pivots fast when needed and finds the growth path again.

Average time from angel investment to exit is about 9 years. With Smarp, we got it in 8 years. The case was very normal, with lots of ups and downs, crises, and happy times. A group of angels accepted the investment terms in 2013, and the company received also about 300k public funding to boost their development. On the way to exit the product had been re-formed a few times; with some pivots and management changes, an US entry done twice, and so on. Normal stuff.

Pivotal moments for the company success were: a) The winning of Arctic15 pitching event that led to an invitation to Techcrunch London where the company was nicely covered also in the BBC World News,  b) The lead investor and new chairman Pedro Ros that was a souvenir from the UK too. c) Slush 2018 where the company received lots of publicity, new VC contacts and later also a VC investment enabling the establishment of a serious SAAS operation.

After some hick-ups, the company was back on the growth track. It had several options in 2021 but ended up choosing to be part of a bigger family and to see how private equity works in the next growth stage. Coyo+Smarp established a very strong player in the enterprise communication field backed by 7,8B Marlin PE.  

Case Aiven: The unicorn

Key learning: Super tech team, fast growth, scalable service and way to operate, availability of funding + lots of luck =  Unicorn.

I was extremely lucky to have an opportunity to invest in Aiven in its seed round. I happened to know the CEO Oskari Saarenmaa and had heard about their service and plans. I liked the open-source domain and thought the service to be very much needed; it solved a real customer problem and had been validated in international markets. The core team had worked together earlier and, for me, they looked like a dream team: business development, sales and marketing were still under development but those were easier to solve.

Aiven systematically polished its product-market fit. It has made extremely complex things simple making life easier for database administrators and application developers. Their competitive edge lies in several things: they use outside services to scale faster but keep the core, such as product management, always in their own hands. Despite several co-competitors (AWS, Google Cloud, Microsoft Azure…), they have their own space to operate.

Since the seed round in 2017, the steady growth has supported a fast valuation increase. Aiven has now reached a €1,8 billion valuation level and has raised more than 135M in funding in a bit over four years and in four rounds. The founders’ dilution has been modest, a bit over 50% in four rounds. The diluted rise in valuation since the seed series has been ca. 200x. Although the final outcome remains to be seen, secondary offering has been possible from the B round on. In great cases, such as Aiven, there is naturally demand for stocks and that makes the founders and early investors’ life easier. One can then develop a future briskly without any pressure of a quick, forced, or final exit. 

In the end, it seems this work can be good, fun and profitable

It takes time and effort, but rewards and good returns are very possible in angel investments in Finland. Even without my Aiven case, my portfolio of 40 cases has already returned all my investments, and about 20 firms are still looking for a bright future and exits. I almost lost my faith after my five first (bad) exits, but in the end, it seems this work can be good, fun and profitable.

Jussi Heinilä
FiBAN member and one of the founders of the network. Working with startups and venture funding since 1998.