A new study carried out by the Finnish Venture Capital Association and KPMG mapped the development of growth and revenue of Finnish businesses that had received private equity or venture capital. The study focused on the period from 2010 to 2017. The study showed that the companies owned by Finnish venture capital and private equity investors are the fastest growing businesses in Finland.
The study focused on the effectiveness of venture capital and private equity (later: private equity) investments in Finnish target companies, and it was conducted by examining the development of businesses that had received an investment from Finnish private equity investors for the first time. The study mapped the period from 2010 to 2017. This development was compared to that of similar companies of the same size operating in the same industry, which were selected from among 87,000 companies in Finland. The benefits of private equity can be seen in the rapid growth of both revenue and the number of employees in target companies.
During the three years after receiving private equity, the companies’ average annual growth rate was 22.8 per cent – six times faster than that of the control group. The annual growth rate of the number of personnel in the companies that had received private equity was 16.8 per cent, or 15 times faster that of the control group.
― Private equity and venture capital investors are professionals, who bring risk-taking capacity and courage to the target companies through their business expertise. Private equity and venture capital investors accelerate the revenue of businesses and multiply their growth rate when compared to companies that do not have private equity investors by their side, comments Pia Santavirta, the Managing Director of Finnish Venture Capital Association.
― The target companies for private equity investors include companies form nearly all industries. The companies include stars like Supercell, but there are also steadily growing companies from more traditional industries. The ability of private equity investors to make companies grow is reflected in the society at large in the form of new jobs, subcontractor networks and growing tax revenues, says Meri Koivula, Director at KPMG’s Global Strategy Group.
Every year, Finnish private equity investors invest about EUR 500 million in total in over 200 Finnish companies. Of that EUR 500, about EUR 100 million is invested in young, innovative start-ups. Private equity investments are transforming the Finnish business scene by building up start-ups with revolutionary business models as well as by internationalising and growing the more established growth companies.
― Growth – and going global in particular – requires the right will, a desire to grow, the ability to take risks, experience, and resources. There is a lot of know-how and great companies in Finland, and private equity investors have helped – and can continue to help – their growth, comments Juha Tukiainen, who chairs the Boards of Directors in the Finnish Venture Capital Association and is the CEO of MB Funds.
This study shows that private equity investors are a significant factor in advancing the Finnish economy and society. A fast growth rate requires investments and hiring new employees. This in turn brings growth, jobs and over-all well-being to Finland.
Finnish Venture Capital Association, Managing Director
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KPMG Oy Ab, Director
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