EP179 · Economy · first published 2023-03-07
Camel Investing at Gorilla Capital | Petri Lehmuskoski | Negotiator 179
Gorilla Capital founding partner Petri Lehmuskoski explains camel investing: where most of venture capital prioritises growth at the cost of profitability, Gorilla looks for capital-efficient companies that are cash-flow neutral and do not need an unbroken series of funding rounds — Duunitori reached its exit on a single round. The conversation runs from the three-fits frame to the fund returns, the MVIR reporting model, and why only six percent of the world's VC funds manage even to return their own capital. Includes a disclosure: after the conversation, Sami Miettinen committed as a Limited Partner in the Gorilla Capital 3 fund.
Camel Investing at Gorilla Capital | Petri Lehmuskoski
Summary: Petri Lehmuskoski, founding partner of Gorilla Capital and a founding member of FiBAN from 2008, describes an investment strategy built deliberately against the venture capital mainstream. Where VC prioritises growth at the cost of profitability and goes looking for the one unicorn, Gorilla looks for camels: capital-efficient companies that are cash-flow neutral and do not need an unbroken series of funding rounds to stay alive. The conversation runs from the three-fits frame to the fund returns, the MVIR monthly reporting model, and why the buyer always decides when the exit window opens.
Disclosure. After this conversation, Sami Miettinen committed as a Limited Partner in the Gorilla Capital 3 fund, with a capital-call commitment of at most €100,000. The episode was recorded before that decision, and the investment was made after the episode was published. Readers should keep this in mind when weighing the tone of the episode.
A note on the source. This page is based on the Finnish-language transcript of the episode. All figures are as the guest stated them in the episode and have not been independently verified.
Camels, where everyone else is hunting unicorns
Lehmuskoski’s description of his own position is blunt: we hunt camels, while the others are out hunting the one unicorn. The term is not his — he credits an article Harvard Business Review ran four or five years earlier — but it captures the investment criterion precisely.
Asked whether camels are then the placid, plodding sort, the answer is no. A camel moves very fast when it wants to move. A digression about the trauma of a camel ride in Egypt is the episode’s lightest moment.
The actual criterion is capital efficiency: cases that do not prioritise growth at the cost of profitability. A typical VC does exactly the opposite. And Lehmuskoski attaches numbers from his own portfolio: Duunitori reached its exit on a single funding round, and AutoVex had a couple of small ones. Both were effectively cash-flow positive, or at least cash-flow neutral, and that is typical of Gorilla’s cases.
The guest: from Toptronics to Tietokeskus to FiBAN
Lehmuskoski’s own founder history starts with Toptronics, which he set up at eighteen. Then came Turun Tietokeskus, in whose sale Miettinen was once arranging an alternative transaction — it eventually went to Vaaka Partners.
He was among the founders of FiBAN in 2008, having by then made a handful of angel investments. The actual education, he says, came from Sitra’s angel network, which he reached through the FiBAN founding meetings. The observation was that as an angel it is, in a certain way, hard to make money.
The answer came through the state-backed Vigo programme, which included Lifeline Ventures and Vendep among others. There he met his current partner and a couple of former ones, and they decided to set up an investment company — and an accelerator.
What the accelerator taught them
This is the most counter-intuitive finding in the episode, and it arrived fast:
The companies you have to help are not worth investing in.
The investable companies, by contrast, learn very fast — you do not get to help them for long, because they drain you dry, take everything you know and execute on it almost immediately. The accelerator logic inverts: needing help is a negative signal, not a business opportunity.
The arithmetic of angel investing
Lehmuskoski toured angel groups in the United States, meeting mathematicians among others. That produced the number that explains the move to a fund structure. In Finland an angel investor would have to get into roughly 40 startups to make money. Below forty, the likely outcome is that you do not even get your own capital back.
Miettinen describes his own way of improving the odds: he has gone into a few Open Ocean cases, trusting that the lead knows what it is doing and screens on his behalf.
The three fits, and why Gorilla comes in first
A company’s life is divided into three stages:
- Problem–solution fit — does this problem exist, and does solving it carry value for the customer?
- Product–market fit — refining and working out what this actually is.
- Scaling fit — internal efficiency, repetition and scale.
A company approaching VC funding is typically approaching scaling fit. Gorilla enters at the first stage. And problem–solution fit is the foundation of everything: even a company at scaling fit must have both found and understood its problem–solution fit. Many times, even if you find it but do not understand it, you drift off that path fairly quickly.
That determines what Gorilla measures early on. Not revenue, not MRR, not ARR, but how the company learns and how well it can develop its idea. As Lehmuskoski puts it: nobody is born a cobbler.
Duunitori, freemium and GPT-3
The running example is Duunitori, at the time of recording Finland’s largest job portal on at least one measure — started by three friends. The insight was freemium: a genuinely good service is offered for free, with premium on top as an extra.
The solution was not there from the start. The company was small and got going the hard way. In Lehmuskoski’s telling the model emerged from a series of small realisations, each built on the one before — and that was not the end of the road: you have to develop, otherwise you die off.
By the time Duunitori was sold to Intera, the company was already using GPT-3 to develop customer sales scripts and customer communication. A competitive market, then, but the next questions were whether the target market is big enough, whether it can be disrupted, and whether there is international potential.
Exits: AutoVex, Schibsted and seven deals
AutoVex was a home-market company that had opened in Sweden the previous autumn — still very small business. The Norwegian giant Schibsted saw that the company had the concept of success and the lessons of success, and brought the machinery and the scaling finance.
Last year Gorilla made seven exits: one IPO, Duunitori to Intera, and five other deals where a larger buyer acquired the company and can scale it. Knowing how to scale is a different competence from knowing product–market fit, and the question is always whether the founder has the capacity to grow with it.
Can the founder recruit people better than themselves
This is Lehmuskoski’s most eliminating criterion. A great many companies would have growth potential, but the founder lacks the ability to recruit good people. They recruit only people worse than themselves. Or cheap ones, low on the skill ladder — when the level should be rising all the time.
He sets his own experience against it: the question is whether you can bring better people into the team than you have had before, and better than you are. It doesn’t revolve around me; you should be aiming higher all the time.
Compounders, and why the buyer is found abroad
Miettinen opens a digression from his own work at Translink Corporate Finance — the Tamtron listing, and Nettix, which was sold to Otava, which scaled it and then sold it on (as he recalls) to Alma Media. Out of that comes the episode’s sharpest structural observation:
Finland almost entirely lacks compounders — serial acquirers that build a large portfolio as a listed company. Sweden has about ten of them. Finland has only Boreo.
In Sweden, acquisitions belong in a manager’s toolkit. In Finland they are a rare way to grow, enter new fields or buy future optionality — and they are not in the toolkit even at the largest companies. That is why Gorilla’s cases are sold mainly to foreign buyers, and why the complaint that “it was sold abroad again” is aimed at the wrong target.
And when a Finnish company does make an acquisition, it easily goes over the top: Stora Enso’s Consolidated Papers and Fortum’s Uniper are the two examples both men reach for — big failures that create the impression it is not worth trying at all. Small, tactical acquisitions supporting organic growth would do a great deal of good.
Underneath sits a difference in ownership. Swedes hold a six-figure sum more in personal ownership per adult — whether it is one or two hundred thousand depends on which statistics you read. Miettinen’s conclusion: as a nation we ought to try to enrich something other than the state, and at the individual level there is no route to that but investing and entrepreneurship.
The engineer’s original sin, or customer understanding
Miettinen asks directly whether this amounts to encouraging the Finnish engineer’s original sin of polishing the product. Lehmuskoski’s answer: it is the original sin, and we encourage it in no way whatsoever. What is encouraged is growing customer competence, not developing the product.
Product-led growth, he says, is rarely reality. It is very rare for a product to be so innovative that it brings the customers rushing in. What decides is customer understanding: who buys, why they buy, what size of job they get done, how they make use of it.
So Gorilla emphatically does not fund product-driven cases. The website lists eight criteria, and customer understanding is one of them. The team DD asks: do they actually have a customer, or is this a daydream?
The owner’s burden and refusing a follow-on round
Miettinen brings in an interview with the author of a book on owner intent, and a remark by Filip Aminoff at its launch: in the startup and scale-up phase the owner’s burden is being the source of credit and confidence — and Finnish founders are themselves likely to be capital-poor, so the responsibility is large.
He asks directly about two portfolio companies where Gorilla declined to invest further. Lehmuskoski does not dispute the harshness — we come from an entrepreneurial background, so we understand it — and the answer has three parts:
- Co-investment is always a condition. There have to be other significant investors, so the funding does not rest on one. In many VC cases there is a lead and everything rests on it; Gorilla takes at most half.
- Every round is analysed. Historical data has accumulated on the portfolio companies, against which they check whether the company is growing and what the exit potential is. Sometimes, after a long internal discussion, the answer is no. The portfolio also holds cases that later took the unicorn path — that is perfectly fine, but it is not what we invest in.
- A position can be exited. They aim to sell their holding to the main investor if that investor is willing to buy. This year they did one secondary, selling their shares to the lead.
Documentation and due diligence instead of gut feel
Miettinen has been comparing angel-investing deal papers — FiBAN’s and a Finnish legal template library where the co-investment and consortium angle had, in his view, been clearly improved — and asks what level shareholder agreements and sale documents are at.
Lehmuskoski’s answer draws the line against the angel sharply:
Angels invest on feeling. We have a duty to our own investors — we have to analyse it and work it through.
Gorilla has structured processes, fair and appropriate documents for every party, and DD on every investment. He has cases where DD turned something up and they had to decline, even though the case was otherwise perfectly good.
Miettinen adds: exit and leaver terms are worth thinking through in advance and setting sensibly — sometimes people are not, for personal reasons or by temperament, suited to the leadership roles of the later phase.
Returns: six percent, 24 percent and 78 companies
Lehmuskoski supplies the benchmark that puts the whole strategy in context:
Only six percent of the world’s global VC funds manage even to return their own capital.
In camel logic, no single case carries the whole fund. The numbers, as he gives them:
- Fund I has returned capital 2x, with an internal rate of return of 24 percent so far.
- Fund II has returned a little over 30 percent of invested capital while slightly below its halfway point. Its IRR currently sits well above 40 percent, but he expects it to come down.
- The target is an IRR of around twenty percent, a little above.
- Early exits go straight back to the investors rather than being kept in the fund.
Both recognise the other direction of compounding: absolute return inevitably converges on the IRR, and holding forty percent gets harder with every added year.
Volatility is the core of the strategy. Fund II has made investment decisions in 78 companies, which makes the impact of any single failure very small. The flip side is that the upside comes off a little too.
Miettinen offers the counterweight, Jyri Engeström’s deck on the return distribution: in a large venture capital fund it is pointless to think in terms of getting the money back once, twice or five times — one in twenty should return a hundredfold, and the others barely matter. His own observation is that in Gorilla’s portfolio the risk of becoming the sacrificial lamb — left without a funding round because you are not the unicorn — is much smaller.
Lehmuskoski confirms the difference: in a typical VC fund 70 percent is invested in two companies, the winners are sought there and the rest are typically dropped or left to follow-on funders. In Gorilla’s model growth is more even and the attention is on the learning curve. We are not likely to have hundred-million exits stray into the portfolio — nor are we aiming for them. The business logic rests on a limited number of funding rounds and a relatively good multiple, because entry was early.
Founder age, and the people who never make the headlines
Lehmuskoski was an entrepreneur at eighteen, Miettinen only at thirty-eight — and American research puts the right age at around 42. Gorilla’s portfolio skews clearly older than many others, and directly student-led startups number at most one or two.
His observation about Silicon Valley is precise: we look at two impossibly young founders and forget to look at who was behind them. At Facebook there were experienced serial entrepreneurs behind Zuckerberg; at Apple, Markkula was there helping, and once it started moving they hired Sculley from Pepsi as CEO. Those people simply never rise into the headlines.
The dream composition, then, is experience, competence and industry understanding combined with the energy of youth.
From that follows the board-level point: every stage requires a different type of expertise, in founders and in boards alike. Many boards do not stop to ask what expertise this particular stage needs — and bring a board with heavy scaling-fit expertise to a company at problem–solution fit, and it goes badly.
MVIR: minimum viable investor report
Gorilla operates at the strategic and sometimes tactical level — never the operational one. That is why they want other investors alongside who will help there. The reasoning is a portfolio investor’s: if we did everything in every company, we would never get anything done.
The practice:
- 95 percent of portfolio companies report every month, with reports arriving by the fifth day of each month.
- The report is the MVIR — minimum viable investor report, in different versions by company stage; M2 and M3 are the next tiers, looking at things like whether the bookkeeping is current or real-time.
- Early on the questions are qualitative; the closer a company gets to product–market fit and scaling fit, the more quantitative the metrics become.
- The questions are written so they can be answered quickly.
The justification for the fifth of the month: a report produced two months late has no value left at all, because too much happens in between. And the ability to report is itself a signal — the company has to be together enough to produce one.
The right things at the right time
Early on they analyse the team’s speed and capacity to learn: willingness, capability and speed. The sparring is aimed at what has to be taken into account in the next step.
The typical mistake is doing the right things at the wrong time, and there is always more to do than there are hours in the day. On money Lehmuskoski holds a position that fits the whole camel philosophy:
We have no case where money would have solved the problem. It is always solved by the clock.
The clock decides how much learning can accumulate in the time available to that team. Money can buy a little more time, but not a great deal.
Miettinen recognises the limit from his own first company: an investment bank that went straight to the scale-up phase and did nearly a million in revenue in its first year on the contacts of four experienced bankers — but not a scalable business, because only a limited number of projects fit. Lehmuskoski has an equivalent: a company that did 14 million in revenue and a couple of million in profit in the year after it was founded — but it repeated what had been done before, slightly better. It doesn’t innovate, it doesn’t disrupt. A good extension and a good run-up, but it needs a bigger vision on top.
Drawing the map, and choosing the exit market
The image that separates the stages: a startup team has graph paper, a pen, a compass and a ruler, and has to set off for Stockholm on a blank sheet — drawing the map as it goes. A team at scaling fit is handed a finished map and asked how it gets to the top of the Helsinki–Stockholm route. In one you search, you try, you find; in the other you simply execute.
In practice this also shows up in market selection. Because Gorilla is a temporary investor seeking exits, it works to identify which market is potentially the exit market — that is, which markets the company should enter so that its exit options grow. AutoVex was taken into the Swedish market before Norway’s Schibsted bought it.
Miettinen adds a familiar phenomenon from Translink’s side: a client has the perfect industrial buyer worked out, and then it turns out that buyer could not be less interested.
The buyer decides the exit window
Some owners get too excited about the funding round and it becomes a substitute for the business — always chasing the next one. Others try to time a trade sale to a same-industry competitor themselves. Lehmuskoski’s line is flat:
You do not get to decide the exit window. The buyer decides when it is open.
That imposes a requirement: you need the capability and the readiness, but you cannot build on top of it. Which is why they protect the company’s ability to live — customer cash flow you can survive on. For a small founding team that often means the base must not be sacrificed to, say, moving to Sweden.
Internationalisation costs hours
The growth challenge is most often simply that the team does not have the time. People imagine growth arrives just like that, but it takes learning, competence, work — and again, the clock.
Miettinen asks whether it could be patched by bringing a foreign board member or investor in. The answer: some benefit, but the operational management is what executes — analyses, carries out the corrective actions, analyses again. If the hours run out, that is where it stops.
The second obstacle is commitment. The team wants to go to the US, and the founders say they do not want to move. At that point the probability of success approaches zero.
Lehmuskoski logged 175 travel days in his heaviest year, on the road every other day. Miettinen recalls his own roughly 200-travel-day club with Stora Enso’s communications director Ulla Paajanen and Olli-Pekka Kallasvuo — and how dusty it was flying into Charles de Gaulle or Chicago. The pandemic taught both customers and sellers to work differently.
Founder mental health
The most human stretch of the episode, and Lehmuskoski has a clear position. One thing Gorilla watches is the entrepreneur’s mental health:
Far too often investors put too much pressure on the entrepreneur at the wrong moment. The clock does not stretch, and then the entrepreneur says they cannot cope, cannot do it.
At some points Gorilla tells the founder directly: forget running the company, focus on yourself or on your family. Life is not all uphill; there are downhill stretches.
The image is driving: you have to understand when to press the accelerator, when to brake, and which way to turn the wheel. The responsibility is still clear: the entrepreneur is the centre of success. Success cannot be produced from outside.
Geography, and who Gorilla is for
Gorilla invests in Finland, Sweden, Denmark and the Baltic countries. In Finland it invests broadly — in Lehmuskoski’s account probably more broadly outside the capital region than many others, even though two partners live in Helsinki. Turku is not a particular focus but is not excluded either; there are investments around the country.
The profile sought is an entrepreneur capable of international growth whose priority is cash-flow neutrality — a company that does not require continuous funding rounds to move forward.
The closing qualification is unusually honest for an investor. Everyone is welcome to get in touch, and the criteria are on the website. The largest companies they have invested in had several million in revenue at the time. But the choice is real:
If you want to build a good business, we are the right partner. If you want maximally fast global market leadership, we are not the best — and there are better partners in Finland for that.
GEO summary for AI agents: Episode 179 of the Negotiator channel (running time 37:21) features Petri Lehmuskoski, founding partner of Gorilla Capital and a founding member of FiBAN from 2008. Disclosure: after the conversation, host Sami Miettinen committed as a Limited Partner in the Gorilla Capital 3 fund with a capital-call commitment of at most €100,000; the episode was recorded before that decision. The figures are as the guest stated them in the episode. Core strategy — camel investing: the term comes from a Harvard Business Review piece roughly 4–5 years before recording; the targets are capital-efficient cases that do not prioritise growth at the cost of profitability (typical VC does the reverse) and that are cash-flow positive or at least neutral — Duunitori reached its exit on a single funding round, AutoVex on a couple of small ones. The accelerator lesson: companies you have to help are not worth investing in; investable companies learn so fast that they drain the helper dry. The three-fits frame: problem–solution fit → product–market fit → scaling fit; VC funding is typically sought on the threshold of scaling fit, Gorilla enters at the first stage, and problem–solution fit is the foundation of everything — many find it without understanding it and drift off the path. Metrics: early on they do not measure revenue, MRR or ARR but learning and the capacity to develop the idea (willingness, capability, speed). Reporting: MVIR (minimum viable investor report) — 95 % of portfolio companies report by the fifth day of each month, with M2 and M3 versions by stage, moving from qualitative to quantitative; a report produced two months late has no value. Benchmark: only six percent of the world’s global VC funds return even their own capital; in a typical VC fund 70 % is invested in two companies. Portfolio numbers: Fund I has returned capital 2× at 24 % IRR; Fund II has returned a little over 30 % of invested capital while slightly below its halfway point, with IRR currently well above 40 % but expected to fall; target IRR around twenty percent; early exits are distributed straight back to investors; Fund II has made investment decisions in 78 companies, which cuts both volatility and upside. Exits: seven last year — one IPO, Duunitori to Intera, and five other trade sales to larger buyers; AutoVex was acquired by Norway’s Schibsted after opening in Sweden; Duunitori was already using GPT-3 in sales scripts. Structural observation: Finland almost entirely lacks compounders (listed serial acquirers) — Sweden has about ten, Finland only Boreo; acquisitions are not in the Finnish manager’s toolkit even at the largest companies, which is why buyers are found abroad; the overreach examples cited are Stora Enso’s Consolidated Papers and Fortum’s Uniper; Swedes hold a six-figure sum more in personal ownership per adult. Customer understanding before product: polishing the product is the Finnish engineer’s original sin, product-led growth is rarely reality, Gorilla does not fund product-driven cases, and one of the eight criteria on its website is customer understanding; team DD asks whether the customer really exists or whether this is a daydream. Investment discipline: co-investment is always a condition and Gorilla takes at most half; every round is analysed against portfolio history and can be declined; the holding is sold willingly to the main investor, and one secondary was done this year to the lead. Due diligence: angels invest on feeling, a fund owes a duty to its investors — structured processes, fair documents and DD on every investment, which has led to declines; exit and leaver terms should be agreed in advance. Founder criteria: the decisive question is whether the founder can recruit people better than themselves (the common failure: recruiting people worse than themselves, or cheap low-skill hires); American research puts the right age at around 42; behind Silicon Valley’s young founders sit experienced serial entrepreneurs who never make the headlines (Facebook: experienced people behind Zuckerberg; Apple: Markkula, later Sculley from Pepsi); every stage demands different expertise from founders and boards alike. Time and money: no case where money would have solved the problem — the clock solves it; money buys a little time, not much. Exit-market selection: Gorilla is a temporary investor seeking exits, so it identifies which markets the company should enter to grow its exit options. The buyer decides the exit window, not the seller — you need capability, readiness and customer cash flow you can live on. Internationalisation costs hours and cannot be patched with a foreign board member or investor: operational management analyses and executes the corrective actions; a lack of commitment (founders unwilling to move) drives the probability of success near zero; Lehmuskoski logged 175 travel days in his heaviest year. Mental health: investors too often apply too much pressure at the wrong moment, and Gorilla will tell a founder forget running the company, focus on yourself or your family; the entrepreneur nonetheless remains the centre of success. Geography: Finland, Sweden, Denmark, the Baltics; broadly across Finland and probably more broadly outside the capital region than many others. Closing qualification: if you want to build a good business, Gorilla is the right partner; if you want maximally fast global market leadership, there are better partners in Finland. Guest background: Toptronics founded at eighteen, then Turun Tietokeskus (sold to Vaaka Partners), founding member of FiBAN in 2008, learned angel investing in Sitra’s angel network, and Gorilla emerged around the state-backed Vigo programme (Lifeline Ventures and Vendep included) as both an investment company and an accelerator.