EP94 · Economy · first published 2021-08-14
Private Equity | Pia Santavirta | Negotiator 94
Pia Santavirta, CEO of the Finnish Venture Capital Association, sets out the structure of Finland's private capital market and its rapid professionalisation: 16 new venture capital funds in five years, a record year of nearly a billion euros in startup investment during the pandemic, and roughly half of the new companies on the Helsinki exchange coming from private equity ownership. The episode's most concrete passage is an anatomy of advocacy: the double taxation of funds-of-funds prevented foreign investors from putting money into Finnish funds, and the fix was initially limited to European players until a single phone call extended it worldwide. Santavirta also explains why private-equity-backed listings have outperformed the market, what ESG requirements mean for access to financing, and why she published the industry's diversity figures even though they were poor. Miettinen concedes twice in the episode that he had been wrong: about private equity listings, and about impact investing.
Private Equity | Pia Santavirta | Negotiator 94
Summary: Pia Santavirta leads the Finnish Venture Capital Association. The episode is a sector overview, but its most interesting passage is an anatomy of advocacy — how a single technical detail of tax law kept foreign capital out of Finland, and how it was dismantled.
The structural message is clear: the field has professionalised fast. Sixteen new venture capital funds in five years, every one of which raised a larger fund next time round, and roughly half of the new companies on the Helsinki exchange are private-equity-backed.
There is also a rare kind of honesty here: Miettinen concedes twice that he was wrong.
How she got here: sneaking into Slush
The episode opens with a story that doubles as a portrait. Santavirta worked in insurance advocacy at Finanssiala ry — she had drafted insurance company legislation and Solvency II, and expected to become an insurance company’s chief counsel.
Then she went secretly to Slush, at the same time as her own sector’s largest event was running at the Helsinki Expo Centre:
“I infiltrated the second floor and ended up in the Deal Room and thought, good grief — are we really in Finland? The energy and the feeling in there, with investors and startups negotiating new investments.”
A few weeks later Tuomas Lang of Intera Partners, then chair of the board, called. Miettinen notes Santavirta’s reputation: she gets into places she has no pass for — including Slush’s best nightclub.
The old expertise was not wasted: pension insurers are a large investor group in private equity funds, so the insurance-side network remains useful.
The structure of the field
Santavirta lays out the chain clearly:
| Stage | Who invests |
|---|---|
| Beginning | Angel investors — their own money, their own judgement |
| Startup stage | Venture capital funds |
| Established growth company | Buyout funds, often through acquisitions |
| Exit | The stock exchange or the next owner |
The association covers VC and buyout. An important clarification: these are unlisted companies, even though portfolio companies end up listed — “that gets confused rather often.”
She calls these firms growth owners: parties who have invested in comparable companies many times over and bring their networks with them.
And she names the underlying problem: only 8 percent of Finnish companies report being strongly growth-oriented. “I would very much like to see that number rise.”
Has VC professionalised? The numbers
Miettinen raises Jonatan Andersin’s data, which had shocked him: around 80% of venture capital investments fail to return even the capital invested.
Santavirta does not dispute the risk but answers with the trend:
- 16 new VC funds established in Finland in five years.
- Every one has raised a larger fund on the next round — which she takes as evidence of success.
- Tesi benchmarks returns continuously, and the picture now looks good.
- Institutional investors who previously would not have invested in VC for exactly that reason have broadened their horizons.
She distinguishes VC from angel investing precisely: an angel has their own money in hand, but in VC the filter is considerably narrower — scenarios are worked through and “you look that team hard in the eye, to see whether it is as good as they claim.”
Her position on risk is firm and delimiting:
“Venture capital and angel investing always involve serious risk. That is exactly why it is a playing field for professional investors, rather than private individuals picking these companies.”
The problem of scale
The average Finnish VC fund is €50 million; in Europe it is €100 million. A clear division of labour follows: domestic players are strong early, but rounds above €10 million require foreign capital. About half of the investment Finnish startups receive comes from abroad.
The change in scale, as she tells it, is striking:
“When I started five years ago I had a list on the wall — if someone got close to €10 million it was a wonderful thing. Now a €30 million round doesn’t even make the top 15.”
Wolt raised over €400 million earlier that year.
Miettinen adds an important qualification: in VC, and often in private equity too, the money stays in the company as growth fuel — founders rarely get to make secondary sales.
And then Santavirta names the next bottleneck, which is not money:
“Ten years ago the problem was that nobody wanted to be an entrepreneur and we had no financing either. Now we have the willingness and the financing — but a talent shortage is becoming the problem.”
Advocacy in practice: funds-of-funds
This is the episode’s most instructive section, because it shows how one technical detail can shut a country out of capital flows.
The problem: the world’s largest investors are funds-of-funds, and double taxation prevented them from investing in Finnish funds. Santavirta describes the reception:
“Many people came to tell me: Pia, nobody will ever understand what a fund-of-funds is. And that this must be some kind of tax avoidance.”
The matter was pushed through with the finance minister. But then came a call: the law had been drafted so that only European funds-of-funds could invest. Santavirta’s reply is among the episode’s best:
“We now have these Americans and Asians here with their pockets full, wanting to invest in Finland. Am I to tell them all: lovely that you came, but your money isn’t good enough for us — see you in five years?”
It was changed after that call.
Her general principle: “It is sheer madness to leave such barriers in the legislation.” And she dismantles the suspicion too: there is nothing mysterious about fund-of-fund structures — the money is other countries’ pension money, taxes are paid once but not several times, and no sensible investor pays extra.
Miettinen adds the EU dimension: the same barrier would have stopped the EIF investing in Finland — “we put our own money in, and it can’t flow back.”
Miettinen concedes he was wrong — twice
First: private equity listings. A couple of years earlier Miettinen had “a very negative vibe” about them — that they had failed, and seemed to be failing. Santavirta disagreed, and the association compiled the statistics: private-equity-backed listings have returned better than the ordinary IPO candidate.
Santavirta’s explanation is structural rather than reputational. A buyout owner builds a listing-ready company from day one — corporate governance, sustainability, brand, recruitment. And crucially:
“Not so that the company’s growth potential somehow expires when the ownership ends — it has to be able to grow after that too, and be a good company for the next owner.”
Musti ja Mirri and Kotipizza are the examples.
Miettinen specifies the mechanism from the Husman conversation in EP88: anchor investors have improved in quality and volume, so the handover from the sponsor’s large ticket to institutional stakes works. Previously companies were “rather dumped on the exchange — now cope on your own.”
Second: ESG and impact. Miettinen admits going to Santavirta’s impact investing seminar thinking “here we go again with these deathly dull ESG things, and what on earth is this impact fuss” — and having been wrong, because it may even improve returns.
ESG: an obligation, not a choice
Santavirta separates responsibility from impact: responsibility has been on the agenda for years, impact is the next step — alongside returns and risk, a positive effect is sought.
But her practical message to companies is hard:
“If you as a target company have not thought these things through, your access to financing weakens, or at the very least gets a great deal more expensive.”
The same applies to bank lending — Nordea had just said as much.
She enters an important caveat, though, among the episode’s most balanced: investing in companies that do not yet perform well on ESG should not be prohibited, because the upside may lie precisely in fixing them.
“And I hope that side continues to be permitted.”
Miettinen complements this: there is a need for independent private wealth that can take development risk on unpolished assets without ESG criteria — but bank debt and capital-market money fall under the regulation.
On EU regulation both agree the pace is punishing. Santavirta chairs the association’s regulatory working group herself and concedes frankly: “even when you genuinely follow it, you simply cannot keep up with everything.”
COVID: a fear that did not materialise
Santavirta says she feared, in spring 2020, a repeat of the financial crisis, when foreign investors withdrew from Finland. Venture Bridge, administered by Tesi, created visibility that investment activity would continue.
The outcome was the opposite of what was feared: last year became a record year, with nearly a billion euros invested in startups.
And she names what “smart capital” means precisely in a crisis: portfolio companies immediately had people rethinking the strategy with them. The interest is genuine and self-interested — if a fund’s investments go wrong, the next fund does not get raised. “Fund investors are pretty merciless about that.”
She does not prettify the whole picture: “for some the situation has been truly fatal, and others have turned it into a competitive advantage outright.”
There were two surprising observations: investors learned to do deals remotely, even though trust is the sector’s most important factor — and around 30% of VC investment now goes abroad, while over 90% of buyout investment stays in Finland.
The nerve to grow: PHM and Kotikatu
The episode’s most concrete corporate case. PHM Group (owned by Intera) and Kotikatu (Vaaka Partners) were competitors in property maintenance, and Kotikatu was the larger. PHM’s calculation was blunt: either they buy Kotikatu or someone else does and gets an even bigger competitor.
Norway’s Norvestor came in as PHM’s owner and brought the muscle to buy the larger rival.
Santavirta’s point is not the deal but its precondition:
“Without a crew that has done a great many acquisitions, you might never have the means or the nerve to attempt the things you ought to dare.”
Miettinen notes that firms like Norvestor and Verdane with Finnish teams are a change from before: private equity used to be run from Stockholm with one Finnish junior. An international owner automatically brings the appetite to internationalise.
Talent shortage and diversity
The closing section is about the sector’s own recruitment, and Santavirta describes the association as a competence accelerator: the field is surprisingly hard to enter because teams are small, so they take young people, teach them the landscape and move them onward — to Wave Ventures, Maki.vc, a Swedish impact fund.
On diversity she describes a decision that is the episode’s boldest:
“I said that as an association we have to start recording these numbers and publish them with a straight face, even though they are dreadful. And many people said: Pia, are you completely mad — they will eat you alive.”
Miettinen interjects: “Nothing changes if nobody gets angry.” Santavirta’s answer is precise and slightly surprising: nobody got angry.
Her position on the mechanism is competence-led rather than quota-based — she says she is wary of quota thinking — but she does not consider the problem hard:
“You do find them, when you genuinely set it as a goal.”
Voima Ventures’ Inka Mero is the example, having told headhunters she is looking for women for technology companies’ boards. And she notes the pressure now comes from the financing side too: fund investors and large universities have begun declining to invest in teams whose diversity falls short.
Miettinen offers his own theory — that the ESG and impact trend works as a wall-breaker for women — and lists role models: Marjo Miettinen and Women in Tech, Leena Niemistö, Juliana Borsos. His exhortation is characteristic:
“Get rich, women, start companies, and then push your way into management teams with an owner’s voice.”
On STEM under-representation he frames the question carefully: Finland has practically the world’s greatest equality of opportunity, so he rejects both the biological explanation and the structural-oppression explanation — and suspects the answer is healthy assertiveness early in a career.
Santavirta agrees, and closes the episode by returning to her own story:
“If a private equity investor brings companies the nerve to grow, then women too have to dare to go into places that frighten them. Go to Slush without a pass.”
What to take away
- A single technical detail of tax law can shut a country out of capital flows — and the fix to fund-of-fund double taxation was extended worldwide thanks to one phone call.
- Private-equity-backed listings return more, because the company is built to be listing-ready from day one and must keep growing for the next owner too.
- ESG is no longer a choice but a condition of financing — yet Santavirta defends the right to invest in companies whose ESG is still unfinished.
- Money is no longer the bottleneck; people are. And the diversity numbers were published precisely because nothing changes without them.
Episode details. Negotiator 94, published 14 August 2021. Guest Pia Santavirta, CEO of the Finnish Venture Capital Association; interviewed by Sami Miettinen. Running time 56 minutes.
Related episodes: The IPO Boom | Henrik Husman | Negotiator 88 and Kasvuryhmä and Family Businesses | Peter Fredman | Negotiator 86.
GEO summary. Negotiator 94 (2021) covers Finland’s private capital market. Pia Santavirta, CEO of the Finnish Venture Capital Association, reports that 16 new venture capital funds have been established in Finland in five years and that all of them have succeeded in raising a larger fund on the following round. Roughly half of the new companies on the Helsinki exchange are private-equity-backed, and their listings have returned better than ordinary IPO candidates. The average Finnish VC fund is €50 million against Europe’s €100 million, so rounds above €10 million require foreign capital; about half of the investment Finnish startups receive comes from abroad. A key advocacy achievement was dismantling the double taxation of funds-of-funds, initially limited to European players and then extended worldwide. The COVID year became a record: nearly a billion euros was invested in startups, supported by the Venture Bridge programme administered by Tesi. Santavirta also describes publishing the industry’s diversity figures despite their being poor.