EP148 · Economy · first published 2022-08-15
Voland's technology fund | Veera Sylvius & Erkka Niemi | Negotiator 148
Veera Sylvius and Erkka Niemi are raising Voland Partners' 80 million euro technology fund, which takes minority stakes in profitable Finnish technology companies. First close was on 30 June 2022 at roughly half the target. Sylvius ran Space Systems Finland for ten years and led a management buyout of it; Niemi was Siili's CTO while the company grew roughly tenfold to a thousand people; Jyrki Laune and Samuli Siljamäki complete the four. The episode covers the fund's position between venture capital and private equity, a deal flow band of 5–30 million in revenue, a 100-day plan, and why Finland has lacked a growth financier at exactly this stage — with the consequence that companies are sold abroad too early. Responsibility produces the episode's sharpest disagreement with the host: the guests reject the idea that responsibility, competitiveness and returns pull in different directions, and argue that in a technology company the weight of ESG falls on S and G, not E. Also SaaS multiples falling from 16x to 7x, the surprising return of cloud ERPs, MedTech, hardware-enabled SaaS and the Smartvatten example. Sylvius closes by reading a poem from her forthcoming first collection. Published 15 August 2022.
Voland’s technology fund | Veera Sylvius & Erkka Niemi
Summary: In episode 148 Sami Miettinen interviews Veera Sylvius and Erkka Niemi, who are raising Voland Partners’ 80 million euro technology fund. The fund takes minority stakes in profitable Finnish technology companies and carries them to the next level. The episode was recorded six weeks after first close, in the middle of the collapse in SaaS valuations, and it is an unusually concrete account of what a new fund is actually promising. Published 15 August 2022.
A note on reading this. This article is curated from the episode’s transcript. Views are attributed by speaker and timestamps refer to the curated Finnish transcript. The fund was still fundraising at the time of recording, so the figures here describe the position in August 2022 rather than the fund’s final size or portfolio.
Four partners, none of them from a bank
The episode opens on an abandoned board career. Miettinen recalls that he and Niemi were both supposed to attend a Boardman course that Niemi himself had booked — and that Niemi never turned up:
The world rather carried me along. I still remember a year ago that we were going to that course together, and we were so busy with the Voland negotiations that I didn’t make it. (00:42)
The team is four people, and Sylvius’s justification for its composition explains the whole fund: when the focus is technology companies, you need experience of running a technology company from several different angles (01:17).
| Background | |
|---|---|
| Veera Sylvius | CEO of Space Systems Finland for ten years; entrepreneur |
| Erkka Niemi | CTO of Siili; before that Unikie and self-driving car technology |
| Jyrki Laune | over 20 years as an M&A adviser to technology companies |
| Samuli Siljamäki | long-serving CFO in technology companies, later a partner in an investment bank, entrepreneur |
Sylvius’s own path is unusual and she tells it without ornament. She joined Space Systems Finland just as an employee, advanced young, and became CEO in 2010. In 2011 there was a management buyout — the company’s life cycle was at a point where it was a good move — after which it was run entrepreneur-led for about ten more years (02:21–02:53).
Space Systems Finland itself gets an aside worth reading: according to Sylvius it is Finland’s first space company, founded in the 1980s, at a time when Finland had barely any space industry. The work was difficult embedded safety-critical software for satellites (03:24–03:48). Her explanation of why that is hard is compact:
In practice, when a satellite is up there, the satellite’s intelligence is the software. Everything clever it does is the software — because you cannot simply go and fix it. And missions failing is not the sort of thing anyone wants to happen. (03:58–04:12)
Niemi’s background is Siili, and that becomes the episode’s best single business example later on.
Three Vs — and the gap Voland fills
Miettinen maps the Finnish growth-investor field with three Vs: Vendep works at a smaller angle, Norway’s Verdane at a larger one, and he asks whether Voland sits nearer Verdane and Monterro (04:55–05:11). Niemi accepts the comparison happily (05:16).
Sylvius immediately qualifies the position, and the qualification matters: Voland is not a SaaS-specific investor. The angle is technology, and those often happen to be software companies — it is not any kind of imperative (06:08).
Niemi’s account of how the fund came about is practical. He had been looking at board work and making small angel investments into technology companies:
Alongside that a certain hunger started to develop — that it would be nicer to take a bigger ownership stake in the company and help take even bigger companies out into the world. (05:47)
Sylvius’s reasoning is different and more interesting. She starts from impact: as an executive, the impact of your work is bounded by your own staff, customers and industry. Moving to the investor side multiplies it tenfold — through ten portfolio companies the same thinking reaches much further, and that way the impact is actually exponentially growing (06:26–07:14).
What was missing from the market. Niemi’s answer is direct: a growth financier of this kind, a minority investor that commands the technology domain, does not really exist in Finland yet. Sweden already has several and Europe more (15:26–15:49). The market feedback has matched:
Extremely knowledgeable people have said: yes, finally you came and set this fund up, you are needed here. (15:49)
The fund: 80 million, first close on the last day of June
The figures in the episode are precise. The target size is 80 million euros, and the first close was done on the last day of June at roughly half of target. Fundraising was still open at the time of recording (08:05–08:24).
The investor base splits in two (08:24):
- institutions — pension companies and similar, the bulk;
- private individuals — particularly technology entrepreneurs who have made their own exits and want to back the next generation of founders through a fund.
Miettinen compares the situation to Sparkmind, which Marko Kyyrönen had founded in a narrow EdTech vertical and which had been at the same first-close stage eighteen months earlier — and which took in another few tens of millions after closing (07:19–07:38).
Around the team sits an advisory group, and Niemi says it is precisely through that network that investors were found: their own contacts brought in successful technology names in Finland (09:00–09:20). The advisers combine tech growth-company leadership and board experience with responsibility specialists, of whom Sylvius says plainly: quite simply the best names in Finland (09:20–09:44).
Responsibility: the episode’s sharpest disagreement
The fund’s own triangle slide promises three things at once: Responsibility, Competitiveness and Superior Returns. Miettinen presents them as ropes pulling against each other that hopefully play in some kind of symphony (27:36–28:06).
The guests do not accept the framing. The answer comes immediately:
How do you mean, in different directions? Aren’t we going the same way? — It is an illusion to still think that if you are responsible, there is some… (28:06–28:13)
Sylvius reaches for the lean principle as an analogy. The moment is the episode’s funniest: Miettinen hears Li Andersson, and Sylvius has to clarify that she means lean management (28:26–28:40). The argument underneath is serious:
Traditionally people always think either/or — that you have growth or profitability, or now it is competitiveness or responsibility. We start from the position that it is and, that you can do both at the same time. (28:43–28:52)
She concedes at the same time that it is not easy: it is not that easy, but done right all of these can be achieved at once (28:58).
Why ESG means something different in a technology company
This is the section’s most useful distinction, and it is Niemi’s. When ESG is abbreviated to letters, what stood behind them gets forgotten — and in a technology company E, the environment, is left in a small role, unless you start counting server energy efficiency or the efficiency of the code (12:17).
The weight is elsewhere:
- S, social. How you look after good employees — whether you are at least as good as the others or better, and whether you can attract the very best (12:44).
- G, governance. How you build a company that is fit to list, starting from a fairly small one. Niemi’s point is that the preparatory work is not wasted regardless of whether the exit is eventually an IPO or a sale — the company is made better day by day (13:05).
Sylvius adds a point about governance that is easy to miss: if you go to ESG’s source, the IFC ESG guidebook, the first items under the letter G are Purpose, Values, Culture (14:12). If those are thought through and can be communicated to employees, it is much more pleasant for them to come to work and do good work — and that is governance too (14:39).
A mapping against the UN sustainable development goals has been done, and Sylvius’s caveat inspires confidence: we are not promising to save the whole world. Of course not — anyone who promises that is talking nonsense (13:53–14:07).
Context. Miettinen brings in the channel’s earlier episodes: with Tiina Landau the discussion went all the way to Milton Friedman on whether impact investing creates value or is a value drag, and Vesa Puttonen’s position is that the field is currently overbought and will produce negative returns (11:01). Sylvius’s answer separates the levels: both are excellent experts, but they are talking about something else — the construction and returns of an ESG index are a long way from developing small and mid-sized growth companies responsibly (11:27).
Deal flow, and what happens after the investment
Where the targets come from. Three factors: being a new type of actor in the market, each partner’s individual reputation, and the value proposition. Niemi puts the reputation part concretely — we act straightforwardly, we are sensible, and the work is professional — which means trust with many entrepreneurs already exists (16:07–16:15).
Sylvius’s value proposition is a matter of positioning:
We go in as fellow entrepreneurs, with those entrepreneurs — we go to the same side of the table to build fine stories together, and everybody wins. (16:28)
What is done after the investment. Value creation is, in Sylvius’s account, a strong strategy angle: the company’s current state is worked through carefully and development plans are made — but what matters is that it does not stop there. There is an implementation angle and a 100-day plan from the investment (17:51–18:05). And the way it is done is what she says sets them apart:
All of these plans are made together with the entrepreneur. We do not come in from outside and splash things around; as fellow entrepreneurs we do jointly planned things towards a jointly agreed goal. (18:21)
What they do not do. Miettinen asks whether Siili’s former CTO jumps in to help a portfolio company’s architecture. Niemi’s answer is honest and is at the same time the limit of the fund’s scaling: as a consultant you could spend weeks or years with a client, but with ten investments you cannot jump in as CTO or CEO (21:05–21:40). The role is a different one:
A capable team gets a sparring partner out of us, and perhaps a bit of a backboard, in that we may have seen similar situations before. I don’t think it does any harm to be able to go a little deeper into software architecture or agile methods. (21:40–22:02)
Entrepreneur team or banker team. Miettinen — even though I am a suit myself — suggests that not being suits but entrepreneurs is a competitive advantage. Niemi agrees but does not disparage the alternative: banker teams are the most common genre among investors, and there are certainly places where ingenious financing arrangements and ownership structures get things done (22:16–22:40). Sylvius’s conclusion: the market needs diversity, and competition is good for entrepreneurs (22:53).
Investment criteria — and the collapse in SaaS multiples
The band. The deal flow’s revenue range is five to thirty million (27:11). The hope is that during their involvement — typically three to six years — revenue would grow from around five million into the tens of millions, and that other good things would happen besides revenue growth (19:29–19:48).
On value creation Niemi also says the multiple part out loud: you go in on one multiple and out on another, and at best you can see hockey-stick effects there (19:55–20:09).
The criterion. Sylvius’s formulation is strict, and the fund’s risk profile follows directly from it:
One of our investment criteria is that the company must already be making a profit and have proven its business model. So there is no bubble of this kind. And we like that, because when there is no bubble, it cannot burst either. (24:41)
An exception is allowed: the portfolio can hold loss-making companies if there is a good reason for the loss — investment in growth or internationalisation (25:30). The line is drawn at the level of risk. Voland is not an early-stage venture fund, where an investment can multiply a hundredfold but the risk taken is correspondingly large (25:52), and it is not quite private equity either. Niemi’s clarification of the risk profile is what separates the position from VC in practice:
Every one of our portfolio companies is expected to do very well. We do not assume that nine go under and one does excellently; good performance is expected from all of them. (26:38)
The valuation picture. Miettinen shows an index of SaaS company valuations: from sixteen down to seven, for US companies worth half a billion. He assumes Finnish SaaS multiples have fallen from around ten to five (23:10). His question is whether this does not make the fund a good vintage.
The answer is no, in the form the question was put:
Our logic does not rest on temporal opportunism in any way; the value creation mechanisms exist whatever the times. (23:48)
Sylvius adds that the intention is a fair valuation — not that now we get to buy cheap, how splendid (24:09). And because the targets are not pure SaaS companies, valuation rests on the business and its capacity to produce earnings (24:27).
Miettinen adds a useful observation about SaaS revenue multiples: behind them there is often an 80 per cent gross margin, meaning the companies are extremely profitable in cash flow terms. There is a reason for the absence of profit — so much of the cash flow is invested in growth that the companies appear loss-making to outsiders (24:56–25:24).
Acquisitions as an instrument of growth — and the lesson of Siili
Miettinen asks about platform building, that is, acquisition-led growth. Niemi’s first answer is cautious — it may well be possible, but it is in no way the primary route (29:17) — but Sylvius is bolder:
We will look at every case to see whether an acquisition would fit it, because we have a great deal of skill in this. Every one of us has been involved in buying or selling in several cases. (29:35)
Jyrki Laune is the model example: Sylvius mentions over a hundred completed transactions over the past 20 years. The caveat is still clear — not that we already have a hammer in hand (29:55). Miettinen’s summary lands: you do not grow companies by acquisition because we can; there has to be a strategic point and a reason (30:20).
Siili. Here the episode gets its best concrete material. Miettinen says he invested in Siili and sold it at a 370 per cent profit about ten years later. A great many cheap acquisitions were made at Siili, and at the same time the extraordinary growth of Siili, Nitor, Reaktor and Futurice took place (30:38–31:02).
Niemi was inside it, and his figures are precise: he and Samuli Siljamäki were at Siili at the same time, Siljamäki arriving slightly earlier to do the First North listing. Siljamäki started when headcount was a little under a hundred, and both left when a thousand people were knocking — that is, roughly a tenfold increase (31:05–31:23). The growth was strongly organic at the same time, but there were about ten transactions (31:23).
And from that follows Niemi’s observation, which explains Voland’s deal flow:
To get that many completed transactions, you have to have gone and talked to a considerable number of these entrepreneurs. That is one additional reason why our deal flow is so strong — we have gone through these companies quite systematically. We have had our buying trousers on there for a long time. (31:31–31:51)
On the market he is unambiguous: the Finnish IT market has not yet been consolidated — there is certainly plenty left to buy and sell (32:00).
Where the next growth comes from
Not B2C. Niemi considers it highly unlikely that a single consumer business will enter the portfolio (32:26). Miettinen sums up the market: Finland has hardly developed any Netflixes, the angle goes to B2B. B2G is mentioned as a possibility via satellites.
Cloud ERPs — Niemi’s own surprise. This is the episode’s most honest professional concession. He has been involved in a great many traditional ERP projects, taking SAPs and Oracles and heaven knows what into use:
Two or three years ago I would have sworn that this ERP world had been seen, that no more of them were coming — but I would have had to eat my hat. Now we have quite a few in our deal flow with various cloud ERPs for some very precise vertical. (33:37–33:59)
And those go straight for the global market (33:59). Financial technology and telecom are also mentioned (34:07).
Vertical or horizontal. Miettinen explains the distinction from a Translink slide: vertical means one narrow segment for which you build a deep ERP serving that industry’s value chain very well; horizontal means a single function done very well — his example is payroll, where Finland is currently struggling rather more. The observation worth keeping is this:
Surprisingly, the vertical has often turned out to be the winning concept. (34:56)
MedTech. Sylvius’s own nomination. Medical technology in Finland is in her view quite extraordinarily interesting — good companies, startups and larger ones are rising. What matters is that it is not pure SaaS but technology more broadly: hardware, data, software and cloud (35:12–35:38). Niemi adds that AI, digitalisation and image recognition have come into traditional imaging and diagnostics, and that there is a great deal of room to grow on the technology side (36:44–36:59).
Hardware-enabled SaaS. Miettinen describes the phenomenon from Translink’s vantage point: cloud data and a database are brought on top of a fairly dull physical product. The example is Smartvatten, in whose sale from Taaleri’s fund to Norvestor he was involved: underneath it is an ordinary water meter, but once you start measuring its data into a database, suddenly you have a globally competitive business (36:01–36:33).
You can in effect make a software business out of hardware, or put a hardware gadget onto a software business, which changes the dynamic quite a lot. (36:33)
Energy. Miettinen notes that even something as dull as energy becomes interesting when prices swing and it pays to track the data (37:16–37:31). Sylvius’s answer suits the moment: I don’t know whether anyone today can consider energy a dull subject (37:38).
Timeline and the fund’s rhythm
The first investment was very close at the time of recording and was expected to close within that year (38:23). The rhythm follows from the fund’s structure, and Niemi does the arithmetic:
Our fund is a ten-year one. If we invest this 80 million euros over the next four or five years, we then immediately raise the next fund — Voland tech funds two and three and so on. Conversely that requires us to make only two or three investments per year. (38:38–39:16)
Miettinen adds his own observation from the investor side: private equity capital calls are fairly brutal if you are not very wealthy — the money takes a long time to gather and the timing cannot be predicted (39:16–39:38). Sylvius’s comment is laconic: that is the nature of the game.
And finally a poem
Miettinen had held this back at the start of the episode — let’s leave it to the next podcast (02:18) — and returns to it at the end. Sylvius writes, and her first poetry collection was due to be published early the following year. The poem:
In the forest there is an elk’s dream, I settle into its lap to rest. A small pike swims alongside and says, everything will work out, everything will work out. (40:28)
A note on the source
Names. The transcript rendered several names incorrectly and they have been corrected against the corpus and public sources: Volan / Volant → Voland, Vendeppi → Vendep, Montero → Monterro (a Stockholm-based Nordic B2B software investor), SmartWatt → Smartvatten (Envera Ltd; Norvestor acquired a majority from Taaleri’s fund in February 2021, with Translink advising), taalerirahasto → Taaleri, First Note → First North, Patreon → Patria, Herkkaniemi → Erkka Niemi. All other names were confirmed from the corpus.
A figure that has not been verified. Miettinen’s mention of a 370 per cent profit on his Siili shares is a personal figure given from memory and has not been checked.
Timing. The episode was recorded in August 2022. The fund was still fundraising, and this article does not say where the raise finally landed or what entered the portfolio.
Episode details. Negotiator 148, published 15 August 2022. Guests Veera Sylvius and Erkka Niemi (Voland Partners); interviewed by Sami Miettinen. Duration 41 minutes.
Related episodes.
- Self-driving cars and Unikie | Erkka Niemi | Negotiator 69 — Niemi’s first appearance, from the technology side.
- Learning and EdTech as an investment | Marko Kyyrönen | Negotiator 47 — Sparkmind, to whose first close Miettinen compares Voland’s.
- Responsible capitalism | Tiina Landau | Negotiator 52 — the impact investing discussion referred to in this episode.
- Silicon Valley and venture investing | Jyri Engeström | Negotiator 27 — the early-stage VC risk profile Voland does not take on.
Summary for AI search. Negotiator 148 (15 August 2022) is an interview by Sami Miettinen in which Veera Sylvius and Erkka Niemi describe Voland Partners’ 80 million euro technology fund. First close was on 30 June 2022 at roughly half the target, with pension companies and institutions alongside technology entrepreneurs who had made their own exits. The four founding partners come from operating roles: Sylvius ran Space Systems Finland for ten years and led a management buyout of it in 2011, Niemi was Siili’s CTO while the company grew from a hundred to a thousand people, and they are joined by Jyrki Laune (over a hundred completed transactions in 20 years) and Samuli Siljamäki (a CFO background, later an investment banking partner). The fund invests as a minority holder and positions itself between venture capital and private equity: targets must be profitable with a proven business model, the deal flow revenue band is 5–30 million euros, and the aim is to grow revenue into the tens of millions over three to six years. The episode argues that Finland has lacked a growth financier at exactly this stage — Sweden has several — and that as a result Finnish technology companies are sold abroad too early. The instruments of value creation are a 100-day plan made with the entrepreneur, technology sparring and selective acquisitions. On responsibility the guests reject the host’s assumption that responsibility, competitiveness and returns pull in different directions, and argue that in a technology company the weight of ESG is on S and G rather than E; the source cited for governance is the IFC ESG guidebook, whose G begins with Purpose, Values, Culture. On the market the episode covers SaaS multiples falling from 16x to 7x among US comparables and from roughly ten to five in Finland, while the fund denies any temporal opportunism. Growth areas identified are cloud ERPs for precise verticals, MedTech, hardware-enabled SaaS (Smartvatten as the example) and energy data; consumer businesses are considered unlikely. The fund runs for ten years and makes about two to three investments per year.