Growth capital helps companies grow and investors diversify

Listed markets are already efficient (or they claim to be), and excess profits are tough to find. However, there are still a lot of inefficiencies in the non-listed markets and, therefore, more opportunities for a savvy investor.

Fast-growing companies offer a well-balanced risk/return ratio in the high return segment of the financial market. For years, most listed domestic companies have suffered minimal to non-existing top-line growth, so investing in growth companies will help balance the investor’s portfolio in that respect.

The only free lunch in investing is diversification. Since there is no tradable market for growth or venture capital, the only way to diversify is to invest in funds or become one, which is not plausible for most investors. However, it will take up to years for the company’s real value to surface from the current pricing, making growth funds long-term ownership, not investment, products in an investor’s portfolio.

Growth companies benefit from investors’ expertise

In growth capital, investors' (or limited partners') money is collected for funds run by general partners (GPs). These funds invest in fast-growing private companies, typically participating in their new share emissions. This new equity is then used to finance the company's growth related activities.

The financial outcome of the investment is based on proceeds gathered from the sale of the shares after typically 5 to 8 years of ownership. Since during the ownership period most, if not all, of the company's profits are used to strengthen the growth, there are seldom any dividends or other payouts before the sale of the shares.

Ultimately growth funds are minority shareholders of fast-growing companies' equity. Decisions are guided by a shareholders' agreement that usually gives the company's founders a lot of operational freedom but also protects the minority shareholders' interests. Active GPs are involved in company management by taking a seat on the company board.

We at Evli Growth Partners invest in European founder-led companies managed by ambitious experts in their fields. Our Growth Partners, some of the most successful entrepreneurs in Finland, work both as investors in the fund and active advisors to the companies in our portfolio, providing hands-on support and valuable networks.

Access to the most beautiful growth companies

There are at least tens of thousands of startups in Europe. It takes time and skill to find the most beautiful. The competition to get into the most promising deals is heavy.

Our asset in this competition is to offer much more than money to the founders. They usually value our entrepreneurial background, willingness to lead the finance rounds and the Finnish way of directly communicating our timeline, financial targets, and improvement suggestions.

Evli Growth Partners team. Starting left: Jake Jyväsjärvi (trainee), Maiju Aspegren, Riku Asikainen, Pauliina Sinnemaa, Jere Blomqvist.

Our expertise and dedication also mean that the best European growth companies are now accessible to private and institutional investors who otherwise couldn't get involved until the company goes public, if it ever does.

Growth companies add much-needed diversification to a value stock-filled portfolio and the opportunity for growth that one rarely finds in the listed market. When speaking with investors, I often compare investing in growth companies to eating chili. Some dare to add just a bit, and some can tolerate a lot more, but there are hardly any dishes that wouldn't benefit from a touch of it.

Our funds are great for investors who want an attractive risk-return ratio and an opportunity to develop sustainable business practices. We at Evli Growth Partners believe in creating great returns without compromising sustainability. We're on a mission to accelerate the most beautiful growth companies with world-class resources to do good.

 

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Private Debt provides stable income and excellent risk-adjusted returns

Unlisted real estate adds stability to the portfolio in the long run

 

NB! Evli's alternative investment funds are intended for professional investors and a limited number of non-professional clients who make an investment of at least EUR 100,000 and who are considered to have an adequate understanding of the fund and its investment activities.