Venture funding webinar offered excellent insights to startups aspiring to grow their business in bioproducts

The ongoing series of events hosted by ExpandFibre continued in March with a thematic webinar focusing on venture funding activities, with bioproduct innovations in mind. The webinar provided multifaceted insights on the venturing landscape and attracted a good crowd online, as it was open to anyone interested in the topic. The webinar was organised in close collaboration with ExpandFibre Ecosystem member Innovestor – one of the most active venture capital companies in the Nordics having the largest VC backed start-up portfolios in Finland.

The ExpandFibre programme managers Katariina Kemppainen from Metsä and Maiju Miettinen from Fortum welcomed the participants by briefly introducing the ExpandFibre Ecosystem’s goals and key activities.

Startups and corporations need each other for competitive advantage and innovations

Innovestor’s Managing Partner Matti Härkönen was joined by Reima Linnanvirta,Partner at Trind.vc, for the introductory webinar session highlighting together the basics of corporate venturing and the two main reasons why corporations want to create collaboration with startups. Firstly, corporations wish to explore innovative products, solutions, and processes and secondly, they want to access innovative business models. Matti reminded that collaboration between startups and corporations is a two-way street and both parties should benefit from it, be it revenue, customer base or risk-free internationalization for startups, or external innovation, disruption and more innovative suppliers for the corporates.

As far as the corporate venturing landscape in the Nordics goes, Matti showed statistics where the trend to invest in innovations on Green Growth has been heavily increasing since 2020, even though only a small number of startups actually end up getting funding. It is, however, advisable for startups to look around carefully for the different funding options as there are many!

Corporate views on collaborating with startups

Erik Kolehmainen from Metsä Spring, the innovation company of Metsä Group, shared the company’s experiences from corporate venturing. At Metsä, the venture funding activities have shown that startups are often more agile and up-to-date with the latest developments which can for example bring new, high-value applications for Metsä Group’s side streams. Startup collaboration also brings practical value on identifying new uses for Metsä Group’s current products, especially paper-grade pulp.

Insights from Fortum’s Valkea Growth Club were given by Mikael Myllymäki, Head of External Venturing at Fortum. He started by talking about the shifting energy landscape at the moment with a growing need for actions combatting climate change. There are biodiversity imperatives with four core trends, namely: competitiveness of clean energy, prevalence of data and connectivity, abundance of climate finance and generational values shift. This is why venture investments for innovations in tackling the climate challenge is the interest of Fortum and they are very active in this sector. Valkea Startup Investments’ focus is on a cleaner future, whilst making sure the investment takes place early enough and demonstrates as Valkea being a value-adding investor.

At the end of the first part of the webinar, Senior Lead in Communications, Anna Tainio from the Finnish Climate Fund, gave a short introduction to the Finnish Climate Fund. The fund is a state-owned special-assignment company focusing on tackling climate change, boosting low-carbon industry, and promoting digitalization. They fund large-scale climate projects with annual budget of approx. 80 M€ which enables the Fund to make 10-15 investment decisions every year.

Case example 1: Innomost

Matti Härkönen from Innovestor co-hosted the first case example presentation with Tommi Äijälä from Innovestor Ventures, Sami Selkälä from Innomost and Erik Kolehmainen from Metsä Spring. Sami Selkälä started the session by briefly sharing the fascinating story of Innomost, which manufactures sustainable cosmetic ingredients from birch, upcycling the side streams from the Nordic forest industry. Knowing that the top 10 cosmetic companies cover almost 50% of the global markets, the business opportunities are huge with the ever-increasing markets for cosmetics.

Approaching such a remarkable market potential with more sustainable ingredients for cosmetics industry requires from Innomost to build an industrial plant and this is where venture capital came into picture: Metsä Spring and Innovestor granted funding to Innomost last autumn. Innovestor’s Tommi Äijälä said that venture capital investing often is founder driven. Therefore, in addition to having a strong belief in what Innomost is trying to achieve, they are excited to be part of changing the cosmetics industry with biodegradable products.

Domain expertise provided by Metsä Spring is also very valuable to startups such as Innomost. Erik Kolehmainen said that what stroke Metsä interesting in Sami’s value proposition was to use the side streams for cosmetics. However, there will be other applications for the side streams so this brings broader opportunities to Metsä. It was also pointed out that larger corporations can support startups with their experience on IPR, work safety, and other mandatory topics not necessarily on the to-do list for startups.   

Case example 2: Infinited Fiber Company

Petri Alava from Infinited Fiber Company started by presenting the company, a fashion and textile technology powerhouse. It develops a technology that turns waste textiles into a premium textile fibre looking and feeling like cotton with versatile uses. According to Petri, one of the strengths of the Infinited Fibre Company is that they have built  a strong brand customer pool and a network of manufacturing and engineering actors. Working with  brands such as H&M has helped Infinited Fiber Company to bring their product to markets and jeans made with their fiber have sold extremely well, which demonstrates the consumer expectations for sustainability. Their next step is to make their innovation mainstream in apparels, yarn manufacturing and nonwoven producers. Their flagship plant is to start operations in 2024.

Voima Ventures is Infinited Fiber Company’s pre-seed investor and has continued to support the company in its growth journey, seeing its potential to be a game changer in textile industry. Jussi Sainiemi from Voima Ventures shared how they help deep-tech founders such as Infinited Fiber Company accelerate their growth. The bioeconomy investments address the areas of sustainable materials, food technology circularity and scarce resources to mention a few examples. As to why it is worth investing in bio and circular economy innovations, Jussi gave as examples that demand for sustainable solutions will grow exponentially due to customer pressure and tightening regulation, and many innovations address a huge market, as we already saw from the case examples.  

Overall, the ExpandFibre webinar, organized in co-operation with Innovestor, was a highly interesting crash course into the world of venture capital and the vast possibilities for emerging start-ups as well as corporations to co-create and collaborate in the field of bio innovations. Matti Härkönen, Innovestor’s Managing Partner in Corporate Venturing summarized his most important advice as follows: “I’d challenge all corporations to ask themselves: in our rapidly changing business environment, is it not just too risky to execute strategic innovation work by yourself or with just few partners involved? Wouldn’t this be exactly the right time to open your strategic mindset for external innovations, for example with innovative startups?”

Did you miss the webinar? View it here.

For more information on the activities of Innovestor, visit the Innovestor website.