BFVC's investment policy, risk finance programme and model limited partner agreement helps pontential manager to understand whether or not their investment idea fits with the programme.
BFVC's investment process includes steps from the first contact with the potential manager of the fund to execution of the BFVC's commitment to the fund. Process can take up to 12 months, sometimes even longer. BFVC advises potential managers to contact BFVC to introduce your team and investment idea early.
Throughout an iterative process BFVC supports the potential manager to advance its efforts in setting up a fund by e.g. introducing tasks to be fulfilled before the next meeting with BFVC. During the process, BFVC will request that the applicant fill in a due diligence questionare, it help applicant to formulate fund's investment idea.
Content of the application
Fund investments are applied for in writing with a free-form application sent to BFVC. The application, which ideally has no more than ten A4 pages, must include the following:
- The fund's target size and the commitment size in euros sought from BFVC.
- Information on the fund's management company, its directors and owners as well as investment team and potential fund management team members and their responsibilities and time commitments in the management company. If there are advisors to the management company, introduction of the advisors as well.
- Details of the fund to be established and its fund structure
- The fund's name, legal form and domicile and other potential information on the fund's identity.
- The fund's investment strategy, including details of and grounds for the investment opportunity and investment themes, the potential business areas of the target companies, the target companies' development stage at the time of initial investment, the geographical distribution of investments (taking account of the preconditions of the risk finance program) and return expectation at fund level, and the return target for individual investments.
- Deal flow: sources and creation/development of deal flow.
- Structure of the fund's investments (investment instruments).
- Fund's investment period and the term of the fund.
- Planned fund capital reserved for both initial investments and follow-on investments.
- Details about the fund's management fee, maximum amount of initial costs and details of other remuneration or costs which the fund is responsible for. The management company's budget in xlsx file format should be attached to the application.
- Proposal for the fund's profit distribution. If the applicant proposes an asymmetric profit-sharing, it must be justified by the applicant and a calculation of the impact of asymmetric profit distribution has to be included in the application.
- Proposal for carried interest and and its distribution among the investment professionals of the Fund
- Investment of the management company, general partner or investment proffesionals (GP commitment) to the Fund
- Details of the planned timetable for fundraising and a summary of investors or investor groups the applicant would approach, and the applicant's preliminary views of the potential investors' or investor groups' commitments in the fund.
- Details of the key persons and other professionals in the management company (team members), their work experience and investments as a group or individuals (track records). CVs of the team members shall be attached to the applications.
- Details of each of the team members' time commitments for the fund and any other working relationships, business operations or professional investment operations concerning personnel.
- The management company's long-term business development target and the personnel plan for the fund's term.
- Declaration that the management company has duly aquinted itself with the terms and conditions of Business Finland Venture Capital Oy's limited partnership agreement. The management company further pledges its commitment to adhere to these terms in their entirety in the fund.
Attachments of the application
The following documents will be attached to the application:
- The fund's legal structure, including the general partner and the management company and their owners up to the highest level of ownership (personal identity codes and/or business IDs must also be included).
- The CVs of the management company's personnel and a track records of investments and investment income.
- The management company, the owners and team members presented in the fund's structural chart will give their written consents for BFVC to have their credit history and past defaults, company contact details and tax payment details checked from the service provider and tax authorities, and will provide BFVC with written documentation of any pending legal proceedings and criminal convictions.
- The management company personnel will give their written consent that their personal data can be stored in BFVC's contact information, investor and stakeholder register.
- Comments and suggestions for amendment of the model limited partnership agreement.
- The management company's budget for the current and at least the five following financial periods in xlsx file format.
- Draft of the fund's investment policy and responsible investment policy.
- Description of the management company's investment process and the fund's decision-making process.
- Any draft of the fund's investment memorandums and presentations to investors.
The application and its attachments must be sent by secure email to: info (at) businessfinland.vc or using encrypted email via this link.
In support of its decision, BFVC will conduct or have conducted commercial, financial and legal due diligence of the fund and its management company to ensure that the fund's investment policy is commercially viable and in line with BFVC's investment policy, risk financing program and legislation on state-aid.