Through their firm Lifeline Ventures, Timo Ahopelto and his partners invest in fledgling companies.
“Instead of professional investors, we consider ourselves businessmen who both want to invest and can afford to do so.”
Ahopelto has himself experienced and lived through all of the resistance, challenges, difficulties and successes a startup faces during its growth. He says this encouraged him to become an angel investor.
Ahopelto and his friends Jaakko Ollila and Jarkko Joki-Tokola founded the IT company CRF Health Oy in 2000 almost immediately after graduation. The practice-oriented assignments they completed for courses at the Department of Industrial Engineering and Management gave them the idea for a business venture involving the digitalisation of the pharmaceutical industry's clinical patient records.
“Our humble goal was to become the best in the world and we immediately headed for the USA. We wanted – and eventually also got – the pharmaceutical industry's number-one electronic systems provider Novartis as our client.”
The partners sold CRF Health for €320 million in 2015. At that stage, the company employed some 350 people and generated a turnover of about €100 million.
Ahopelto is proud of what he and his partners have accomplished. Today, 18 out of the world's 20 largest pharmaceutical companies uses CRF Health's solutions in their clinical patient trials.
“Becoming the best in the world took an unbelievable amount of work and 5-10 years of total devotion to the cause.”
Free from prejudice
For Ahopelto, CRF Health was a “university of entrepreneurship.”
“Entrepreneurship is a kind of an apprentice profession that can only be learned through practice. Your first company, a venture for which you work night and day, is a unique experience for every entrepreneur. The experience never leaves you, no matter what happens to that business.”
Ahopelto says universities and other institutions of higher learning play an important role in sparking interest in and enabling entrepreneurship.
“Aalto University has kept an open mind about entrepreneurship. Towards the end of the 2000s, it gave birth to the Aaltoes student movement and the Aalto Venture Garage, which the students have developed further into Startup Sauna and the Slush event.”
Startup business activity and ecosystems have not been spawned through State-sponsored programmes; instead, development has stemmed from the ideas and actions of individual people. Ahopelto raises familiar names, such as Aaltoes founder Kristo Ovaska and Slush progenitor Miki Kuusi.
Big things from little seeds
Timo Ahopelto is convinced that Finland is experiencing an entrepreneurial renaissance.
“For many people, entrepreneurship has become an enticing alternative. Attitudes have changed enormously in just half a decade.”
Ahopelto says an entrepreneurial renaissance is more than just young people establishing businesses. More and more people employed by established companies are also considering the possibility of developing fresh business activities around some product.
“Entrepreneurial thinking can manifest itself in large corporations by, for example, employees not viewing some matter as being too small from the perspective of the company's business and instead trying to come up with a way to develop something large from that small thing.”
A classic example is the operating system Android, which Google purchased for a relative pittance. Now, Android competes for the top spot in the ranking of operating systems for mobile telecommunications.
“We should also bear in mind that many of the world's most significant companies, such as Facebook, Google and Apple, were born out of the ideas and efforts of just a few people.”
Ahopelto notes that Finland's startup ecosystem is now, at just over half a decade old, only at the start of its development curve. The Silicon Valley ecosystem started to develop some 70 years ago in the United States, and even Israel's so-called Silicon Valley of the Middle East only got going about twenty years ago.
“Israel, with a population of eight million people, has managed to create an ecosystem which generates 200 million dollars worth of mergers and acquisitions a week. Why couldn't we do the same here in Finland? Even now, despite our short period of development, we've achieved enormously good results.”
Ahopelto says startup ecosystems are already engaged in global competition for both talent and funding. Helsinki's challengers include Stockholm, Berlin, London, Silicon Valley and Tel Aviv.
Ahopelto holds the view that the cooperative spirit through which things often progress is one manifestation of the ongoing renaissance.
“Many will help the community without receiving immediate compensation. These days, it is possible to get advice from Finland's best and most experienced players by networking and just asking the right person at the right time. Some time ago, this would have been almost impossible.”
Circles of friends are of great significance. Ahopelto says a good team is able to iterate a good product and a market for it. If necessary, the team will acknowledge even painful realities and can correct course before it's too late.
“Startup Sauna and Slush are specific points where the entire Finnish startup scene congregates. Volunteering to help in the organising of Slush, for example, lets you get involved and form networks,” Ahopelto hints.
Fun and fulfilling
Ahopelto demonstrates his own faith in startup companies and the entrepreneurial renaissance by acting as an angel investor. He co-founded the investment company Lifeline Ventures with Petteri Koponen in 2009.
At first, they made small investments, providing funding in the tens of thousands of euro. In 2012, the partners founded a €30 million fund and the size of their investments grew as a consequence. Their newest venture, Lifeline Ventures III Ky, is a €57 million fund.
“We are prepared to take big, sometimes even crazy, risks. We talk about technology, market and team risk. We are least prepared to compromise on team risk. We like to invest in sectors, which at least one of us is already familiar with.”
Investments target Finnish startup businesses that are seeking funding in the so-called angel stage or a bit later in the seed phase.
“The entrepreneurial renaissance is the only thing that can save the Finnish economy in the present situation. Small firms typically operate in sectors in which value-added and demand are growing.”
Ahopelto thinks Finnish startups should focus on sectors in which they have the potential to be the best in the world.
“The sector itself can be narrow or broad, but your product has to include real specialised expertise if you want to be the best. It is too often the case in Finland that we produce generic things such as software products, which are also being made by many others all over the world. ”
Ahopelto speaks enthusiastically about entrepreneurship and angel investing, pointing out that it allows you to simultaneously participate in the life of a dozen companies in the early stages of their development, making it very gripping, a lot of fun and rewarding.
- Timo Ahopelto received his Master's degree from the Department of Industrial Management and Engineering in 1999. He majored in strategy with a minor in telecommunications software. After graduation, he first worked as a consultant with McKinsey & Company for one year. In 2000, he and his partners founded CRF Health Oy, where he worked as CEO for seven years.
In 2007–09, he was the Head of Strategy and Business Development at Blyk Oy, a company which aimed to make mobile calls free with the aid of advertising. Ahopelto and Petteri Koponen co-founded Lifeline Ventures, a startup funding provider, in 2009.
Ahopelto serves on the Board of several startup businesses, in addition to which he is a Board member at Tekes, the Finnish Business and Policy Forum EVA, Slush Helsinki Oy and the Startup Foundation.
Ahopelto debuted as an author in 2013. He drew on his own life experiences as a growth entrepreneur to write the novel Sand Hill Road.
Text: Timo Hämäläinen. Photo: Jaakko Kahilaniemi.
The article is originally published in Finnish in Aalto University Magazine 17 (issuu.com) October 2016.