Butterfly Venture Fund III starts investing, two new American partners join in

Butterfly Ventures starts investing today from the new Butterfly Venture Fund III. The target size of the fund is 24 million euro. The fund focuses on hardware and deep tech companies whose business is built around unique, often protected and hard to reproduce technology. Butterfly Ventures is joining forces with US and Sweden based Capital A Partners (CAP A) for the new fund.

One of the focus areas of the fund is research based innovation and co-operation with universities that Butterfly Ventures has established relationships with. The fund is particularly interested in seed stage companies with high growth potential. While most of the target companies will be from Finland, the fund will also invest elsewhere in the Nordics and the Baltics.

The expansion of operations brings into the new fund two American partners from CAP A, Tanya Marvin-Horowitz, based in Stockholm, and David Mendez, based in the United States. One of portfolio companies in CAP A’s Fund I, Svenska Aerogel, listed in December 2016 to the Stockholm First North. CAP A is also a co-investor alongside Butterfly Ventures in portfolio company, Conexbird.

“We are so excited to be working with such a successful and experienced Butterfly team as we embark on our first Nordic-based fund. CAP A has made investments in the Nordics since 2013; however, our partnership with Butterfly establishes a more substantial presence here and provides more resources to help build our portfolio companies into successful global enterprises.” states Tanya Marvin-Horowitz, Managing Partner at CAP A.

With the new fund, the Butterfly Ventures team will have nearly 40 million euro under management. To date, Butterfly Ventures has invested in 40 portfolio companies and in the light of Finnish Venture Capital Association (FVCA) statistics it has had roughly 15% – 20% market share of all the early stage first time investment rounds invested by venture capital funds in Finland. In addition, CAP A has invested in 18 portfolio companies, 7 of which are Nordic based.

“Butterfly Ventures was the first VC we spoke with. The co-operation started a year and half before the seed investment round. When we needed the funding, everything worked out really fast. It was particularly important for us, that in addition to funding, we got on board a VC who we trusted and with whom the co-operation was working really well.”, noted Toni Linden, the CEO of KNL Networks.

“The help we’ve gotten, particularly immediately after the first investment round has been invaluable. The co-operation with Butterfly Ventures has always been fruitful, constructive and such that it supports the entrepreneur. Whenever I have asked, they have helped us. Therefore, it’s very easy to recommend Butterfly Ventures to my fellow entrepreneurs.”, says Aki Soudunsaari, the CEO of Naava.

A significant portion of Butterfly Ventures’ current portfolio companies deal with deep tech and hardware, such as KNL Networks, Optiwatti, Naava, Valossa, Sarokal Test Systems, Conexbird, Sapotech and Asmo Solutions.

”Of our existing portfolio, those companies who have had a hardware component have developed faster than others. This can be seen both in their revenues as well as valuation. Furthermore, many of our most interesting companies, for instance KNL Networks and Valossa, have research based roots. It’s natural that the focus of the new fund is steered towards this direction.”, states Juho Risku, Partner of Butterfly Ventures.

”The fact that Finland has very good hardware knowledge explains part of it. During the last few years, hardware development has become easier and more cost efficient. We also believe that one of our key success factors has been the very conscious, open and constructive co-operation with our portfolio companies. We have a good reputation and we get plenty of leads through the entrepreneurs of our existing portfolio companies.”, adds Ville Heikkinen, Partner of Butterfly Ventures.

Initial investors of Butterfly Venture Fund III include Tekes Venture Capital Ltd, Elo Mutual Pension Insurance Company, Fennia Mutual Insurance Company, Tradeka-invest Ltd, AI-Partners Ltd, LocalTapiola Pohjoinen Mutual Insurance Company and Gerako Ltd. The fund may accept additional investors until the final closing.

”We haven’t invested in such an early stage venture funds before, but the focus area of the new Butterfly Ventures’ fund along with the versatility of the team and the success of their earlier investments convinced us. We have researched several funds and this was suitable for Fennia’s investment portfolio.”, says Eero Eriksson, Deputy Managing Director of Fennia.

This first closing of the fund is nearly 13 million euro. The final closing of the fund will be done during 2017 and the size will be capped at 24 million euro.

”The rapid start with professional investors who have plenty of experience of investing into venture capital funds tells that we’re trusted. Naturally, the significant commitments of large institutional investors and Tekes Venture Capital are a good sign.”, explains the CEO of Butterfly Ventures, Matti Kanninen, “The success of our portfolio companies has helped also; for example, KNL Networks’ 9 million Series A round, which was one of the largest A rounds in 2016 in Scandinavia, and crowd funding of Asmo Solutions, which was closed just in two days, faster than any other over million crowd funding campaign in Finland. The fresh triple victory of Optiwatti at the nationwide Kasvu Open could also be mentioned.”

Enquiries and additional information

Matti Kanninen, managing partner
Phone: +358 (40) 5455877
Email: matti@butterfly.vc

Resources

Download PDF: EN, FI

Case: Foodiac

Foodiac LogoConsumers and businesses want more unique and personal dining experiences. At the same time chefs would like to make name and have variety for their work which typical restaurant job doesn’t offer, as well as earn some extra income. Foodiac is a service to facilitate this, it allows anyone to book the best chefs around to cook at their home or corporate events. For chefs it allows easy end-to-end management of customer flow. Foodiac will disrupt the whole $33 billion in-home catering and $36 billion B2B event catering markets, while also challenging the fine-dining restaurants globally.

Foodiac connects the best chefs around with the consumers.

Foodiac connects the best chefs around with the consumers.

Prior to Butterfly’s investment Foodiac has proven the business model locally in Finland by attracting nearly 100 service providers, generating superb metrics, including >1000% google ads ROI, nearly 100k€ incoming monthly RFQs and over 150k€ worth of revenue.

“The market of in-home and event catering are completely untapped markets. Also the restaurant industry has trouble matching the growing requirements of customers. We at Foodiac noticed this opportunity and the response from the markets has been amazing. We’re glad to have Butterfly backing us both financially and with the wide experience they have in growing startups. We just launched in United Arab Emirates and the metrics look even better than in Finland. We are further expanding the concept to Germany in 2015 and using the knowledge of Butterfly to plan the next steps in conquering the world.” (Miikka Mäkiö, CEO of Foodiac)

Butterfly invested into Foodiac because of very professionally carried proof of business pilot in Finland with extraordinary metrics. The team is hard working, smart, agile and capable of delivering results professionally. Butterfly’s investment will be used to validate the business model in international markets outside of Finland.

Case: Augumenta

augumenta-logo-27.10.2014Augmented reality (AR) might sound like a science fiction, yet there are many industrial applications where AR is being deployed already today, for instance in warehousing and service operations. Typically AR brings in loads of information in meaningful way to the task at hand that speeds up the work and reduces the number of errors. However AR hasn’t been very interactive, thus limiting the power and uses of it. AR represents paradigm shift in device user interaction and requires reliable advanced means of interaction such as hand gestures. Augumenta is forerunner here, delivering fast, reliable and energy efficient gesture detection and virtual inputs for AR interaction as an easy to integrate SDK for application and device vendors.

There are wide variety of industrial applications where AR becomes handy, like identifying the right pipe and operating field automation on the spot.

There are wide variety of industrial applications where AR becomes handy, like identifying the right pipe and operating field automation on the spot.

Prior to Butterfly’s investment Augumenta had finished the minimum viable product and secured two industrial system integrators, who are now evaluating the package. Furthermore they have one granted patent and two more filed, securing the related IP.

“Augumenta was founded with a clear mission: to make wearable devices convenient and easy to use. Smartglass is a powerful tool for enterprises, and when equipped with our interaction solutions, they enhance productivity at workplace, resulting in significant cost savings. We focus on bringing our technology to different industry verticals, while expanding our product offering and patent portfolio. Wearable devices are a dynamic, fast-developing market with some unique challenges. We are delighted to have Butterfly as our investor; their vast experience in business strategies and IPR management is a great asset for taking Augumenta to the next level.” (Tero Aaltonen, CEO of Augumenta)

Butterfly invested into Augumenta because of their innovative market approach that allows them to jump ahead before the consumer mass adoption of AR. Their product offers easy path of AR integration, way smoother gesture detection and AR interaction as well as substantially longer battery life than competing products. Another key driver for the investment was the highly professional PhD level founder team with years of relevant industry experience. Butterfly’s investment will be used for confirming the product market fit and securing the first few major customers.

Case: Ceruus

Ceruus logo, white bgCeruus has created a reliable, low-cost and easy to implement service platform for internet of things products and services creation. The platform has a flexible data synchronization which operates reliably also in environments where there is no fixed internet gateway, i.e. when an end user device, such as smart phone is used as a gateway. This provides plenty of flexibility for products and business models. Their mass production ready reference implementation includes low cost standalone Bluetooth based internet of things hardware module that records temp / motion data and provides control when integrated to other hardware. Internet of things is one of the billion dollar megatrends and Ceruus addresses some of the key competitive factors, i.e. reliability, power consumption, ease of implementation, mobility and flexibility.

Ceruus allows easy access to such information such as energy consumption and temperature at home.

Ceruus allows easy access to such information such as energy consumption and temperature at home.

Prior to Butterfly’s investment Ceruus had developed the first mass production ready product version as well as secured the first pilot customers from Finland, Germany and Taiwan.

“Internet of Things will reshape the life in the same way as the Internet has done so far. Services accessible from the web and mobile will for instance replace ordinary home instruments, like temperature gauges and room thermostats, and automate business work processes. Among other things Ceruus technology will decrease the cost of implementation and add flexibility due the fact that any smart device, such as mobile phone or tablet, can be used as a router. We’re particularly happy that Butterfly invested into us. While money is obviously important, even more important is the fact that they bring in their business insight and challenge us to see what we do from a fresh angle.” (Matti Verkasalo, CEO of Ceruus)

Butterfly invested into Ceruus because their product allows easy access to multiple internet of things business. Furthermore they have secured multiple interesting pilot customers. Ceruus team also has a very strong experience of industrial scale productisation, especially what comes to low power consumption products. Butterfly’s investment will be used for completing the second round of customer product pilots as well as business model testing and verification.

Case: Pint Please

Pint Please logoMicrobrewery phenomena has opened ever expanding number of options for beer drinkers, but how to choose what to drink and where to go to? Pint Please is a mobile application that makes it easy, it recommends the beer based on ones’ taste and shows the availability on pubs. In essence, Pint Please is leveraging the long tail phenomena, where people’s tastes are dividing into smaller segments and at the same time creating a need for personally tailored information. Beer industry, including the pubs, is a huge industry involving hundreds of millions consumers and xx of marketing money. While Pint please offers a convenient marketing channel for beer industry and pubs, it also allows the consumers easily find what they like. It’s a true win-win for both.

Pint-Please-3-in-one

Pint Please makes it easy to find the beer you like and the venues selling it. Pint Please recommends the beer according to your previous taste.

Prior to Butterfly’s investment Pint Please had made a test launch in Finland with promising metrics, acquired several paying customers and secured the key partnerships for UK launch.

“We love the beer and Pint Please is in the heart of one of the biggest trends in the world, the long tail. Traditional marketing has been just push, push, push -type, whereas Pint Please is really about the ones taste and allowing pubs and breweries to meet the taste. Everyone wins; we, beer lovers get better beer, breweries will know what kind of beer they should brew and pubs know what they should offer. At the same time, it’s a hundred million market opportunity. We’ve kept the Butterfly guys in the loop from the very beginning. The ongoing dialogue with them has helped us along the way a lot for instance with the business model. It seemed just natural to bring them in, when we had initial market proof and felt we’re ready for going international.” (Juha Karppinen, CEO of Pint Please)

Butterfly invested into Pint Please because of very promising business model with huge market that has shown to be able to generate significant revenue early on, already without millions of users they’re aiming at. This type of monetization capability is very rare among mobile applications. Furthermore the team represents excellent mix of technological and marketing talent as well as enthusiasm towards beer. The communication and co-operation has been easy. Butterfly’s investment will be used for UK launch and further development of the application as well as securing the first major international customers.