Mixing startups and VC with French seasoning

July 19, 2020

Tero Mennander – TALKS WITH PETRI

Tero Mennander talks about missing the perfect exit window and life as a VC in France and the Nordics. He also reveals his connection to Leningrad.


Tero Mennander has been General Partner with Ventech since 2016 and brings operational, entrepreneurial and investment experience in innovation. With an office in Helsinki and Paris, he covers Ventech’s investment activities in the Nordic countries, Finland, Sweden and Denmark.

During his times as an investor (1998 – 2006) for Sitra and as General Partner with Nordic Venture Partners he led numerous early-stage Nordic investments such as u-Nav Microelectronics (acquired by Atheros), CRF Health (acquired by Vitruvian Partners), Continuent (acquired by WMware), and MAC (acquired by Meconet). He has also held several Investment Committee and Advisory Board positions in European and US VC funds. During his tenure with Nokia (2006 – 2012) he held leadership positions in Corporate Development, Venturing and M&A. Earlier in his career, he worked in business development for Boeing Corp.

Most recently Tero founded and was the CEO of PulseOn (2012-2015), a connected wearables company specializing in optical sensors and algorithms.

Tero holds a Msc. in Industrial Economics from Université de Genève and an MEB from Solvay Business School, Université libre de Bruxelles. Tero has lived and studied or worked in Belgium, Switzerland, UK, Russia, USA, and Finland.


(NOTE: The text may contain errors, misconceptions and even comical unintended contexts. Please use it only as a reference to the actual audio conversation from where it has been transcribed.)

Petri: How does it feel not being able to fly to France every second week?

Tero: It gives me more time to do more work. I don’t have to spend so much time at the airports and in airplanes. Time-wise it’s more efficient but meeting my colleagues in France and Germany is always a pleasure. I miss that as well.

Petri: Do you think you’re going back to the same schedule as before? Or is that something it’s going to change for permanently?

Tero: That’s a good question because we’ve been thinking about that in the partnership. This remote work, although we’ve been doing that quite a bit in the past as well, but we’ve been talking both in the French and German offices, whether we should implement some kind of a different structure where people systematically can work more remotely than until now. I probably will go back to the previous rhythm of flying over to Paris every two or three weeks. But it’s been a good time actually to see during this corona crisis how things can be done remotely very efficiently.

I closed an investment totally remotely. I had met the team before the crisis. In a way, it wasn’t really closed totally remotely. But normally you tend to meet the team again before signing. And this time we couldn’t do that. The final touch was done all remotely.

Petri: Has anything changed? The frequency you do deals? Or are the valuations going down or is there any change?

Tero: I wouldn’t say that we know yet exactly where the world is going. When Corona hit all of us really hard in mid-March, we were afraid in some of our portfolio companies that things would get much worse than where we are today. There’s nice optimism in the air again.

Petri: Was there a phase where you were hands-on helping your portfolio companies?

Tero: Absolutely. We reacted very fast right from the beginning. We wanted to go through all our portfolio companies within our own team, but more importantly portfolio companies. We wanted to cover all the possible scenarios with the companies on the board, with the management team, with the CEOs.

We wanted to build scenarios, worst-case scenario, a base case scenario and less that of a worst-case scenario. And according to those scenarios, we wanted to see where the company stands. And in some of our portfolio companies that are not cashflow positive yet we wanted to see very systematically how much cash runway do they have.

Since there’s a lot of fog in the air, we don’t know where the markets will be going within the next 18 months. We wanted to be sure that we know in each portfolio company where we stand.

Petri: What did you learn in that process and what do you do next time a bit differently?

Tero: Acting fast is always the best thing to do and not start waiting and seeing. Proactive reaction and fast reaction is always good. So looking back when you look at, for example, my portfolio companies, I really respect the CEOs and founders that started taking measures, if necessary, as soon as possible. So a fast reaction is always good.

Petri: Where did you add value as a VC, as an investor to startups? What kind of help a CEO could expect to get from you in a crisis situation?

Tero: We want to make sure in all of our portfolio companies systematically that the strategies are right. They’re the right people that can execute on the strategies. And then that there’re enough financing resources to execute on the given strategy. And here paying attention to the impact on the all different portfolio companies, what is the impact of the coronavirus? Because it depends a lot on the nature of the company and what business they’re in. Is it B2B or B2C? What is the impact? Challenging the CEO on the impact, on the scenarios. Then challenging the CEOs and the management team what operational changes should be made or even what opex cuts should be made to make sure the company is covered over the next 12 to 18 months.

It’s basically just supporting the management team, through the board work and even beyond the board work, in building the right scenarios for the companies.

Petri: Was that the reason you’ve been working more?

Tero: For the month of March, yes. I think our whole team was working a lot with the portfolio companies just to make sure that we all reacted as quickly as possible into this new situation we’re in.

Petri: You have a rather unique perspective on the VC in Europe. You are part of a French VC but yet you cover the Nordics. You are in two places at the same time. What are the differences in culture and startups? And maybe even in the VC culture?

Tero: It’s always a bit dangerous to a generalise too much. But if one were to generalise, Nordics what comes to technology and adapting new technologies is probably a bit more open and flexible if one compares it to Central Europe. There’s a small difference. Another difference if I compare startups and the venture capital industry in general, the markets in Finland, Sweden, Denmark, Norway, and the Baltic countries, which is included in the definition of new Nordics nowadays, the markets are pretty small, which means that both the startups and the VCs need to think internationally much sooner than in bigger markets like in Germany or France. One can build a rather big company in France and Germany without going overseas. But in Finland, Sweden, Denmark, it’s tough because the markets are just so small. One has to think internationally on day one.

Petri: Do you think there’s a model you prefer to grow big and fast in one country first, or just be agile and think in a multicultural way from the beginning?

Tero: I prefer the multicultural approach both in terms of startup strategy and building teams. I like teams that have diversity, not only in terms of competencies and expertise, but also culturally. The values should be the same in startup teams but diversity always is an advantage. This is my personal opinion.

I like the diversified international approach from day one. And I like companies that have a global ambition because nowadays the world is shrinking faster than ever before. Despite the coronavirus times that we’ve been facing and thinking globally for ensuring competitiveness, in the long run. Is extremely important. It becomes more and more important going forward.

Petri: Have you seen differences in experimentation and speed of trials and errors and in that type of growth and company development?

If you are only in one market and building products for one market, or, if you have multiple markets and they are in different stages you need to adapt different strategies for those markets, penetration strategies are different. Do you think that there’s something, some advantages coming from there?

Tero: I think it’s an advantage for the Nordic companies that they do need to go international almost day one because the companies learn and are ready to adapt their strategies then and their operations, as they go forward and expand internationally. Clearly, I think it’s an advantage.

And if let’s say a Swedish company enters the UK markets, as early as possible, they learn more about the competitive situations, the competitive dynamics. They learn more about how they can enter maybe later on the US market or go beyond the UK market. It’s definitely an advantage when you can think internationally from early days.

Yes, absolutely. It’s accelerating. I think.

Petri: If you are a founder and you’re thinking of taking VC money and you’re situated somewhere in Europe and you’re thinking now that everybody is pretty much a hundred milliseconds away. Why should I just knock on the doors of my local VC, if I could as well talk to Tero or some people in Italy or just name the country or throw a dart on the map and just ping them? Are there any arbitrages in that sense that you could pick and choose the best deal terms or the best partners for your company and for your growth?

Tero: Traditionally both VCs and startups have been thinking that the early-stage company we’re talking about, and if it’s a seed-stage company, for example, it’s easier to raise money locally. The company gets support from the VC. And if the VC is located just a few blocks away from the company, it helps.

It still makes sense today, but I think the VCs internationally just look at companies also overseas. VCs tend to have expertise in certain areas. Or in certain sectors and may understand more of the startups value adds or value proposition, even if they’re located on the other side of the world, but it does complicate and make it difficult when it comes to bringing added value on a daily basis to the CEO or to the management team.

Petri: What comes to the deal flow you see hundreds if not thousands of startup pitches a year. Without seeing the names or without seeing where the teams are coming from, could you make an educated guess based on how they present themselves, are there some differences?

And are there any tips, how would you look favourable in the eyes of a VC? What are the things you really would like to see also when somebody is pitching you, what are looking for?

Tero: It’s the normal VC mantra that you’ll probably hear from everybody. It’s team, the quality of the team and the level of innovation and uniqueness that the value proposition represents, the markets and the timing. All of these are obviously very important.

We look at all of those. Normally we’re being approached with pitches. Of course, we tend to look at how much the pitch makes sense, how it is presented. It has some impact as well. But I think it’s a very holistic view that we try get of the company based on the pitch, and then ultimately with the meeting and the remote call that we have with a company.

Underlining one specific point would not be fair. Because it’s a very holistic approach one needs to have when first evaluating the companies.

Petri: Yet, it’s very emotional as well. You’ll like some deals, some things are so cool. You just get it and it’s so easy to explain versus something which is completely new, maybe world-changing, but it’s so difficult to explain because it’s so unfamiliar. I think these things matter as well, because even though you have kind of bought the team and you’ve been exposed to the company, but you have to sell it internally to the other guys as well. I think that’s something as well.

Tero: I think that’s a good point. The crisper and the easier it is to explain what the company is doing and what is specifically the hypothesis or the reasoning why one should be interested about it…the easier it is to explain, obviously the easier it is for any VC to start putting time and effort and looking to close a deal with the company. That’s true.

Petri: A bit tongue in the cheek, founders please do not do these things. What are your top three?

Tero: The first point that I would say is to be as transparent as possible about your business. Because creating trust with a VC is probably the most important thing from day one. So not too much bells and whistles or sugar coating is something I prefer. I really need to understand what is the honest and true situation in the company and at what stage are they truly in?

Because if one exaggerates on a few topics in the pitch, for example, and one finds that out later on in the process then that creates doubts. Honesty and transparency is probably the most important thing that I look for in any startup founder and in any startup CEO.

I also prefer to talk directly with the management team instead of using or talking to any advisors in between. I prefer also to deal with pitches that the founding team has built instead of outsiders or any third parties. I think those two points at least for me come to my mind first.

Petri: Can you see that there’s been some external help or somebody else has been doing the things when the CEO or whoever is presenting you the case that they’re not really on top of all the issues?

Tero: That happens rarely but sometimes one can see that and then I asked myself whether there’s too much sugar coating. Because I really want to feel the ambition and the vision of the management team, of the CEO, of the founder, rather than having them present some ambitions or visions or metrics in a pitch that they don’t relate to.

Petri: You were also previously VC, almost 20 years back. How has the culture changed, the startup culture, but also the VC standard and practices over the years? Have we become closer to Silicon Valley, maybe not how it is today, but the West coast maybe ten years back or something with the practices? Are we catching up?

Tero: The VC scene has changed totally. If you think about it in the late ’90s, beginning of the 2000s, especially in Europe, many of the VCs that operated then don’t exist anymore. The VC scene has totally changed. There’re new management teams that have popped up over the past five to ten years.

Yes, absolutely. That has changed from the VC scene. The market has changed totally. In terms of the startups the whole drive to become an entrepreneur and to found a startup, the mentality has changed totally. If you think about it 15-20 years ago any talented graduate from universities would rather start working for a consultancy firm or join a big corporate.

Nowadays, I feel that the most ambitious graduates want to join startups or start founding their startups. The scenery has changed both from the startup point of view and the VC totally over the past 15 to 20 years.

It’s so much easier in a way and faster and much less capital intensive to create new startups, thanks to all the cloud and digital technologies that you have out there and the new distribution channels. It’s a huge generation shift that has happened over the past 15 to 20 years.

Petri: You’ve been living in many countries for many years, and looking at your career history as well. You were first in school and then you are suddenly a country manager of Boeing Corporation. How did that happen?

Tero: I was living practically all my life or my childhood abroad, except I did my high school here in Finland. But then I went to study abroad again in Switzerland and Belgium. After my MBA in a business school in Brussels, I started in Helsinki. I wanted to come back to my home country, to work as a project manager for McDonald Douglas in the offset program. I started off not directly as a county manager, but as a project manager for the offset program. And then after a few years, I was promoted as a country manager for the Boeing Corporation. They acquired McDonald Douglas in the mid-’90s. That’s how I turned out to be the country manager for the Boeing Corporation here in Finland.

Petri: Which countries you lived in your childhood?

Tero: I lived in Belgium twice, first for four years and then for two years. Then I have lived in the UK and in London for five years. And then I have lived in the Soviet Union, in Leningrad for a couple of years.

Petri: Do you speak Russian?

Tero: I used to. I still speak a little bit, but I don’t use it enough to say that.

Petri: When was that?

Tero: That was during the Brezhnev times. That was in the beginning of the 1980s. That was interesting for a 12-13-year-old boy. And then I have lived in Switzerland in Geneva.

Petri: What are your recollections from the Soviet time? Because it’s completely different from the other experiences and you’re an early teenager at that time.

Tero: I liked living in all these countries that I mentioned. I have really good memories, but the one and a half years or two years in Leningrad those were weird times. Because even for a 12-13-year-old boy living in the Soviet Union, I could see the huge difference in the system. I could even understand that the system isn’t really…compared to London, Brussels and Geneva Leningrad was, at least in my eyes, more like a third world country, a developing city. It was weird.

I went to a Russian school, and I was the only student in the school besides my brother that didn’t have to…we had to wear school uniforms, but we were the only ones that didn’t have to wear a scarf, a pioneer red scarf. We were regarded also as weirdos, my brother and me in that school we were different from the others because we came from this capitalistic world that wasn’t regarded highly during those times in Leningrad.

Petri: How did you spend your time? The rest of Europe was watching MTV and doing all those cool things with satellite TVs and consoles. What were the fun things to do?

Tero: We didn’t have any of that.

Well, I was a kid. Spent my time with my family and friends. And then obviously we had a lot of foreign friends that came from the mean capitalistic world. Weird times.

Petri: You have also been a startup founder. How did that come about?

Tero: I worked for Nokia’s leadership for five years during the bad times from 2007 to 2012. I was first working in M&A because during 2007-2008 Nokia had this strong push to acquire companies, new digital companies, especially from the US. And then I was working in business development.

I was heading their new business development team within Nokia. And as a side program, I innovated a product or a business. And when 2012 came about and Nokia was in difficulties I had the opportunity to take my team with me from Nokia and start a company based on this innovation, this new product that we then continued developing in the startup.

Petri: How did that happen? You were like, okay, we need to jump out of the Nokia ship and do something. Did you go through the portfolio and see what are the things or was it obvious that you chose the one you actually did?

Tero: It was obvious because it’s a product and innovation that probably for the first time ever I made myself. I had very strong ownership and passion towards that product because it was my baby. There was no question about it. That was the whole thing why I was so excited about the opportunity then spin it out and start a company.

Petri: How many projects you had? Did you incubate different ideas to certain stages?

Tero: That’s what we were doing. I can’t remember exactly, but we probably had about, let’s say ten programs simultaneously. We were trying out different new businesses, new product ideas, new service ideas. Incubated them. And then obviously we would kill many of them because they wouldn’t make sense or we wouldn’t get the right funding from Nokia.

We were trying to come out with new product ideas for Nokia. In other words, building a future of Nokia from the product side beyond just mobile phones.

Petri: How many out of those projects are still alive or made it out of Nokia?

Tero: Nokia totally changed its strategy. Especially when the mobile phones division was sold to Microsoft. I haven’t been following up so closely that I would even know. I’d be happy to know that there would be even a few of those programs that would still exist. I frankly do not even know.

Petri: Do you still remember the sales pitch about the product? So that we can know a bit about what you were doing and why it was so exciting?

Tero: Oh yes, I remember that very well. Back in 2009-2010, I had somebody, a colleague of mine or a team member of mine. His name was actually Arto Lehtisaari, who’s a very successful startup founder today. He’s a technology guy and he told me that the optical technology has progressed so much that it may be possible to measure heart rate accurately from your wrist instead of from your chest. During those times we had the Polars and Garmins in the world and Suunto here in Finland that made heart rate monitors, but you had to wear a strap around your chest.

With the new optical technology, it was considered then that maybe create a wrist device that measures heart rate like wearing a watch on your wrist.

Petri: It was just like an early version of iWatch?

Tero: Exactly. And we were the first ones in the market to create that technology back in 2010-2011.

Petri: What happened?

Tero: I was pitching to Nokia’s top management that Nokia could actually enter the wellness market with a wellness wrist device that could thanks to the optical heart rate measurement possibility could measure consumers’ fitness levels, stress levels and sleeping patterns continuously from the wrist. It was an innovation that we even proceeded with that program. And we got a lot of funding for it, but unfortunately, 2012 most of the new programs that Nokia was pursuing were cut because of the obvious reasons that Nokia was in the situation where Nokia was in 2012. And that gave the opportunity to start a company around it.

Petri: Was it an easy process or were there pain points to get funding and really get it off the ground?

Tero: It took some time. We started the company in 2012. It took a few months before we founded the investor. Ultimately, we had two investors that we’re ready to invest. We chose one. It took some time because during 2012-2013 investments into hardware were not very obvious.

There were only a handful of VCs here in the Nordics that were investing in hardware. It took some time before we got the funding.

Petri: Now you’re on the different side of the table. Before you were selecting cases and now you’re were pitching.

Tero: That was a very good learning process. It was extremely good from the experience point of view to found own company and sit on the other side of the table and pitching to and negotiating with VCs. I think being now a VC helps me understand that side of the table from a completely different perspective than if I hadn’t had that experience.

Petri: Looking back, is there something you would have done differently? Does the company actually still exist or what happened? You left and joined the VC world again.

Tero: That’s right. I left three years after we raised our money. It was a good time to leave because the investor, a Russian oligarch that invested, and myself, we had completely different views as to when we should actually exit the company. We had an opportunity to sell the company.

And that was really in that window of opportunity, a good window of opportunity to sell the company. We had a few offers, and we had completely different views with the investor whether to sell it or not. That was a good time for me to leave the company and sell my shares, but the company exists today, still today. It hasn’t been sold.

Petri: Looking back it would have been a good opportunity to sell it? It would have been the right choice?

Tero: Absolutely. It would have been a good time to sell because while we were the first ones in the market offering a device with a heart rate monitoring capability we knew already back then that Apple would come out with a product, Samsung would come out with a product.

And then ultimately also Garmin, Suunto, Fitbit and Withings would come out with a product. And we had a window of opportunity of selling the company at the time when there was this big US, a Fortune 500 company, that really desperately needed the technology and the product into their product repertoire.

But obviously now, it’s a very competitive market. There’re just so many devices out there. And the technology itself has been commoditised.

Petri: Would they have been something you could have tilted to the, yes, we are going to sell? Something in the way you selected your investors, negotiated the deals if you could rewind?

Was there something that you could learn from that process? Or tell other guys please don’t do these things?

Tero: Choosing the right investor. That’s extremely important. That’s what I tell the startups as well. And, I learned it the hard way myself. One shouldn’t go necessarily with the investor that offers the highest valuation, the highest amount of money. One should choose an investor that truly understands the business.

In my case, I had a Russian investor, a banker, who did not quite understand the startup realities and their dynamics and what are the right windows of opportunity for selling a company if that’s needed. Choosing the right investor is definitely extremely important right from the start.

Petri: What kind of sacrifices have you done in your life?

Tero: That’s an interesting question, Petri.

Petri: That’s actually not my question to be exact. Hampus Jakobsson, who I interviewed some time ago, asked this question and he said that the answers are really interesting usually. It’s also very unexpected what comes from the people.

Tero: Turning it into a positive perspective there’re obviously so many interesting things one could be doing but one cannot do everything. There’re many interesting startups that could be founded. There’re so many countries where one would like to live in. There’re so many things one would like to do, but it’s always the choice that one needs to be making along the way. One could argue that since one doesn’t make different choices or choose something else one sacrifices from that point of view.

Petri: What are the countries you would love to live in? And what are the startups you would really like to found?

Tero: There has to be many ideas along the way in the different fields that I’ve had or even sectors but I don’t think it’s very fruitful to all these opportunities that I have missed along the way. And there’re, of course, many countries where I would love to live in. On the other hand, although there are many places one would love to live in the real important thing is what you are doing and who are the people that you’re surrounded with?

I think that’s the most important thing than thinking too much of whether it would be nicer than in Helsinki, where eight months a year it’s dark and cold.

Petri: So what makes you happy?

Tero: My loved ones around me, the great Finnish nature. We’re approaching midsummer and it’s a fantastic time of the year here in Finland, Helsinki. People and nature make me happy. And then the third point would be any passion that I have in my daily work makes me happy as well.

Achieving things, getting things done, makes me happy.

Petri: How do you define success?

Tero: Trying hard and then achieving something or the other way around is one could see that trying hard, having even failed, can be a success what comes to the learning process.

Petri: What is your favourite word?

Tero: Holistically speaking it’s love.

Petri: What is your least favourite word?

Tero: It would be the opposite then, hate.

Petri: What turns you on creatively, spiritually or emotionally?

Tero: A passion. That you find a passion into something you’re doing or passion to a person.

Petri: What turns you off?

Tero: Bad behaviour, jealousy.

Petri: What is your favourite curse word?

Tero: A Finnish one, of course. Saatana!

Petri: is there a proper translation in French?

Tero: In English, it’s Satan. But in French, the French word that one uses more commonly is probably merde which is shit.

Petri: What sound or noise do you love?

Tero: The sound of the sea in my summer cottage. The sea and the wind after a nice sauna session.

Petri: What sound or noise do you hate?

Tero: The sound when you go to a dentist clinic.

Petri: Is it the drilling?

Tero: It’s the drilling, yes.

Petri: What profession other than your own would you like to attempt?

Tero: If I was really talented in one art area, in music, for example, that would be fantastic to try it out.

Petri: What profession would you not like to do?

Tero: A profession probably where routine is key. Let’s say a pilot, for example, I would get bored.

Petri: If you could be a co-founder of any startup in any era, which one would you choose?

Tero: Facebook

Petri: Why?

Tero: When Facebook was founded it was a social project. But it was totally unclear how they would turn it into a business, how they would make money with it. And I think it’s just fabulous the whole journey. Facebook’s journey is just extraordinary.