Investment strategy
- impact investing
Aboa Advest is a family-owned investment company established in January 2015. The company is owned by founding partner Timo Ketonen (80%) and his children Catarina Chaveroche (10%) and Mikael Ketonen (10%).
Since the company was founded, we have been particularly interested in impact investing, which means that we also aim to achieve a positive social or environmental impact, i.e. a measurable social benefit. From an investor's perspective, a third dimension emerges alongside the risk/return approach: impact.
The company aims to make equity investments in Finnish and Nordic growth companies, primarily through buyout and venture capital funds. The company also engages in sub-lease of premises at the Blue Economy Centre to the associated company A'Pelago Experience Ab and other growth companies operating in the blue economy.
In January 2020, we reassessed our investment strategy: we will primarily invest in venture capital funds, rather than directly in startups. We are involved in two buyout funds already investing in profitable growth companies and six venture capital funds investing in startups.
We have a long-term investment strategy, expecting significant returns from our investments over a 10-year horizon.
The investment strategy is continuously monitored and updated annually during Q4.
Main principles of allocation
The main principles of allocation relate to risk tolerance, targets and time horizons, among other things.
Investors must assess their own risk tolerance before determining the allocation of their portfolio. Risk tolerance is influenced by factors such as age, financial situation and investment horizon.
Diversification is key to allocation. Do not put all your eggs in one basket. Diversification across multiple asset classes and sub-asset classes can help reduce risk.
Aboa Advest invests in Finnish and Nordic growth companies through buyout and venture capital funds. Direct investments in startups will only be made in a carefully considered manner and then only in the context of the Blue Economy.
Target allocation:
Buyout funds 30%
Startups 20%
Venture Capital funds 50%
Aboa Advest Oy's investments are financed by a subordinated loan provided by Timo Ketonen, the company's founding partner.
The portfolio's return objective and investment horizon
The primary objectives of the investment activities are to increase the company's wealth and to focus on growth companies in Finland and the Nordic countries in accordance with our investment criteria. Buyout and venture capital funds aim to generate a 3-5x return on capital over the next 10 years.
For startup investments, we will settle for a lower overall return considering the risk aspect of the portfolio. Certain startup investments may however generate a multiple of 5-10x capital invested in the long run.
Equity returns from buyout and venture capital funds generate positive cash flow for Aboa Advest. However, these are recognised in the income statement of Aboa Advest only after the closing statement of the fund concerned (the general maturity of a venture capital fund is 10+2 = 12 years). At the end of the life of a fund, remaining investments are liquidated. Proceeds are distributed. Limited extensions to fund term possible – usually 2 years at the discretion of the GP (general partner of the fund).
For more information about venture capital please refer to Investopedia.