NSN spins non-core projects into Verso Fund
Invests cash and technology licences into a Finland-based unit to incubate start-ups and pre-commercial units
Published: 31 May, 2012
READ MORE: M&A | Finland | Nokia Siemens Networks | Venture Capital
Nokia Siemens has been busily selling off non-core business units since it announced a radical turnaround plan last year, which involves a laser-like focus on mobile broadband. Now it is taking a new approach to accelerate its rationalization, setting up a spin-off fund to support projects which are no longer at the heart of the company's own strategy.
NSN has sold off some of the revenue generating business units which it has identified as non-core, including its WiMAX and microwave backhaul activities (to NewNet and Dragonwave respectively). The new Verso Fund is centered on smaller or pre-commercial operations which nonetheless still have commercial potential, though not within the main NSN portfolio. It will also invest in start-ups in the conventional way.
The vendor has invested about €10m in the Finnish-based fund and aims to get other large companies to participate, either by investing or by spinning their own units into the process. This will help to create new enterprises in Finland, (whose economy has suffered from the decline of its largest company, Nokia) and the initiative could act as a template for other territories. As part of the model, it will license NSN technology to the start-up companies.
"The aim of the fund is to invest in such projects that are no more part of the core activities of the company and that can be spun off. Without initial funding, the risk is that these projects are terminated and the capabilities and competencies built in the projects remain unused," says Pekka Soini, Finland country director at NSN. "The Verso Spin-off Fund creates a model for large companies to invest in the initial capital of start-up companies. In Finland, funding for this phase has mainly been available from public sources."
Anssi Kariola, who devised the new spin-off model and set up the fund, will also manage it. "In the first phase we received close to 40 applications, and the evaluation of their business potential has started," he said. "Our aim in the first phase is to create a portfolio of 10 - 30 start-up companies."
Partners and advisers on the scheme include the Finnish Ministry of Employment and Economy, potential investment fund partner Finnvera, and the Aalto University Center for Entrepreneurship.
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