Interview with Toni Mikkonen

Claudia Zhang

Could you please tell us a little bit about yourself and your background?

I am originally from Helsinki. I studied Finance in the early 2000s and majored in Finance with a total of five minors. During my studies, I co-founded a VTT-technology-powered and funded startup aimed at fighting climate change. After a few years working with the startup—without making significant progress—we sold the company. That is, we found someone to continue its mission and acquire its patents, though we didn’t make any money from the sale. I then moved into strategy consulting, where I worked for the next 10 years. Currently, I am the Investment Director at the Finnish Climate Fund, where I manage a team of 12 brilliant impact investing professionals. Outside of work, being a father to a 4-year-old keeps me busy.

I was also active in the early stages of AFA during its first couple of years through board service. It has been great to see the community launch and evolve. Much appreciation should go to Jaakko Eteläaho, Antti Pirskanen, Juhani Laakso, and everyone else involved in getting AFA off the ground around 2016. And of course, to all the active AFA enthusiasts who continue to carry on.

What is the Finnish Climate Fund? What are its mission and objectives?

The Finnish Climate Fund is a state-owned special assignment company. Its purpose is to get climate technologies and solutions to market and scale faster than they otherwise would. It’s a relatively new investment company; we made our first investments in 2021. So far, our board has made 19 investment decisions with a total volume of approximately 145 million euros.

We invest in a minority role—on average, our commitment has been below 30% of the overall planned investment. So these decisions are already tied to a significant total. Our objective is to maximize positive climate and environmental impacts. Currently, our impact measurement focuses on CO₂ emission reduction, but we also consider effects on biodiversity or raw material use. The goal isn’t to maximize our own returns or compete with private investors for the most attractive opportunities. Instead, we aim to get climate investments to happen significantly earlier and with greater ambition by absorbing part of the risk in the early stages of ventures.

Aren’t green transition investments fully covered by private investors? Is there a need for a publicly owned climate fund?

It depends greatly on the maturity of the technology. For example, new wind power projects attract a lot of capital once they clear the development stage. Public funding played a crucial role in launching the wind power market around 15 years ago but is no longer needed.

However, many green transition areas—such as hydrogen, carbon capture, and the circular economy—are far less mature. We are not yet seeing green transition investments at anywhere near the scale needed to reach net-zero goals by 2050 globally and 2035 in Finland.

To put it more concretely: climate ventures often involve risks and investment needs that are challenging for private investors to take on. CAPEX and working capital funding are common hurdles even for promising green transition companies. A typical customer for us might be a climate tech company whose technology has been proven on a small scale, and who now needs tens or even hundreds of millions in funding to demonstrate it at industrial scale while still being pre-revenue. Others may be seeing high customer demand and strong scaling potential but are held back by working capital requirements.

We aim to address these market deficiencies with our funding, accelerating the green transition and the associated benefits like energy independence. Many of these companies offer significant positive externalities that they currently have no way to monetize.

What are the best things you gained from studying finance? What were some of your most memorable experiences, and why were they significant?

Finance studies provided a solid basic toolkit for both strategy consulting and my current role. Most importantly, they laid the foundation for further on-the-job learning. However, the most memorable and valuable parts of my studies were the people I met. Many of them remain some of my closest friends to this day. As often happens, the most challenging projects at the time turned out to be some of my fondest memories.

Before impact investing, you worked in strategy consulting and with a tech-startup team. What reflections do you have from those years, and how have they prepared you for your current role at the Climate Fund?

One reflection is graduating and job hunting in the fall of 2008, right after the collapse of Lehman Brothers during the subprime mortgage crisis. Another reflection goes even further back to launching a startup based on VTT research and patents, aiming to make a positive climate impact. At the time, such a venture was far from trendy. Almost no one wanted to work at a startup—everyone aspired to join Nokia—and seasoned investors laughed when we pitched ideas about the climate crisis and energy conservation.

A couple of lessons come to mind: First, similar cycles and challenges tend to repeat themselves, though never in exactly the same way. The realized future is rarely as bad or as good as it seems during a crash or a hype phase. Second, real change takes time but can be very positive. The startup culture today is dramatically more supportive of climate tech than it was back then.

Having launched a climate tech startup helps me relate to our customers—at least to some extent. These entrepreneurs deserve the highest appreciation; they are the ones truly changing the world. My years in strategy consulting gave me broad exposure to common business challenges and many due diligence and later-stage transaction processes—experience that is very relevant for my current role.

What inspired you to work for the Climate Fund, and what do you find most rewarding about your job? Could you also describe your role and responsibilities?

We must—and we can—transition our economies toward sustainability. There’s huge potential in the technologies that are already market-ready and in those still under development. Finance plays a critical role in enabling the risk-taking and investments required. Working at the Climate Fund allows me to contribute my small part. I am cautiously optimistic about the future. While the Finnish Climate Fund is a tiny player globally and has only been operational for a little over two years, the emission avoidance potential of our portfolio companies' plans is already significant: 287 million tonnes of CO₂ equivalent over a 10-year estimate.

Of course, those plans won’t be realized exactly as projected, and they require billions in additional investments over the next decade. But the numbers show that we can make a meaningful difference with existing technologies. The climate challenge is not hopeless. My team is responsible for the due diligence of potential funding candidates and managing the portfolio of companies we invest in. The most rewarding part of the job is working with amazing teams developing sustainable technologies and solutions.

What advice would you give to someone interested in pursuing a career in sustainable finance? What skills and qualities do you think are most important for success in this field? How do you see the field evolving in the years to come?

I think there are going to be a lot of interesting opportunities at the intersection of finance, sustainability, and technology. In fact, it's difficult to imagine a future where this isn’t the case. I believe we are still in the early days of sustainable finance and impact investing. For someone interested in pursuing a career in impact investing, a good approach might be to first build strong expertise in either finance or technology. Once that foundation is in place, you can dive deeper into climate policy, regulation, impact assessment methodologies, and related areas. Solid domain knowledge provides credibility and the ability to contribute meaningfully to this evolving field.

Also, we just opened the application period for our Fall 2023 analyst trainee program at the Climate Fund.

What do you enjoy doing outside of work, and how do you maintain a work-life balance?

I enjoy spending time outdoors with my family and our dogs. I also try to fit in some CrossFit-style training on most days, even if it’s just a short session. In recent winters, I’ve been getting back into ice hockey, which has been a lot of fun.

What would be your advice for a 25-year-old Toni?

That’s easy: remain an entrepreneur. The best time to start a clean tech startup was 15 years ago. The second-best time is today.


Claudia Zhang is a former Editor-in-Chief of AFA Quarterly.