Leaving behind the heavily regulated confines of Finland’s telecommunications arena, former Sonera Corp. CEO Kaj-Erik Relander last week officially stepped down from that post to become a partner in Accel Partners’ London office.
Coincidentally, the VC firm revealed the same day that it was in the final stages of closing its Accel Europe Fund with commitments of $500 million.
Relander considered the move for a full eight months before taking the plunge. “I was in a very high position in the telecom industry, but the top-tier firms in private equity are like clubs,” he said. “There aren’t openings every day, so I decided to jump on it.”
His sudden decision to resign from one of Sonera’s top positions sent shock waves through the company, the telecom industry and the Finnish media. There is much speculation that Sonera, which is currently struggling under the weight of a slumping stock price, is inching toward a potential merger with rival Swedish telecom giant Telia AB. However, Relander said there was no truth to the rumors that preliminary merger talks were in progress, nor to analyst conjectures that he and another Sonera executive, Harri Hollmen, had left the company because they recognized that they could be oustered from its top ranks if such a merger were to occur. Indeed, he said his resignation might actually slow down any consolidation efforts, especially as the company searches for his successor.
Hollmen had announced his intent to leave Sonera just two days before Relander announced his own departure. The resignations were not related, however, and their timing was purely coincidental, Relander said.
Sonera’s stock traded between $7.00 and $8.00 for most of last week.
Nonetheless, Relander said that he did not choose to leave the company he helped build basically from the ground up because of its faltering public market performance. “It’s emotionally difficult to leave, but on the other hand, you have to move on,” he said. “I’m moving to a more international environment, which is something I’ve been looking at for quite some time.”
Politics Vs. The Bottom Line
Businessmen like Relander continue to endure rising pressures from the left-wing Finnish government, which is vehemently opposed to privatization in the telecommunications industry. In fact, Nordic telecom companies have had a difficult time of late attracting management because of the underlying political strife.
At Sonera’s helm, for example, Relander’s first duty would have been to shareholders, but with the Finnish state holding a 53% controlling stake in the company, there were bound to be heated ideological clashes between Relander’s vision for the company and the government’s own political agendas. What is more, the state vetoed a plan for a new share-incentive plan this spring, likely causing him added frustration.
Although Relander is in the midst of winding down his responsibilities at Sonera, he will remain a strategic advisor to its Chairman, Tapio Hintikka until year-end. Beginning in July, however, Relander will divide his time between those duties and Accel, as he will spend three months learning the ropes at the firm’s Palo Alto, Calif., office before moving to London in September to help manage the European fund.
With the move to Accel, Relander is basically returning to his venture capital roots. From the late 1980s to the early 1990s, he worked on technology deals for a Finnish VC firm. Then, deciding he needed more corporate experience in the industry, he returned to business school and shortly after graduation was tapped by the Finland-based telecom company that ultimately became Sonera.
“I always had the idea I would go back to the industry one day,” he said. “I had not planned to do it as early maybe five years from now but this is the right time for me to move on.”
Indeed, Relander brings his wireless expertise and his extensive network of Nordic telecommunications contacts to Accel’s table, as well as years of operating experience. He said he also feels this is an exciting time to be investing in wireless Internet and communications infrastructure and software start-ups in Europe and Israel where the new fund will focus the majority of its investment activities.
As for investing in Israel, he said he isn’t too concerned with the political unrest there. “It’s part of the culture, you just go with it,” he added. “It’s not anymore concern to us as an investor than any other people who deal with Israelis. You either have to accept it or you have to be out because, unfortunately, it looks like [the strife] will be around for the foreseeable future.”
In addition to Relander, Accel recently recruited Joe Golden, Cisco Systems Inc.’s former managing director of business development and strategic alliances for Europe.
Accel did not return repeated calls for comment.