New Finnish venture fund backs Manchester tech business in £4.2m round

Fractory, a manufacturing technology business based in one of Manchester’s bustling tech hubs has secured £4.2m in a funding round led by new Finnish venture capital investor Kvanted, set up to back industrial technology business in Northern Europe.

Estonian owned Fractory formed in 2017 and has recently secured its first £2m order. The company was backed in earlier funding rounds by funders Superhero Capital, OTB Ventures, Trind Ventures, United Angels VC, Startup Wise Guys and Verve Ventures.

Fractory employs 70 people and is headquartered in Manchester at the Bonded Warehouse in St Johns. 

The funding will be used to grow Fractory in markets and territories where the company already operates, and where foundations are well-established, most especially the UK. 

Martin Vares, co-founder and chief executive of Fractory, said: “Kvanted understands exactly what we are doing. They have a longer-than-average investment period to align with the lengthier development cycles in industrial tech. And they act as a connector, in our case bringing innovative technology providers together with traditional industrial companies.

“Kvanted has broad industry experience and unique networks, and their fund investors include prominent industrial players such as Oras Invest. It’s the best possible strategic partnership for Fractory at this stage.”

Vares outlined Fractory’s growth plans:  “This year we received our first order of more than £2 million. In the beginning, orders were smaller and customers appreciated us mostly for our platform’s automation, speed and convenience. But more customers are now also recognising our network of supply partners, the quality and delivery reliability they represent. The new investment will help us grow exactly this type of customer as we expand our network of quality-assured partners and simplify supply chains for customers.

“We entered the market because we saw engineering businesses struggling with outsourcing, fighting with supply lines. Those are big issues and we have not been able to fix everything all at once. But we have got to the stage where small companies as well as public corporates value us and we now move to the stage where, hopefully, they come to absolutely need us. We are maturing as a company, becoming more scalable, doing more and more work with global organisations.”

Fractory has been trading since 2017 and was founded by mechanical engineer-turned entrepreneur Martin Vares along with Joosep Merelaht and Rein Torm. It’s an online platform connecting engineers with production capacity and claims to have automated the manufacturing procurement process so that engineers simply upload design files to get instant quotes and delivery times, with Fractory taking responsibility for every aspect of the order.

Customers use Fractory for series manufacturing, project manufacturing and prototyping too.

Kvanted’s founding partner, Axel Ahlström, said: “There’s a lot of untapped potential in the industrial sector, and our aim is to accelerate industrial innovation, connecting industrial technology start-ups with established corporations. Fractory, which is one of those start-ups, is already on an impressive trajectory, with increasing client numbers, and our aim is to help it become more widely adopted across industry. Fractory’s important position in the world of manufacturing is clear to us and we see the scope for its growth increasing through this Partnership.”

Though backed by experienced investors, Kvanted is a new fund seeking early-stage investment opportunities, having raised its first fund of €70 million. It is based in Finland and Fractory is its first investment.

Other earlier backers of Fractory – including VCs, angels and entrepreneurs – have also taken part in this raise. “That existing investors are increasing their interest is a sign of approval,” Vares said.

“VC’s, like Superhero Capital, continuing to back us is a vote of confidence in our considerable potential. Also, that entrepreneurs like Taavi Kotka are with us again in this round is very special,” he added.

Jakob Storå, a partner at Finland-based Superhero Capital, said: “Superhero participated in Fractory’s first investment round back in 2019. As we’ve been able to witness Fractory’s progress close-up and see its great potential, we are happy to support the company in this round as well. Fractory is building a connected manufacturing ecosystem that has the potential to revolutionise manufacturing procurement and we are super-excited to be part of the next step on this journey.

“We’re also happy that Kvanted joins us as an investor in this round. With its industry expertise and connections, Kvanted can help Fractory’s solution get an even stronger foothold in the market.”

Founded in 2023, Kvanted is an early-stage investor focusing on industrial technology. Founded and headquartered in Helsinki, Kvanted focuses on early-stage companies developing new software, hardware, and service solutions for the industrial sector with a mission to build a more sustainable future. 

With their first fund of €70 million, Kvanted is the first pure-play industrial technology investor in the Nordic region. The founding partners of Kvanted are Eerik Paasikivi, Maria Wasastjerna, and Axel Ahlström.

The first fund will invest in around 20 companies, with initial investments ranging from €0.5 to €3 million, and a longer-than-average investment term to align with the longer development cycles in the industrial domain.