Last week, I had the pleasure of being invited out to Finland by Finnfacts on a whirlwind tour of new and established Finnish start ups. I was also delighted to attend the renown Nordic Technology Conference MindTrek, joined by other prominent figures from the international web and technology scene.
Over the next few days I’ll be sharing thoughts and details of some of the companies we visited, these include Floobs, RuntoShop and Muxlim. Though, for the moment, I’d like to share my perspective on the Finnish startup scene and community as a whole.
First and foremost, visiting the country, there is no question the weight of the country’s most famous technology company – Nokia – is an overbearing one. While it provides jobs and a great deal of pride, it also appears to be a heavy load on the start up community who need more small and nimble company’s to look up to.
That said, in recent years with the acquisition of companies like the Google acquired microbloging service Jaiku (still held in high acclaim), MySQL and more recently the (Nokia) purchase of Finnish/UK travel community Dopplr, there is a richer source of start up inspiration than ever before.
Nordic blogs like Arctic StartUp share news and reports about the regions finest, and provide a much needed source of promotion and support through events and the blog itself.
Ville Vesterinen, Arctic StartUp’s editor, sat with us to share some of his insights and experiences. Amongst many other facts, a notable one is the sad fact that the majority of the country’s entrepreneurial successes rarely return to the country, but rather choose to move abroad and invest their financial rewards in stocks and mortar.
While the migration of successful entrepreneurs has hampered the country’s growth, there are signs that is beginning to change and entrepreneurs like Jyri Engeström (Jaiku founder) are reportedly returning home to help nurture the community and support aspiring internetpreneurs. While others like Taneli Tikka are already there and continue to play a pivotal role within the start-up ecosystem.
In regard to financial support and investment, the most notable fixture is the support the government gives its fledgling start ups. Through programs like Tekes and Finnvera, the Finnish state provides sizable investments equal to the amount you can find through VC’s and angels. This means, if you are able to find €1 Million in investment through a VC, the government will match it with a loan at favorable rates. This can be repeated through further rounds of investment.
One significant characteristic of the start-ups we were able to visit is their international outlook. Clearly, success in Finland isn’t enough. Companies have an almost ingrained international perspective, a huge positive.
From my experience, there are a number of essential ingredients to a (potentially) successful start up ecosystem, engineers, more engineers and a special few entrepreneurs. Fortunately Finland is stacked full of them, and they’re creative too. This, combined with a supportive community, and natural drive towards global success and innovation means Finland does indeed have what it takes to play a more significant role in the international start up scene that it currently gets recognition for.
That said, the country is still in dire need of more support from its start up ambassadors, the fortunate few who have created a great deal of personal wealth and experience from their own start up successes. From my albeit short time in Finland, it is these role models that can make the difference between mediocrity and supreme international start up recognition.
Nicely written and a good summary on the state of things in Finland.
Traditionally the Finns recognize themselves as competent product builders (engineers, designers, etc) but severely lacking in sales, marketing and PR skills. There’s more than a shred of truth in this, and emphasis on more successful marketing/sales can be seen in those government support instruments; they fund commercialization of good businesses and products a lot more today – as opposed to funding just R&D of technical inventions in the past. The local VCs are also more keen on internationalization plans than ever before – and they are also networking better. Staying in touch with their Swedish, UK, central European, US and even Asian peers to arrange followup rounds and exits etc.
One other example on how hard the government is trying with startups is that they have started to invite entrepreneurs to participate in their own processes. I, for example, have been a member of Tekes’ steering committee for 1.5 years now on a program that gives out 120 million EUR of funding for social media, games, and other software companies, almost exclusively startups. (This is called the VERSO, Vertical Software Solutions programme, “verso” means a “sprout” (reference to startups) in finnish).
The primary “exit route” for Finnish startups and entrepreneurs seems to be selling to often US-based tech giants. As is apparent from this (partial) list of international exits in the startup space:
Sumea, to Digital Chocolate in 2004
Animoi to Macromedia in 2004
Mr. Goodliving to RealNetworks in 2005
InnoDB to Oracle in 2005
Smartner to Seven in 2005
Hybrid Graphics to Nvidia in 2006
BitBoys to ATI in 2006
Hantro to ON2 in 2007
MySQL to Sun Microsystems in 2007
Jaiku to Google in 2007
Solid to IBM in 2007
Dopplr to Nokia in 2009
There have been plenty of other tradesales naturally, but those are among the most noteworthy where the investors (VCs etc) also made money in the exit.
..In addition to more serial entrepreneurial support Finland could also use a more direct funding and exit “pipe”. People here dream of some day having something similar to what the entrepreneurs have in Israel: the possibility for a good startup to get seriously funded, enter the US market, and even get all the way to IPO if possible. Finland is still long ways from having a similar “tunnel for good startups” in place, but everybody is eagerly looking at ways to make an impact and build a better ecosystem for startups to thrive in. There’s some more on this topic on my blog, your comments are much welcomed.
What would be interesting to hear from the readers of thenextweb.com is about Finland’s image, and is anybody really looking at Finland as a place that is happening and occasionally producing something interesting? Or are Finns being too quiet and invisible through all the noise out there?
Thanks,
Taneli Tikka ( http://tane.li )
Hey there Taneli, thank you for stopping by and for the taking the time to write such an in depth review of the Finnish start up ecosystem.
I can honestly say (from my perspective at least), the Finnish start ups I come across almost always offer a superior level of innovation and simplicity. The issue i find is that I don’t actually see enough of them…
Now that’s either because there aren’t that many of them, which I found out last week to be unlikely. Or the other reason might be that (as you say) the entrepreneurs suck at the marketing and promotion of their products. Either way, word of these startups, particularly those with global ambitions need to be heard. Hopefully the likes of Arctic Startup, TheNextWeb Europe, TC Europe can help to some degree..
Hey Zee & Taneli,
It’s so awesome to see this post, i will be visiting Finland at the end of October as well. I was selected to be part of a Delegation of South African entrepreneurs who will visit Finland as part of knowledge exchange programme. I would love to have further recommendations of interesting companies to visit. I believe we will be there for 5 days.
The program details are at http://www.safipa.com/
Hey Ismail,
I’m student at Helsinki University of Technology and and after a university merger in Aalto University. We have this student-run society called Aalto Entrepreneurship Society promoting growth entrepreneurship. Maybe you would like to check that out:
http://aaltoes.com
http://www.facebook.com/group.php?gid=37295947284
In the Finnish start-up ecosystem there is one significant hole yet to be filled – venture capital.
Where the best ones think how to maximize a company’s potential, the Finns typically think how to minimize the risks. Also, the lack of *real* successes – among other things – results into low valuations, making it very difficult for the entrepreneurs to properly capitalize their ventures.
Heikki, Thanks for the heads up. I have sent the details to the coordinator, i believe we will be visiting the uni.
The link to Mindtrek seems to point somewhere else… ;-)
(Try .org)
Liked the post….Sharing something similar…
Finland – The Land of the Midnight Sun“