The Finnish word ‘sisu’ describes a combination of resilience, tenacity and perseverance — and some say it perfectly encapsulates the country’s startup ecosystem.
“In 2024, Finland’s startup and venture ecosystem wasn’t just about surviving all the various global challenges — it was also about how it could also thrive despite them,” says Aziz Rahman, senior advisor for investor services at Business Finland, the official government agency responsible for trade and investment promotion, innovation funding, travel promotion and talent attraction.
And the proof is in the pudding. As noted in a recent event at the Finnish Ambassador’s Residence in London on December 10, 2024 hosted by Business Finland’s Investor Services and moderated by Sifted, Finland this year has bucked the trend of a continued slowdown in funding, raising €592m in the year to date according to Sifted tracking, making it one of only a handful countries that has a figure higher than last year.
As of November 2024, Finland has three current unicorns — smart ring maker Oura, data and AI platform Aiven and supply chain planner Relex Solutions — and two former unicorns, including global gaming company Supercell, which was acquired by Tencent in 2016 and food delivery company Wolt, which was acquired by DoorDash in 2021.
Here’s what makes Finland’s startup landscape different.
A homegrown talent pool
Rahman says that when investors consider investing in Finland’s startups and growth companies, they look for more than just funding innovation — they want to back companies that will ultimately shape different sectors and have a global impact.
The reason why Finland will continue to lead and excel is all about the people.
An example of this is Peter Vesterbacka, who was previously the cofounder and CMO at Rovio Entertainment, the Helsinki-based company that created the world-famous Angry Birds game in 2009. Vesterbacka says the most important thing for Rovio was the massive talent pool in Finland.
“Talent density has been a key enabler of growth all over the Finnish ecosystem,” he says. “The reason why Finland will continue to lead and excel is all about the people. Fantastic education for not just a few, but for all. That leads to a talent pool second to none — even in a nation with a tiny population like Finland.”
Government support
In addition to a broad talent pool, government support further bolsters Finnish startups.
For example, Urho Konttori is CEO at Distance Technologies, a Finnish startup that has developed the first glasses-free mixed reality solution. He praises the ‘really good’ infrastructure built by the Finnish government to support its startups — citing Business Finland as an example, which has covered around 50% of his startup’s R&D expenses to date.
“It helps to know that, as an investor in a Finnish entity, half of the risk is actually covered by the government,” says Konttori.
Business Finland’s Investor Services team identifies and connects Finland’s most promising early and growth-stage companies with international venture capital firms, corporate investors, institutional investors and family offices. According to Business Finland, their efforts have resulted in over €600m+ in direct investments in Finnish companies. As a government-backed service, these are provided free of charge to both Finnish companies and international investors.
Entrepreneurs here realise that it is a small market, and they need to think global from day one.
The Finnish government aims to increase the R&D spending to 4% by 2030. Rahman notes this support as one of the key reasons why its startups are thriving.
“It’s a great environment to test ideas before scaling them globally. I think the entrepreneurs here realise that it is a small market, and they need to think global from day one. You’ll see that in a lot of businesses in Finland — that’s simply how they are built,” he says.
A legacy of innovation
Konttori also says the pre-startup era success of telecommunications company Nokia, which was founded in Finland, is important. He says ex-employees are now engaging with and creating new startups, which has further helped the country’s startup ecosystem to grow.
“Even before Nokia, there was a flourishing demo and hacker scene that got people experimenting with home computers,” says Jussi Mäkinen, CMO at Distance Technologies. “That got a lot of people like myself experimenting with computing and creativity. A lot of that hacker spirit remains in the Finnish tech scene.”
Finland’s got a track record of producing category-leading companies in telecommunications, deeptech, gaming, cleantech, forestry and education.
In Sifted’s recent ranking of Europe’s 250 startups with the highest percentage revenue growth over the past three financial years, two of them — SaaS platform Shook and beauty services booking app Booksalon — were Finnish.
“Finland’s got a track record of producing category-leading companies in telecommunications, deeptech, gaming, cleantech, forestry and education, so it’s not new for Finland to create companies that can go on to become global giants,” adds Rahman.
Mäkinen also notes the importance of events like Slush, Helsinki’s annual conference for startups, techs and VCs, with 2024’s edition welcoming over 13k attendees from around the world. The panel at the Finnish Ambassador’s Residence in London agreed that Slush helps position Finland as a global investment hub.
“Slush gathers thousands of investors in Helsinki for meetings every year, and that allows networking opportunities between the startup founders,” he says.
Investor appetite
Finland’s early investment scene mirrors global trends, with homegrown angels and seed funds leading the charge. Yet Rahman says this landscape is evolving. The real buzz however, he says, ignites at Series A and B stages for international investors.
A lot of Finland’s startup success is down to the academia and the fantastic education system they have, the government support and a very collaborative industry.
“The sluggish M&A and IPO market has been well documented, but one thing that has been really positive this year is how the domestic investors have directed more funds into early-stage businesses — this year’s results are among the best we’ve seen, and we need to keep up this momentum if Finland wants to remain attractive to international investors,” says Rahman.
From an investment perspective, Konttori says the main concern has been for later stage startups getting to sufficient growth speeds. He believes getting customer revenue growth needs to be the main focus for startups after they have their core technology and start entering the market.
“It’s very positive that the startups have had to focus on this — you cannot rely on just investment money and hoping that someday you will actually make it,” he says. “This has accelerated and then put more focus into revenue growth.”
Looking ahead to 2025, Rahman remains optimistic.
“A lot of Finland’s startup success is down to the academia and the fantastic education system they have, the government support and a very collaborative industry,” says Rahman.
“When you combine all these elements, innovation will naturally thrive.”
The Business Finland’s Investor Services team includes Marika Mäkelä who covers the US, DACH and the Nordics, Shi Ting Chen who focuses on Asian investors and Aziz Rahman who handles the UK, Turkey and Gulf regions’ funds.
Read the orginal article: https://sifted.eu/articles/finland-startup-ecosystem-brnd/
