- Finland, especially Helsinki, is a rapidly growing innovation centre, with its startup ecosystem attracting significant international venture capital, evidenced by a 50% year-over-year increase in venture funding.
- Leading in deep tech innovation in Europe, Finland boasts strong public-private collaborations and substantial VC investment in high-tech sectors like AI and quantum computing.
- With a top ranking in the Sustainable Development Goal index, Finland integrates sustainability into its business strategies, attracting ESG investments and excelling in innovative environmental technologies.
- Finland’s investment scene is increasingly appealing globally, especially to Asian investors, for its high-tech, sustainable environment, with initiatives like Venture Nordics inviting international investors to explore Finnish deep-tech opportunities.
With a strategic location, track record of high-profit investments, and strong innovation culture, Finland and especially Helsinki are at the forefront of global innovation, attracting international VCs. What exactly makes Finland so attractive to global investors? In this guide, we cover Finland’s unique strengths and dive deeper into the country’s surge in foreign venture capital, covering insights from Global Corporate Venturing’s latest Special Report.
Finland’s unique strengths
Finland stands out among the landscape of global investments due to its unique strengths—from advanced digital technologies and a collaborative spirit to a focus on sustainability.
Vibrant and evolving startup ecosystem
Finland operates on the Nordic Model, creating an ideal foundation for startups. Helsinki’s startup ecosystem is distinctly open and collaborative, setting it apart from other cities. Virginia Vegas, Founder and Managing Director of VC Challenge, describes Finland as the most fun and open ecosystem in Europe:
If you want to be in the top innovation and technology space—especially if you’re a woman with ambition—then you need to be in Finland.Virginia Vegas, Founder and Managing Director of VC Challenge
With a talented workforce, a supportive network, and a well-functioning business environment, Helsinki’s strong startup ecosystem attracts international investors looking to tap into creative innovations. The city’s ecosystem is growing faster than European benchmarks, and Finland’s total venture funding was €402 million in 2022, up 50% year-over-year from €268 million in 2021.
Plus, the city’s startup scene remains resilient regardless of the current economic turbulence. “We still have a vibrant and international startup scene that employs a great number of international talent,” says Paula Miettinen, Director of Business Services at Business Helsinki.
Pioneering deep tech
As a hub of cutting-edge ideas and technological breakthroughs, Finland has a reputation as a technology forerunner and leads the way in Europe’s innovation race. While renowned for gaming technology developers like Supercell and Rovio, Finland’s tech evolution is leaning towards deeptech.
We still have a vibrant and international startup scene that employs a great number of international talent.Paula Miettinen, Director of Business Services at Business Helsinki.
Deeptech is now the most funded segment in Helsinki, followed by impact. Helsinki deeptech startups raised 30% of all VC investment since 2022, and they make up 26% of all startup jobs in the city. Information technology (IT) also plays a big role in the country’s innovative ecosystem, with 47% of all VC-backed deals historically falling within the broader IT space.
When it comes to deeptech, Finland excels in AI, nanoelectronics, advanced materials, and options and photonics. Quantum computing and biomaterials are also emerging as key areas of focus. These technology domains lay the groundwork for future businesses in quantum computing, next-generation generative AI, and recycled materials that are needed in electronics.
Download the GCV Special report – Finland: An emerging deeptech ecosystem
Strong collaboration with public and private institutions
Finland’s shift towards deeptech is supported by its strong academic foundation, boasting 35 universities across a population of less than 6 million.
In recent years, state-owned research institute VTT has spun out startups like sustainable textiles company Spinnova and Solar Foods, which aims to create nutritional protein from air. A spinoff of Aalto University and VTT, IQM is a leading quantum computing hardware company and key player in Europe’s quantum ecosystem.
Startups in Finland receive plenty of government-backed support. For example, companies collaborating on RDI projects with Finnish universities and research hubs receive a 150% deduction on the costs of RDI projects.
Helsinki also helps private companies with low-threshold opportunities for real-time product piloting. The Helsinki Innovation Districts initiative encourages private companies, scientific communities, and residents to collaborate and experiment with new technologies.
Sustainability at the core
Companies today need to view sustainability as a business opportunity, not an additional cost. Failing to prioritise sustainability could mean going out of business in 10–15 years.
Ranked #1 in the Sustainable Development Goal index, there’s no doubt Finland takes sustainability seriously. With its smart city excellence, technological leadership, and focus on sustainability and well-being, Helsinki provides ample collaboration prospects in ESG investing and smart-city innovations.
Finland’s startup landscape draws strength from its forestry legacy, a sector dominated by wood, paper, and pulp production. But beyond these main business lines, side streams contribute to innovation in alternative packaging materials and recycling technology. There’s a concentration of talent in Finland and the Nordics that knows how to regenerate valuable products from bio side streams.
“If you look at the legislative environment in Europe, we’re now moving to a place where you have to invest a lot to circle our economy, to replace plastics and any fossil-based materials, any chemical industrial products,” says Inka Mero, managing partner of hard tech-focused venture capital firm Voima Ventures.
Foreign venture capital’s surge in Finland
Finland tech startups often thrive at seed and series A funding, but run into challenges when scaling and securing series C funding onwards. To overcome funding challenges and develop future technologies, Finnish startups need to raise funds from global markets from the start.
“Finland is like the world’s R&D lab: they’re building world-beating technology around climate, life sciences, and deep tech. Finnish companies need global capital to help them expand globally—if incredible tech gets stuck in Finland and never reaches its potential, that’s a problem for the world, not just VCs,” says Caroline Huges, founder of UK-based Womankind Ventures and participant in the 90 Day Finn Program.
While Finland hasn’t traditionally been a strong market for global investors, the tides have been changing. “Foreign venture capital flowing into Finland has more than doubled in two years. I would say that it’s not a very well-kept secret anymore, so it’s definitely now something that is on the radar for some people at least,” says Panu Maulaheimo, venture advisor at Helsinki Partners.
While local investors contribute 30% of VC investment, cross-border European investors are the biggest contributors of VC investment in Helsinki (33%), followed by US investors (26%). Several international VCs have opened up new offices in Finland this year, taking advantage of the country’s strong entrepreneurial spirit, technological know-how, and forward-thinking mindset.
Corporate support in venture capital
Global corporate venturing (GCV) plays a crucial role in shaping the landscape of future technologies. In fact, corporate venture capital (CVC)-backed startups are more likely to survive, get higher valuations at exit, and remain more stable.
Finnish companies reaching unicorn status often see the active participation of CVC in their major deals. For instance, cloud database software developer Aiven raised $210 million in 2022 via a combination of debt and series D venture funding in a deal led by Eurazeo and featuring Salesforce Ventures.
Finland is like the world’s R&D lab: they’re building world-beating technology around climate, life sciences, and deep tech. Finnish companies need global capital to help them expand globally—if incredible tech gets stuck in Finland and never reaches its potential, that’s a problem for the world, not just VCsCaroline Huges, founder of UK-based Womankind Ventures
Collaborations between large companies in the hard tech space, such as Neste and Fortum, also play a crucial role in supporting startups. Beyond investments, these collaborations serve as vital early customers for startups.
But in the Finnish VC landscape, the bulk of funding comes from public sector sources (30%) and institutional investors like insurance companies, funds of funds, and pension funds (33%). Corporate investors accounted for only about 1% of the total funds raised in 2022. Why is this the case?
This is partly because there are few corporate VC investors based in Finland. Most CVC investors have been foreign, including Samsung Next, Sumitomo’s Presidio Ventures and E.ON’s Future Energy Ventures. However, the leading CVC investor in the Finnish landscape is VTT Ventures, the corporate venture capital arm of VTT Technical Research Centre. Based in Espoo, Finland, VTT Ventures made 20 deals in local startups in the past decade. The firm invests in imaging and optics, the internet of things and electronics, life science, materials and manufacturing, sensing and diagnostics, and software and ICT sectors.
With Finland’s venture scene on the rise, more corporate investors will no doubt be attracted to the sector.
Helsinki is a top choice for sustainable investment from Asia
Driven by shared characteristics that form a strong foundation for business opportunities, Helsinki is becoming a top choice for sustainable investments from Asia.
Both Finland and Asian countries are known for their clean, green, high-tech, safe, and organised environments. For example, Finland’s outstanding education system, combined with Singapore’s focus on smart-building projects, sets the perfect stage for collaboration.
Japanese investors also benefit from access to Finland’s pipeline of innovative impact startups that are ready to scale, and the country’s strong political support. While Finland is still an untapped market, several funds have found success here. NordicNinja, a Japanese early-stage VC fund, chose Helsinki as its European base and invested more than €50 million in 19 startups founded in Finland, Sweden, Estonia, and Lithuania. As the first Japanese deeptech fund established in Europe, NordicNinja exemplifies the growth potential in Helsinki’s startup ecosystem.
Helsinki recognises the value of networks and support when investing in a geographical area. Tailored support and resources, including Helsinki Partners, the Venture Nordics Program, and the Finnish Venture Capital Association are available to help navigate the Helsinki business landscape.
Ready to explore Finnish investment opportunities?
Explore Finland’s dynamic investment landscape through Venture Nordics—a unique and immersive program designed for international fund managers and LPs. Delve into Finland’s deep tech sector and discover investment opportunities while embracing the Nordic approach to work-life balance. Learn more and apply for the nine-day program.
Applications for the program close on February 18th, 2024.
Learn more about the Venture Nordics Program
Engage with Finland’s key market players, network with top VCs and startups, and discover practical insights into investment and operational strategies in Finland. Plus, enjoy leisure activities that showcase the best of the Finnish lifestyle!
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