What makes Finland’s startup scene so attractive to international investors?
We asked Colin Powrie, a venture capitalist at Ascend Capital Partners, what makes Finland’s startup scene so attractive to foreign investors. To date, Ascend Capital has invested over 24 million euros into four Finnish startups.
Colin Powrie is a venture capitalist at Ascend Capital Partners – a Hong Kong and Luxembourg-based VC firm with investments in several early-stage Finnish startups. We asked Powrie how Ascend Capital Partners got started in Finland, what kinds of Finnish startups they have invested in so far, what advice he would give to other international investors considering in investing in Finland, and much more.
Q1: What is Ascend Capital Partner’s investment strategy and how did you become interested in Finland?
We look for deep-tech early-stage startups creating some sort of platform technology that gives us a breadth of shots on goal.
One of the sectors we focus on is med-tech – specifically medical devices with software and hardware that help medical professionals make better diagnoses. We also invest in mobility startups, which can be anything that enables electric and self-driving driving vehicles. We like semiconductors too.
One of our team members is married to a Finn and was extolling the virtues of Finnish tech and the country’s work ethic, so at the end of 2016 we went to Slush for the first time and really enjoyed our experience there. After that we had some helpful introductions from Business Finland and started to get into the local scene and speak to entrepreneurs in Finland. Then before Slush 2017 we announced investments in four Finnish startups. To date we’ve invested more than EUR 24 million in those four companies.
People are honest and direct, which are great things when you want to do business. The country’s infrastructure is really hard to fault – Finland is very well put together and organised.Colin Powrie, Venture Capitalist at Ascend Capital Partners
Q2: Before we talk about those startups, please tell us what you like about investing in Finland.
We like Finland because the tech is unique. I think this stems from the culture and the education; in the way people are brought up to be very technical, but also very imaginative in the way they use tech. When you work in early deep tech, you’re talking about getting over a sort of hump in terms of engineering capability and technical innovation. Finland definitely brings a lot to the table in this regard.
Helsinki is also very well positioned between east and west, which serves us well. A lot of what we’re doing is trying to find great technologies and expand them to fast-growing markets like China and the rest of Asia.
Q3: You’ve already taken two of your Finnish portfolio companies to the next stage – please tell us more about those companies.
The first to mention is Aiforia, an AI solution for clinical laboratories that helps with discoveries and diagnoses. Last year we had an IPO for the company on the Helsinki Stock Exchange – a great achievement for everyone involved.
Another one is Grundium, an excellent company that makes high-precision microscope scanners so that pathologists can work remotely. Since we became involved Grundium has found its product-market-fit and scaled to a profitability phase. Now we’ve exited our share and the company has a new financial backer to take it to the next step.
Q4: What can you tell us about the other two companies in your portfolio?
Canatu is an amazing company with a technology to make carbon nanotubes. The material is transparent and stretchable, so you can use it for things like defogging cameras, or for the windscreens of cars. Canatu is now working with some of the world’s leading semiconductor manufacturers, using its technology to create significantly higher production yields. The company is literally growing stronger and stronger with each week – it’s a very interesting case.
Our fourth investment is in Tactotek. They’re approaching the market with an engineering process for injection-moulded structural electronics. This essentially allows you to create 3D shapes where you can directly embed electronic circuitry, LEDs, and other smart functionality. It’s a very interesting company with large global institutions as part of its shareholder base.
Q5: What are some of the upsides and downsides of investing in early-stage startups rather than in more mature companies?
As these are primarily deep-tech companies, there’s often a lot of homework involved from our side to really understand what they’re doing. You must be able to talk intelligently with the founders, as you need to impress them too!
These companies are in a very embryonic stage and are creating a lot of things from scratch, so you sometimes find yourself being a professional support coach as you help them get past certain milestones. This is really really different to investing in a growth stage company, where you’re looking more at the data you have to hand.
In early-stage companies you also have much more of an ability to make a big impact in terms of the company’s trajectory. For example, we’re trying to affect our portfolio companies’ cross-border strategies to help them expand into Asia and elsewhere. In some ways it might be easier to do this by getting in there early and helping to craft the strategy.
Q6: What role has Helsinki Partners played in helping you get established in Finland?
Helsinki Partners has been great in terms of supporting our understanding of the local environment and getting us access to the latest news. This is useful as we can’t be in Helsinki all the time, even though we do come there frequently. The organisation has been a kind of cultural bridge for us in terms of learning how to work with people in Finland.
Q7: What would you say to other international investors considering doing business in Finland?
I say come and take a look! There is no substitute for actually visiting Finland, and the things you see there will really amaze you. People are honest and direct, which are great things when you want to do business. The country’s infrastructure is really hard to fault – Finland is very well put together and organised.
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