Growing ecosystem: Finland is one of the hottest startup hubs in Europe

Startups need to surround themselves with an ecosystem consisting of many things, including wide networks, a well-functioning infrastructure, competent entrepreneurs, highly skilled labour and business angels who provide not only funding but also other forms of support for the growing companies. Finland has created an excellent microclimate for startups to flourish with the help of Business Finland, various types of guarantees offered by Finnvera as well as other financing projects around the ecosystem.

Vesa Riihimäki, Head of Startup & Growth Finland at Nordea, says that the foundations of the country’s successful startup scene were laid decades ago.

“For a long time, Finland has been known as a technologically advanced country with a lot of engineering know-how. Nokia specifically played a huge role in the creation of the Finnish startup ecosystem – through both its rise to prominence and its fall. Former Nokia employees were encouraged to kick-start their own tech businesses and other endeavours through various programmes. Many good things came from it, and a startup-friendly environment began to take shape. This also gave wings to the world’s leading startup event Slush.”

Riihimäki is happy to see that the groundwork laid over many years is now paying off.

“Our ecosystem in the Greater Helsinki area is growing stronger every year, for example. Local universities and numerous healthy startups actively help each other out. There has also been a lot of hype around the most successful companies, which has attracted even more and better talent. At the same time, more people have also taken on the role of a business founder. Even the digital transformation accelerated by the pandemic has boosted many of our businesses.”

Three drivers of success

Finland is already a home to a few unicorns – high-growth companies valued at more than one billion dollars. According to Riihimäki, there is more potential for future success bubbling under the surface, too. He sees three main reasons for why Finnish startups are now able to raise more capital than before.

“We are finally at a point where Silicon Valley was light years ago. We have serial entrepreneurs working on the second or third startup, reinvesting the money they made from one or two successful exits. This is how the ecosystem matures.”

“In the past five years, another driving force has been the emergence of several domestic venture capital (VC) funds with more than 100 million euros in assets to fund startups.

The third key driver has been large global VC funds. Riihimäki applauds Slush and a few longtime domestic VC funds for successfully marketing Finland to global investors.  Nordea is also able to use its network to attract the world’s largest VC funds to privately organised events where they can meet Finnish startups.

“If we can raise 15–20 million euros in a funding round with Finnish investors alone, this means we will cast a wider global net when we are talking about raising hundreds of millions.”

Attitude, values and culture

Riihimäki talks about a big shift that has taken place in Finnish society over the past decade.

“The most famous startup founders have become rock stars in a way. Research shows that today’s university graduates are more interested in entrepreneurship and working in startups than before. The virtuous cycle and publicity have contributed to the growing ecosystem.”

According to Riihimäki, startups may have also been trailblazers when it comes to creating a thriving company culture.

“A sense of community, teamwork, an inspiring work environment and a positive feeling in general come to mind when I think about the hundreds of companies I have visited.”