What makes Helsinki a hot startup hub - 8 observations

In 2006 when Jaiku started, the Finnish web startup scene was practically nonexistent. There was no Aalto University, no accelerators, no encouragement, and no money. Still, there was a growing enthusiasm to do something, and there was Aula that brought interesting people to Helsinki.  Only 5 years later, everything has changed. Helsinki has transformed into a vibrant startup hub with bursting creativity, self confidence, and humor.  Here are some observations on what is happening:

1. Rovio boosts collective optimism
A startup entrepreneur has to be an optimist, because thinking about all the things that can possibly go wrong would paralyze anyone to death.  The standard optimism however elevates into new heights when there is one crazily successful example nearby. Thanks to Rovio, Finnish startup founders have started thinking we can. 

2. New networks and communities encourage initiatives and action
As a busy entrepreneur, you rarely get to hang out with likeminded people, and that's a pity because you miss a lot:  serendipitous connections, randon exchange of wild ideas, as well as concrete tips  about good events,  people, partnerships,  and funding. The pioneers and new pillars of the new active Helsinki startup culture inlcude collectives such Finnish Mobile Association,  Aalto Entrepreneur Society, Aalto Venture Garage, Startup Sauna, Future Female, and TEDx Helsinki.  All these are loose enough so the barrier of entry is low, but active enough so that things start to happen.

3. Entrepreneur-led accelerators bring focus and hands-on mentoring to government funding
Two years ago the Finnish Funding Agency for Technology and Innovation TEKES launched Vigo, a new kind of accelerator programme for young Finnish growth companies. The accelerators are led by experienced entrepreneurs that participate in the activities of the selected companies. Vigo companies can get up to 1M eur (non-diluting) grant for building their international business. In less than 24 months the 40 portfolio companies have raised more than €70 million from investors such as Accell Partners, Index Capital, Sunstone Capital, and Inventure.

4. New VCs with good networks
One of the Vigo accelerators, Lifeline Ventures, just announced a new 20 MM eur venture fund.  For Finland, 20 MM eur new money for statups is not trivial: it is as much as total foreign investments in 2011 (let's hope this number will grow in 2012). The founders of Lifeline Ventures, Petteri Koponen, Ilkka Paananen, and Timo Ahopelto, are all serial entrepreneurs with great connections to London and Silicon Valley investors.

5. New tax incentives for angels
Despite the good news on the VC side, the early stage entrepreneurs are not exactly rolling in angel money. Luckily, the government has figured out that since  half of all the new jobs seem to emerge in small growth companies,  so perhaps it would be good to hammer through some tax benefits for business angels. The so far unconfirmed plan is that half of the total angel investment would be deductible from one's capital gains. Not bad, eh?

6. There are plenty of great engineers

Finnish engineers are reliable, skillful, organized, and cost effective. Ok, perhaps a bit blunt sometimes and not so well combed as the Swedish ones, or as unexpensive as the Russian ones, but still, absolutely lovable. And there are plenty of them in Helsinki --and Oulu. I'm not saying recruiting is ever easy, it is damn slow and frustrating, but at least we're lucky for not having to compete with Etsy and FourSquare in NY or SoundCloud in Berlin.

7. Biz & tech press is slowly waking up -> more talk =  more action
Finnish business and tech press (except for ActicStartup) is well-known for whether completely ignoring the emerging startup scene or alternatively only taking pleasure for its failures. As the spring comes,  there are signs of waking up. Those who have  ventured to write about other companies than Nokia, Metso and Kone, have noticed that their readers quite like to learn about people who risk their lives and reputation by stubbornly believing in weird ideas, sometimes succeeding, sometimes failing.  (Heck, this is prime time entertainment!) Read Wired and learn. Btw, for any news you want to cover in Finnish, I'd recommend pinging directly Elina Lappalainen at Talouselämä.

8. Minister at your service

The Finnish Minister of European Affairs and Foreign Trade Alex Stubb is unconventional. He is young, direct,  has a good sense of situation, opportunity, style, and humor. Lots of people hate him, but startup entrepreneurs love him.  Stubb likewise gets a kick out of the new startup generation and has given a new kind of spin to US oriented business delegations. The trips are well organized, interesting and fun. "I'm at your service, use me", says Stubb. In the best case Stubb's attitude is contagious and other goverment officials start asking themselves if they are really doing everything they can to support Finnish growth companies -- who are and will be,  after all, paying an increasing amount of their secured monthly salaries and pensions.

Below is the Finnvasion2012 delegation at Nasdaq. Touch the image to see the links and let me know which ideas you would bet your money on. Happy to make direct introductions too!

 

 If you want to post this interactive image to your blog, click the embed icon on the top right and copy paste the code.

 

 

Comments

[Timo Ahopelto]

You are so right Ulla. I just got one 'top class' investor familiar with what happens in Finland. He knows Sweden well, and said after seeing some 10 startups here: "There is real tech innovation in Finland that I can't see elsewhere or in Sweden." Felf good as we Finns always wish to beat the Swedes. :)

[Ulla Engeström]

There you go. What actually got me to write this was a friend of mine who was wondering if Helsinki is as interesting as Stockhokm as a startup city. "Stockholm? What's happening there?", I asked. I guess there must be something going on there too. ;-)

[Ted Valentin (Tripbirds.com)]

Great stuff, Ulla. I think you nailed some things that people usually don't think about, like: #1 successful examples, #2 networks, #5 angels, #7 friendly media.

Nice to hear from you in the comment that Stockholm was in the back of your mind. As you might know, I'm part of the Stockholm startup scene. So, from my perspective: I think we have some successful companies, enough investors, world class competence in both design and programming. And here as well, the media is waking up. (tnx Adam Erlandsson, Josefin Jakobsson). What we DO lack is networks, like the ones you describe. I think you're way ahead of us there. We have Stockholm School of Entrepreneurship and Hyper Island, but that's about it. And for some strange reason, there are very few angels, almost none at all. That's really quite strange.

One thing that I think is a big obstacle in Stockholm is that young engineers and designers are rather complacent. Engineers are happy to work for Ericsson or ABB, and designers are happy to work for some design agency that makes them look hip. There's no incentive, or thought of, taking risk.

BTW, go Thinglink!

[charlie]

Just as I was leaving Finland in 2009, I could see the entrepreneurial world in Helsinki start picking up. I was hoping one of the new firms would be a big item in 2011, but I'll be happy with the great things happening in 2012!

And, it's great to see Peter in the picture (move over Stubbe!). He's tried so hard in the past 10 years to support Finnish entrepreneurs. I'm sure he's happy with the new scene!

[Ulla Engeström]

Hi Ted, hi Charlie!! Networks are certainly interesting, because in a way it seems to feed all the rest, and offer an interesting alternative and 'social shoulder' for stepping out of one's comfort zone.

I'm actually quite surprised to hear there is not much angel money around in Sweden. Why is that? At least it is not as bad as in Denmark.