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At the end of last year, the volume of investments in Finnish startups amounted to €951 million – almost twice as much as in 2019 or 2018. To illustrate the progress, you can recall the figure of 2010, which was €121 million. In Finland, they are confident that in 2021 it will be possible to step over the mark of €1 billion.
The main share of investments fell on venture funds – €495 million (a year earlier it was € 286 million). This amount was distributed among 174 startups. Once again, more than half of the total volume of venture capital investments are from foreign funds. Moreover, 83% of transactions with foreign capital were carried out in cooperation with local venture investors.
Finnish business angels cut funding last year – they allocated €36 million for the development of 321 startups. This is lower than the record figure of 2019, when the total investment amounted to €54 million. During this year, the main focus of their activity was the support of portfolio companies. Indeed, about 80% of startup deals with business angels were additional rounds of investments. For comparison, in 2019 this figure was 44%. In addition, last year the number of business angel exits increased significantly to 171 transactions – a record for this group of investors.
€99 million were addressed to startups by large corporations and pension funds in Finland. These categories of investors were first identified in statistics. Another €50 million was spent on accelerators and crowdfunding.
Finnish startups raised the remaining €271 million from foreign corporations, business angels and other groups of investors.
From smartphones to virtual reality
The main focus of technology companies in Finland remains the Greater Helsinki region. According to Dealroom.co, the city is in 8th place in Europe in terms of the number of unicorn companies (capitalization over $1 billion) – last year there were 4 unicorns. 8 more startups are potential unicorns, at the moment their capitalization is $200-800 million.
The biggest deal last year was HMD, a phone manufacturer that raised €195 million from a pool of investors including Google, Qualcomm and Nokia. The company, which has been developing and selling smartphones under the Nokia brand since 2017, launched the first device of a well-known Finnish brand with 5G technology a few months before the deal. Last year’s deal allowed HMD to achieve a total amount of attracted financing of €1 billion. The company planned to direct investments, including for development in foreign locations – Brazil, India and African countries. HMD Global now holds about 1% of the smartphone market, ranking 13th globally among all vendors. HMD has sold over 240 million smartphones in 4 years.
Another interesting deal in the field of mobile technologies was the raising of €42.5 million by the startup Swappie from the Finnish state investment company TESI and its existing investors: Lifeline Ventures, Reaktor Ventures, and Inventure. Swappie at the facilities of its own factory in Helsinki is engaged in the restoration of iPhone smartphones and their further online sale. Simultaneously with the announcement of the deal, the company launched its online stores in Germany, the Netherlands, Ireland and Portugal. Swappie’s revenue dynamics are impressive: €97.6 million in 2020 versus €31 million in 2019.
A record deal for Europe in the segment of high-tech companies in 2020 was marked by a startup IQM, which raised €39 million. The company specializes in the development of quantum computers. The round was closed with the participation of more than 10 investors, including TESI. The main funding for the project was directed by a German venture capital fund MIG Fonds. It is planned that the attracted investments will go to development, attracting highly qualified personnel, and creating sales and business development teams. IQM was founded in 2018, it is headquartered in Espoo and has a subsidiary in Munich. Now the company employs more than 70 people, and in the IQM portfolio there is a grant of €3.3 million from the state institution for the support of entrepreneurship Business Finland, which we talked about in one of our previous materials.
One of the leaders in terms of the volume of attracted investments last year was the startup Varjo, which specializes in VR technologies. The company is known for being the first in the world to achieve the same quality of resolution in virtual and mixed reality pictures as the human eye. Varjo closed the €46 million round with new and existing investors. The startup plans to use the raised funds both for the development of its software and for global expansion. Now its product is present in more than 40 countries in Europe, Asia, North America, the Middle East and Central Asia. Varjo’s clients include large companies that use the service for experiential learning, showcasing future construction projects, evaluating prototypes, design solutions and the effectiveness of security technologies.
This January, a deal was closed, which is likely to be the largest for Finnish startups by the end of 2021. Wolt, an online food search and ordering service, raised €530 million from a pool of investors: Iconiq Growth, Tiger Global, DST, KKR, Prosus, EQT Growth and Coatue. Previous partners of the startup also participated in the deal: 83North, Highland Europe, Goldman Sachs Growth Equity, EQT Ventures and Vintage Investment Partners. Wolt appeared in 2015 when it started working with 10 restaurants in Helsinki. Now the service is present in 23 countries and 120 cities. Today, Wolt is no longer only food delivery from restaurants, it also allows ordering flowers, electronics, clothing and other items.
From Russia with technology
Russian startups, which had already made some noise in Finland, began their journey in the country with participation in the Finlanding program. The selection took place from August 2 to September 20, the final online pitch session was held on October 14, where three winners of the program Finlanding were selected.
One of the most experienced Russian companies localized in Finland is Robbo, which manufactures educational robotics. Its products are represented in 22 countries of the world. The company has implemented a number of projects with leading educational institutions in Finland – they have become in many ways a launching pad for the development of Robbo in other countries. Another technology attractive to Finland is developed by Geyser Batteries. Its office is located at the Maria01 Campus, where the startup team is developing water-based batteries. Geyser Batteries plans to open a production site in Finland next year.
In 2019, Acoustic Extra Freezing moved to Finland, developing the technology of acoustic freezing of products. This method, according to the company’s management, is more advanced in terms of preserving the taste of food. One of the important aspects of the application of acoustic freezing is the potential increase in exports of products from Finland, where the harvest season is rather short, but using this technology, it can be delivered to other countries throughout the year.
This year, the Finlanding program is traditionally organized by the Helsinki Centre in St. Petersburg in cooperation with the leading Finnish startup support institutions – NewCo Helsinki and Helsinki Business Hub.
162 applications from teams from Russia ready to enter the European market were participated in the Finlanding program. Companies presented 24 technology areas, most of all applications were received in the areas of Smart City (30 applications), GreenTech (26 applications), MedTech (17 applications) and Life Science Tech (15 applications). The vast majority of participating teams are at the Growth (50 applications) and Startup (45 applications) stages. The Finlanding program operator was GoTech Innovation.
Previously, Suomzilla Oy and VERSPEAK, shared their achievements in business development in Finland with GoTech Innovation. Other success stories of Russian startups in Finland can be found on the Helsinki Business Hub portal.