I moved to Finland in Summer 2004, and started my company (MySites) in 2006. During that time, I have been able to witness and participate in the development of the nascent Finnish startup ecosystem, as well as get experience from all around the USA, France, Germany and more recently the UK.
While I am upbeat about the developments in the Web industry, I would like to stress the points that I feel are more challenging in Finland and need to address if we wish to succeed, plus share an insight of how things are improving.
1. Lack of entrepreneurs
The most urgent problem is the lack of willingness of Finns to become entrepreneurs. To quote The Economist: “if only 3% of the population want to be entrepreneurs, as in Finland, you will have trouble creating an entrepreneurial economy”.
People have blamed this on several factors: lack of emphasis from schools, the emphasis on becoming a consultant, eased by the amount of public support that pays them, the so-called cultural lack of risk taking. While I will not try to pinpoint a specific reason for this, the country needs to create more entrepreneurs.
Pros: In spite of the lack of efforts from schools or the government, student organizations such as Aaltoes, Hankenes, Hues, Boost Turku and Stream Tampere have done a great deal of efforts to get interest from students during the past year.
2. Lack of role models
There is very little awareness of growth entrepreneurship as a viable career path. This comes as a surprise, considering Finland’s considerable contribution to technology: Nokia, F-Secure, SSH, IRC are all Finnish creations. Yet how many students know Marten Mickos or Taneli Tikka? How many want to create the next Remedy, Sulake or Digital Chocolate? Schools and the media have a large role to play in this. There is no shame in wanting to become the next Bill Gates, Sergei Brin or Mark Zuckerberg.
Pros: Aaltoes has managed to invite several “name” speakers in front of students, including: Risto Siilasmaa, Taneli Tikka, Marten Mickos, speakers from Standford and MIT.
3. Centralization
MySites started in Tampere, which is a city I didn’t know existed before 2003. Most events, VCs, people, startups are located in Helsinki. This is less true for the gaming industry, which has managed to have significant activity in Oulu, Kajaani and Tampere. However, the web is far behind.
Pros: Boost Turku and Stream Tampere have been successful at creating local startup events. Also, Tampere All Stars has made commendable efforts in the city of Tampere.
4. Lack of visibility
To my knowledge, there is a grand total of one blog that regularly covers all the Finnish startups. Getting coverage in mainstream press is practically unheard of. In fact, I have had consistently more success at getting coverage from foreign media than locally. You will not hear from innovative startups in your newspaper. There is very little discussion about growth entrepreneurship. Abroad, Twitter gets invited on Oprah, and even minor startups appear at the Journal de 20 Heures in France.
Pros: At least there’s Arcticstartup.
5. Lack of sweat equity
The value of your startup stems from the robustness of your team. In my experience, many people will expect the same things from a startup job as for a regular one: work normal hours, get paid a regular salary, don’t ask for equity. Without sweat equity, your team is less committed to stay and fight the hard fights. Without working extra hours, your team cannot compete with people who receive more money or have superior technology.
Pros: None that I can think of. Use your Kela money, student loans and credit cards more.
6. Lack of investments
As is the case in most of Europe, Finnish startups are less funded than American or Western-European counterparts. There is a distinct lack of foreign investments in the country, possibly due to the lack of tax incentives, while local risk investors have a consistent track record of getting less involved in local cases than Swedish investors. There’s been enough discussion about the topic. However, one must consider that with less access to funding, Finnish startups are less likely to be competitive with well-funded players.
Pros: While this is still very difficult, there has been an increate in very early stage investments (<50k range) and attempts to make fundraising less complicated by the Vigo program (though it is still early).
7. Lack of feedback
This one is purely personal, but I have found it extremely difficult to receive feedback in Finland. Consumers would simply say the positive things or say nothing. More alarmingly, even industry people (consultants, VCs) have been tight-lipped with their response. In contrast, feedback I received on every important meeting abroad has been extremely invaluable. I am not sure why this is the case. Maybe Finns are trying to be polite? Negative feedback is the basis of change, and the only way we can learn how to meet your needs.
Pros: There is a growing amount of “Open Mic” events organized by the different entrepreneurship societies, where feedback has been very straightforward. I’m looking forward for more of this from others as well.
8. Lack of networking and collaboration
There are plenty of startup and social media related events. Yet, in one year of attending these events, I’ve gathered fewer contacts and business cards than I have in San Francisco or London in less than a week. What gives? It can’t be simply that there’s fewer people or that they’ve all got their hands full with projects. How do you conduct business if you don’t actively hunt for new leads or partnerships?
Pros: There are less than 10 people I would consider “heavy networkers” in the country. Taneli Tikka, Peter Vesterbacka, myself, Janne Saarikko, Sonja Kangas, Ville Vesterinen, Christina Forsgard, and Kai Lemmetty. Talk to them, learn from them!
9. Lack of internationalization
The European market is very fragmented. When you live in one of the smaller nations in Europe, you should start thinking about being international very early (unless you’re aiming for a really, really profitable niche). I often hear that Finland is a good test market. In my experience, it is not: it is more difficult to acquire consumers, get visibility, get feedback. Also, Finns have lower purchasing power than Western Europeans. I think it is quite a stretch to think that this knowledge is relevant abroad. There should be a stronger emphasis on participating in international events, setting up offices abroad, hiring foreigners, getting international visibility. In my experience, and this is quite counter-intuitive, all of these things are easier to do than their local counterparts.
Pros: There’s been an increase of internationalization by Finnish startups, such as Dazzboard, Mysites, Xihalife, Muxlim, Gigswiz. Also, Culminatum has been making efforts with its EIB Clinic to help some.
10. Too tech driven
Since very few people want to become entrepreneurs, most who do are people with a certain technical skill, who want to get it turned into a product. Many very smart engineering students want to create something new instead of working for some big company, and this is even more true of the active ones who contribute to open source projects. Of course, this creates a huge gap in the new companies that are founded. Legal, management, sales knowledge are often seen as secondary.
Pros: The Vigo program’s goal is to fix these gaps. Aaltoes organizes the Talkoot events (one of which I was mentoring) to help gather teams.
Hopefully we can make those points history in a year or two :)
Great analysis, Ramine. I like the fact that you have a “Pros” section for each challenge. When a problem is identified and described, it can be overcome.
Marten
P.S. And if the challenges are now down to only 10, the situation is better than in the 80s when people of my age took our first steps in the entrepreneurial world. :-)
Pretty much the same in Estonia. Good list.
I think Estonia’s doing a lot better though. You guys have more startups than we do. The VCs are more active. You even have one of the biggest success stories in Europe.
Ramine, this is the most insight full posts about Finnish ecosystem I´ve read. It´s also great list for Startups to check what they should do and not do when taking the first steps!
Great contribution! IMHO the Ecosystem here develops so fast at the moment that in few years Helsinki will be great place for Startups and investors!
Very nice post Ramine.
Honestly, I think in Finland many startups are being driven to spend their focus and energy on getting tiny bits of funding. This quite often kills their passion to reach for the best CUSTOMER solution. Hence, very few stars are being created.
Also loving the positives you bring out. :)
Great analysis, Ramine. I like the fact that you have a “Pros” section for each challenge. When a problem is identified and described, it can be overcome.
Marten
P.S. And if the challenges are now down to only 10, the situation is better than in the 80s when people of my age took our first steps in the entrepreneurial world. :-)
Pretty much the same in Estonia. Good list.
Very nice post Ramine.
Honestly, I think in Finland many startups are being driven to spend their focus and energy on getting tiny bits of funding. This quite often kills their passion to reach for the best CUSTOMER solution. Hence, very few stars are being created.
Also loving the positives you bring out. :)
Thank you for this insightful posting!
Very good writeup. The only things I’d want to add is a dreadful lack of ambition and belief in yourself…
Excellent writeup. Related to the last point – of being too tech driven – is that from time to time startups are not enough business and people driven. One has to understand the fundamentals of business as well as do something that is interesting to someone — filling some sort of real need in their lives or in their business.
Absolutely the best post I’ve ever read about Finnish entrepreneurship. Hopefully this text goes to someone on the top. There could be room for another blog about startups so I’ll consider starting one. Anyone here wanting to write in that kind of blog? Though I don’t have the status yet to get anyone (except my friends) interested writing in it. Should build it first?
Just build it already ;)
Nobody’s got the status to get people interested in contributing. You think the ArcticStartup guys had help when they started? :P
Start a blog, keep blogging, network, go to events, get it out there!
We definitely need more opinions like this. As Marten also pointed out, back in the 1990′s when we founded Akumiitti, the list of challenges was a bit longer. We had at least two things that helped us at that time: 1) we had to fund the company initially with customer money; ie. we wento to companies like Tele (Sonera) and Nokia and pitched our revolutionary concepts – they never bought what we sold but something different, a deal was made anyway and 2) Nokia phenomenon. When Nokia became well known everywhere, also other Finnish companies could enter in discussion with global companies, and not necessarily WITH Nokia.
Nowadays it’s of course bit different game. Point #1 still applies, selling and pitching never goes out of fashion. Point #2 is non-existing nowadays.
Commenting a bit the points Ramone made: I agree that we should get rid of this consultant-driven-no-risk-allowed government funding policy… It’s really slowing down the entrepreneurial spirit. While Tekes is evolving into ever better role, and in many aspects is very good additional funding tool, there are some other instruments that due to the agricultural heritage are really of negative influence.
And in any case, it’s money that is needed. It doesn’t matter if your idea, team and product are good. If you cannot run as fast as the well-funded competition, it’s difficult to reach the goal (dominant market position/acquisition/profitability/etc) first.
Antti
One problem is the image of entrepreneurship in Finland; most of my friends think that being an entrepreneur is going to get you into personal bankruptcy which ain’t true unless you’re ignoring all the planning or investing all your money and then entering into market that you ain’t capable of handling.
Also there is the point that we Finns try to do everything by ourselves, which usually leads to 16-hour workdays seven times a week and that ain’t motivating the rest who are even thinking of starting a new company.
In short: We need better examples. Role models.
Thanks for all the comments. Best thing to do if you want to change things in a better way is to help the startups you know and/or to be vocal about these problems. The media should really talk more about this. Hopefully they will soon
Really good posts about challenges. What do you think Ramine what are there things that make things easy in Finland to establish start-up company or are there any?
Sure. You should really try to get in touch with the entrepreneurship societies. The Bootcamp organized by Aaltoes is probably the biggest effort for startup creation ever made in the country. This summer, there’s Summer of Startups (where I’ll be mentoring). Plus there’s the Tekes support and others in general.
Thank you for this insightful posting!
Very good writeup. The only things I'd want to add is a dreadful lack of ambition and belief in yourself…
Excellent writeup. Related to the last point – of being too tech driven – is that from time to time startups are not enough business and people driven. One has to understand the fundamentals of business as well as do something that is interesting to someone — filling some sort of real need in their lives or in their business.
Absolutely the best post I've ever read about Finnish entrepreneurship. Hopefully this text goes to someone on the top. There could be room for another blog about startups so I'll consider starting one. Anyone here wanting to write in that kind of blog? Though I don't have the status yet to get anyone (except my friends) interested writing in it. Should build it first?
Absolutely the best post I've ever read about Finnish entrepreneurship. Hopefully this text goes to someone on the top. There could be room for another blog about startups so I'll consider starting one. Anyone here wanting to write in that kind of blog? Though I don't have the status yet to get anyone (except my friends) interested writing in it. Should build it first?
We definitely need more opinions like this. As Marten also pointed out, back in the 1990's when we founded Akumiitti, the list of challenges was a bit longer. We had at least two things that helped us at that time: 1) we had to fund the company initially with customer money; ie. we wento to companies like Tele (Sonera) and Nokia and pitched our revolutionary concepts – they never bought what we sold but something different, a deal was made anyway and 2) Nokia phenomenon. When Nokia became well known everywhere, also other Finnish companies could enter in discussion with global companies, and not necessarily WITH Nokia.
Nowadays it's of course bit different game. Point #1 still applies, selling and pitching never goes out of fashion. Point #2 is non-existing nowadays.
Commenting a bit the points Ramone made: I agree that we should get rid of this consultant-driven-no-risk-allowed government funding policy… It's really slowing down the entrepreneurial spirit. While Tekes is evolving into ever better role, and in many aspects is very good additional funding tool, there are some other instruments that due to the agricultural heritage are really of negative influence.
And in any case, it's money that is needed. It doesn't matter if your idea, team and product are good. If you cannot run as fast as the well-funded competition, it's difficult to reach the goal (dominant market position/acquisition/profitability/etc) first.
Antti
One problem is the image of entrepreneurship in Finland; most of my friends think that being an entrepreneur is going to get you into personal bankruptcy which ain't true unless you're ignoring all the planning or investing all your money and then entering into market that you ain't capable of handling.
Also there is the point that we Finns try to do everything by ourselves, which usually leads to 16-hour workdays seven times a week and that ain't motivating the rest who are even thinking of starting a new company.
In short: We need better examples. Role models.
Thanks for all the comments. Best thing to do if you want to change things in a better way is to help the startups you know and/or to be vocal about these problems. The media should really talk more about this. Hopefully they will soon
Really good posts about challenges. What do you think Ramine what are there things that make things easy in Finland to establish start-up company or are there any?
Sure. You should really try to get in touch with the entrepreneurship societies. The Bootcamp organized by Aaltoes is probably the biggest effort for startup creation ever made in the country. This summer, there's Summer of Startups (where I'll be mentoring). Plus there's the Tekes support and others in general.
Just build it already ;)
Nobody's got the status to get people interested in contributing. You think the ArcticStartup guys had help when they started? :P
Start a blog, keep blogging, network, go to events, get it out there!
I think Estonia's doing a lot better though. You guys have more startups than we do. The VCs are more active. You even have one of the biggest success stories in Europe.
Ramine, it is surprising that you do not mention the fact that in the mid-2000s almost 60% of the software found in Nokia handsets was created and delivered by Finnish startups. I happened to CEO one of them, Visual Radio, a spin off from Jutel Oy in Oulu. I came to know many startups in Oulu and companies that emerged from startups, like Elektrobit, Polar Electro (still privately owned) and others in Finland that were merged like TietoEnatur. I also wonder why you forgot Jyri Engestrom’s Haiku or Marco and Lisa’s Dopplr. And most importantly, Wreckamovie.com, which in the film circles has totally taken digital creation to another level.
I love the fact that you almost wrote a Manifesto. Finnish entrepreneurs deserve support and funding because being creative and crafted is part of the Finnish SISU. Finland would not be Finland without the entrepreneurial efforts of many Fins that created great companies.
What is needed is more like you and the rest of the members of the ecosystem to change the paradigm.
I shall see you all at TechTour, which takes place in Helsinki on 14th-15th and goes on to Estonia and Sweden.
http://www.techtour.com/nordic2010/index.php
I can’t name drop everyone :) Both Jaiku and Dopplr have exited. I love Wreckamovie (and crowdsourcing for that matter), we’re talking about doing things with them with MySites.
See you around. Would love to hear more from startups up North.
Thx Ramine, It seems it takes a non fin to give best perspective from finland :) – luckily as you are pointing out there are lot of great developments going on with these issues in many fronts – The best thing I like about most of the initiatives, that those are started and run by entrepreneurs or entrepreneurial people.
Ramine, it is surprising that you do not mention the fact that in the mid-2000s almost 60% of the software found in Nokia handsets was created and delivered by Finnish startups. I happened to CEO one of them, Visual Radio, a spin off from Jutel Oy in Oulu. I came to know many startups in Oulu and companies that emerged from startups, like Elektrobit, Polar Electro (still privately owned) and others in Finland that were merged like TietoEnatur. I also wonder why you forgot Jyri Engestrom's Haiku or Marco and Lisa's Dopplr. And most importantly, Wreckamovie.com, which in the film circles has totally taken digital creation to another level.
I love the fact that you almost wrote a Manifesto. Finnish entrepreneurs deserve support and funding because being creative and crafted is part of the Finnish SISU. Finland would not be Finland without the entrepreneurial efforts of many Fins that created great companies.
What is needed is more like you and the rest of the members of the ecosystem to change the paradigm.
I shall see you all at TechTour, which takes place in Helsinki on 14th-15th and goes on to Estonia and Sweden.
http://www.techtour.com/nordic2010/index.php
Thx Ramine, It seems it takes a non fin to give best perspective from finland :) – luckily as you are pointing out there are lot of great developments going on with these issues in many fronts – The best thing I like about most of the initiatives, that those are started and run by entrepreneurs or entrepreneurial people.
I can't name drop everyone :) Both Jaiku and Dopplr have exited. I love Wreckamovie (and crowdsourcing for that matter), we're talking about doing things with them with MySites.
See you around. Would love to hear more from startups up North.
Ramine, this is the most insight full posts about Finnish ecosystem I´ve read. It´s also great list for Startups to check what they should do and not do when taking the first steps!
Great contribution! IMHO the Ecosystem here develops so fast at the moment that in few years Helsinki will be great place for Startups and investors!