Finland’s Hot Startup Scene has Huge Ambitions — There’s Just One Problem
(This article first appeared on Business Insider, Aug. 10, 2016.)
The Finnish startup scene has shown great promise through the years: It has given birth to products such as Linux, Angry Birds and Clash of Clans. However, one thing is holding it back. In its pursuit of an expansion similar to that in neighboring Sweden, the Finnish startup scene needs more local money and late stage investors willing to take risks.
Supercell: A proof of startup-power.
Recently, Tencent, the Chinese company behind messaging app WeChat, agreed to buy a majority stake in Finnish Supercell in a deal worth $8.57 billion, valuing the company at $10.2 billion. Supercell is a true Finnish startup success story.
The game maker was founded in 2010. During its first five years it only produced three games — but they all became global megahits. The most successful, Clash of Clans, is the highest grossing app of all time, together with Hay Day, it generated revenues of $2.4 million a day in 2013.
Supercell doesn’t employ more than 190 people and the games are created by teams consisting of at most half a dozen people. None the less, it was the number one mobile games developer in the world in 2013.
Following the gaming success.
In an interview with Dennis Mitzner of The Nordic Web Jonas Dromberg, a Finnish Tech investor, presses on Finland’s potential to move beyond the gaming sector.
“Spotify would likely never have made it without the clout and leverage of Swedish-managed funds.”
“There is much more to Finland than gaming startups, even in places where international investors wouldn’t immediately look. It’s difficult to successfully prop Finnish non-gaming startups on the global stage without local (Finnish) financial risk takers. For riskier ventures, you can’t rely on international later-stage investors alone. Spotify, for example, would likely never have made it without the clout and leverage of Swedish-managed funds,” says Jonas Dromberg to The Nordic Web.
Why Sweden is ahead.
Dromberg is convinced things would be better with greater access to venture capital. Most Finnish venture capital firms have focused on pre-seed or early stage financing. The Nordic Web writes that the number of angel investors are, in fact, on the rise, but that there is a need of more to finance global expansion — such as Supercell’s or Spotify’s.
“Finland has tremendous tech, but where it falls dramatically behind is in access to local financing. Swedish startups can tap into much more locally-led venture funding. To remain competitive, Finland desperately needs larger internationally-minded VCs that can help take local entrepreneurs to global B rounds and beyond.”
