Two men converse at Slush
 Huge news recently for the Finnish startup scene: 2020 saw record funding figures and Slush (pictured) is back on the calendar for 2021. Image: Riikka Vaahtera/Slush

Finnish firms enjoy growth spurt at home and abroad

As the world awaits eagerly a return to some semblance of normalcy made possible by the roll-out of coronavirus vaccines, the nascent optimism is encouraging firms and investors to ramp up their growth efforts.

Aleksi Teivainen

26.05.2021

The COVID-19 pandemic utterly failed to stem the flow of growth capital to Finland. The Finnish Venture Capital Association (FVCA) in May reported that the amount of growth capital thrown at Finnish startups surged to an all-time record of 951 million euros in 2020, an increase of almost 90 per cent from the previous year.

Investments in Finnish startups have thus tripled in the past five years, highlighted by a fivefold increase in foreign venture capital investments and a tenfold one in later-stage investments.

Foreign capital made up well over a half of the total last year, with foreign venture capital firms chipping in to the tune of 272 million euros and other investors to the tune of 271 million euros. Finnish venture capital firms supported domestic growth aspirations with 223 million euros and other investors, such as companies and pension funds, with 99 million euros.

Wolt courier accepts a food package

Wolt raised a record-breaking 440 million-euro funding round earlier this year. Image: Wolt

The rest of the capital was received from domestic accelerators, business angels and crowdfunding.

Statistics from Invest Europe also reveal that Finnish startups received, for the third consecutive year, the most venture capital investments relative to gross domestic product in Europe. Their venture capital receipts of 495 million euros represented 0.21 per cent of Finland’s GDP, compared to 0.12 per cent in the UK, 0.11 per cent in the Netherlands and 0.1 per cent in Sweden.

Given the optimism that inoculation campaigns will soften, and ultimately thwart, future waves of infections, investors could be about to loosen their purse strings further.

This year, indeed, has begun on an encouraging note for many Finnish startups. Wolt in January closed a record-breaking 440 million-euro funding round to prop up its footing in the highly competitive global food delivery service market, laying the groundwork for another banner growth capital year.

Funding for games, plastic substitute

Metacore, a Helsinki-based game studio, in April announced it is ready to accelerate its already brisk growth rate after receiving 150 million euros in credit from Supercell, the Finnish game studio behind Clash of Clans. The casual games developer has witnessed its revenue run rate climb to about 45 million euros in the eight months following the launch of its debut title, Merge Mansion.

A programmer with his back to the camera sitting by a desk with two screens.

Metacore will buckle down to scale its successful puzzle game, Merge Mansion. Image: Metacore

“Merge Mansion has hit its metrics, and we’ve been scaling it successfully so far,” CEO Mika Tammenkoski told GamesBeat.

“We believe that we can really reach the top of the charts with this game,” he added. “Getting to the top of the charts, or scaling mobile games, is really capital intensive because of the dynamics of the free-to-play business model. And it means that you have to invest heavily, and then you have to wait for a while to get the return on the investment.”

Jaakko Harlas, investments lead at Supercell, said Metacore has gone from strength to strength following its founding in August 2020, with its debut meeting the lofty expectations set for it.

Metacore has adopted roughly the same approach to game development as its principal backer: it builds and tests games in fully autonomous two-to-three person teams that will not expand them until validating them through player feedback. The approach enables the studio to, on the one hand, quickly abandon projects that do not resonate with users and, on the other, quickly take action when the early metrics are positive.

Five children posing for a photo in a kitchen while playing with fruits and vegetables.

Finnish game-like cooking app Carrot Kitchen is spark an interest in healthy cooking and eating in kids around the world. Image: Carrot Revolution

Carrot Kitchen, a Finnish game-like cooking app designed to inspire children to cook and eat healthy, will be launched in the UK with the help of a 500 000-euro pre-seed funding round led by PINC Incubator, the venture arm of Paulig.

“Childhood obesity is increasing worldwide due to unhealthy diets with low amounts of vegetables. Parents are looking for new tools to bring up their kids in a healthy and sustainable way,” stated Olli Freese, CEO of Carrot Revolution, the startup behind Carrot Kitchen.

“We see PINC and Paulig as the ideal lead investor due to aligned values and high synergy potential.”

The app uses interactive video and voice instructions to help children to prepare meals from a growing offering of healthy recipes designed specifically for children, enhancing the experience with game-like features such as points and tutorials on kitchen utensils and safety.

“Carrot Kitchen is such a great tool to involve the kids in cooking early on and this benefits the whole family – whether it is allowing kids to grow more independent, sharing the family workload, promoting cooking as a collective family experience or simply turning screen time into something more creative,” commended Marika King, head of PINC Incubator.

Helsinki-based Woodly reported last week it has secured three million euros in funding for the commercialisation and internationalisation of its namesake wood cellulose-based substitute for plastic. The fully carbon-neutral material is said to function as traditional plastic in both production and end products while genuinely supporting the sustainability targets of companies.

A man in a black hoodie posing for a photo in front of a spruce.

Jaakko Kaminen, the CEO of Woodly, is urging companies to back their sustainability pledges with meaningful action. Image: Woodly

“In recent years, plastic has become a bogeyman, the use of which many would like to abandon altogether, or at least replace with alternative materials,” commented Jaakko Kaminen, CEO of Woodly.

“So far, the market has mainly succeeded in abandoning the use of the word ‘plastic’.”

Woodly revealed the funding will be used to introduce various packaging solutions and products to global markets to support corporate efforts to leave the fossil economy and reduce the carbon footprint. Its material has already been used to package, among others, rose begonias sold by K Group, textiles by Black Moda and fresh herbs by Vihreäkeiju.

Reaching for growth

Finnish companies have started the year not only raking in, but also making investments in pursuit of growth.

Helsinki-based Eficode in May said it is cementing its position as the leading development operations consultancy in Europe by acquiring Beecom, a Swiss consultancy specialising in software development tools created by Australia’s Atlassian. The acquisition, it envisioned, will enable it to meet rising demand for the tools, as well as cloud migrations, and agile and development operations practices and tools.

Demand for Atlassian software and services has increased as a result of rapid uptake of software-based solutions across industries in the German-speaking market.

A yellow neon-light sign in an office.

Eficode has established itself as the leading development operations company in Europe. Image: Eficode

“Eficode sees Beecom as [a] strong player in the Atlassian community in Switzerland,” told CEO Ilari Nurmi. “By acquiring Beecom, we can confidently serve its customers with an even broader set of services.”

Following the acquisition, the German-speaking markets will make up roughly a fifth of the business of Eficode.

The acquisition price was not disclosed. Beecom generated around 10 million euros in revenue last year from its customer base of more than 200 companies in the banking, automotive, business services and security industries.

Smartly.io announced last week it has taken over Viralspace.ai, a US-based startup enabling advertisers to optimise the performance of creatives. The Helsinki-based startup said the takeover, the price of which was not divulged, will supplement its digital advertising platform with artificial intelligence-powered creative capabilities, enabling clients to make more data-driven decisions about their creatives – that is, the format in which ads are presented in a digital environment – in real time.

“When the algorithms brands have long relied on are failing them, creative becomes an increasingly valuable lever to pull. It’s the silver bullet needed to drive performance,” stated Kristo Ovaska, CEO of Smartly.io.

“With our acquisition of Viralspace.ai, we’re gaining a tailored solution that can help drive greater creative intelligence to a degree of sophistication unseen elsewhere in the market.”

The brand-specific solution understands the factors driving conversions, predicts the performance of ads and suggests optimisations before, during and after launch. It has been shown to deliver improvements as dramatic as 70 per cent in cost per acquisition.

“Creative data is, for most brands, an untapped gold mine,” viewed Hiro Tien, CEO of Viralspace.ai.

Accelerating abroad

Kiuas, the leading startup accelerator in Finland, has made its coaching-focused accelerator programme available to startups also in to other parts of the Baltics and Nordics. The expansion will double the number of teams accepted annually to the roughly two-month programme, which is supported by a pool of hundreds of entrepreneurs and investors, from 15–20 to 30–40.

The non-profit accelerator viewed that the expansion will serve as a stepping stone for further expansion in the future.

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