Is Helsinki the Nordic’s next big unicorn factory?


The Nordic region is famous for producing unicorns – startups valued at over $1 billion – at a rate unmatched by its GDP. With Finland and its neighbours ranking in the top 10 in Europe per capita for VC funding, what makes their formula so successful? And is Helsinki emerging as Europe’s fastest-growing unicorn hub?

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House of Impact, SLUSH side event 2023 (1) Slush 2024 Ramen Tech event (3) an illustration of a unicorn factory

How to build a Nordic unicorn factory

Small but mighty, the Nordic countries are some of the happiest and most innovative in the world – producing a higher share of billion-dollar exits (unicorns) compared to gross domestic product (GDP). So, how do they do it?


Finland’s formula for success

1. A tech talent powerhouse

Finland, particularly Helsinki, is rich in tech expertise. With 54,000 clean tech professionals and a thriving ICT sector, startups like Wolt and Supercell are making waves globally.

2. VC excellence

Finland’s VC funds deliver stellar returns, outperforming European peers. Mature funds see a 22% annual return, while newer funds boast 19%, with impressive growth metrics across the board.

3. Government incentives

Ranked #1 in the Sustainable Development Goal index, Finland supports innovation through generous R&D tax deductions and low corporate taxes. A 150% RDI project deduction makes it particularly attractive for global investors.

The Nordic Model 

Many believe the Nordic Model is the driving force behind the region’s thriving entrepreneurial ecosystems. Described as a “mixed-market economic system that combines elements of both capitalism and socialism”, the model is practised by Sweden, Denmark, Finland, Norway, and Iceland. The Nordic Model creates a foundation for a rich startup environment through free education, social security, and government-backed support. 

Why is Finland attracting the attention of VC investors?

With a track record of successful VC investments, government-back incentives, and an entrepreneurial ecosystem set to grow, Finland is arguably one of the most overlooked investment hubs. 

Finland’s mature VC funds boast impressive results

Mature VC funds boast an impressive 22% annual return and a TVPI of 2.9x. Outperforming their European peers, these funds have almost doubled their capital, with “DPI now standing at 1.3x, with over half of the value still pending realization”, says the Finnish Venture Capital Association. New Finnish VC funds are also performing well compared to European peers, with returns standing at “1.5 times the called capital, with 19 per cent annual returns”. 

Finland offers enticing incentives 

Ranking #1 in the Sustainable Development Goal index, Finland has earned a reputation for innovation. To attract further investment in research and development, Finland’s government offers a 150% deduction on the costs of RDI projects for companies working in collaboration with its universities and research hubs. And with a corporate tax of just 20% – one of the lowest in the Nordics – it’s a hotspot for tech startups.


Ingredients for a unicorn factory

1. A collaborative community

Helsinki offers a supportive environment where investors easily connect with top founders. English is widely spoken, making it easier for international talent and VC firms like NordicNinja to thrive.

2. World-class startup ecosystem

Home to Slush, the world’s largest VC event, and Maria01, the Nordics’ top startup campus, Helsinki is where ideas and investments flourish.

3. Strategic location

Situated between east and west, Helsinki serves as a gateway to Asia and other fast-growing markets. Its innovation-friendly policies and real-time piloting initiatives further cement its place as a global tech hub.

Helsinki – Europe’s fastest-growing unicorn factory?

Helsinki ranks alongside prolific ‘unicorn factories’ like Stockholm, Oslo, and Copenhagen. The city’s startups are now worth a combined €25.2B, triple its value since 2015 – and its VC investment ecosystem is growing faster than in London and Paris. Here’s why:

A collaboratory international environment

Not too big but not too small, Helsinki is a city where entrepreneurs and VC investors find it surprisingly easy to get an audience with Finland’s most influential people. Thanks to smaller, more collaborative networks and the widespread use of English at work, foreign entrepreneurs and VC investors quickly acclimate. One prominent venture capital fund,

NordicNinja, a Japanese early-stage investor, chose Helsinki as its European base in 2019, relocating four team members from Japan to Helsinki. “The work-life balance in Helsinki is one of the best in the world. Everything works smoothly; it’s very quiet and very safe. My kids can go everywhere by themselves, and it rarely takes more than 20 minutes to travel anywhere in the city”, says Tomosaku Sohara, Managing Partner at NordicNinja.

A thriving startup ecosystem

Some of the Nordic’s top 10 ecosystem players are based in Helsinki. Slush is the world’s largest gathering of VC investors and brings together the who’s who in startups, while Maria01 is the Nordic’s leading startup campus – putting VC investors and founders together under one roof. “Our founders have the unique opportunity to establish connections and work closely with leading investors while the VCs get a seat at the Nordics’ leading startup campus and ongoing deal flow updates from some of the hottest startups”, says Hanna Nylund, Head of Marketing & Communications at Maria01. 

a woman talking to a man at an invest in Helsinki event

Factory

Unicorn

an illustration of a unicorn factory

One of Europe’s fastest-growing VC hotspots

Helsinki is the 4th fastest-growing European ecosystem for VC investment – faster than London and Paris. VC investors are attracted by the city’s location and its innovation capabilities. “Helsinki is very well positioned between east and west, which serves us well. A lot of what we’re doing is trying to find great technologies and expand them to fast-growing markets like China and the rest of Asia”, says Colin Powrie, Venture Capitalist at Ascend Capital Partners. 

Helsinki is an internationally important tech hub

Ample government support, access to resources, and widespread open data sharing have enabled Helsinki to compete with top global tech hubs, such as Stockholm, Tallinn and London. How does one of Europe’s smallest cities rank brush shoulders with the world’s largest tech hubs? Helsinki helps private companies by offering a low-threshold opportunity to pilot products in real-time. Initiatives like The Helsinki Innovation Districts encourage private companies, scientific communities, and residents to work together and experiment with new technology. These public-private-people partnerships are a prime example of the Nordic Model in action.