The value of Helsinki's start-up ecosystem tripled in six years
Photo: Jussi Hellsten
The Helsinki region is a larger area than its size when comparing European start-up ecosystems. The value of Helsinki's start-up ecosystem has tripled since 2015, and the combined value of start-up companies exceeds EUR 25 billion. This can be seen in a recent report published by NewCo Helsinki, the city of Helsinki's new entrepreneurship centre, and Dealroom, a Dutch start-up. Dealroom is a leading provider of startup data with some of the world's most important cities and investment companies as customers.
Attractive Helsinki draws venture capitalists
In the report, Helsinki's start-up ecosystem is shown to be very attractive. The average annual growth rate of investments in start-ups has been 32 % over the last five years. So far in the best year, 2020, funding was EUR 916 million– more than 57 % more than the previous year. Among European ecosystems, Helsinki is growing at the fourth fastest pace in capital investments. In turn, impact investments have tripled over a period of five years.
"Helsinki aims to be the most functional city in the world. Start-ups and scale-ups play an important role in achieving this aim. We want to promote entrepreneurship and growth in every possible way. We are delighted with how companies have coped with the coronavirus pandemic. Helsinki's start-up ecosystem has an incredible sense of doing things and an attitude that makes anything possible," says Marja-Leena Rinkineva, Director of Economic Development for the City of Helsinki.
According to the report, domestic investments have been relatively low when compared with the rest of Europe or the United States. This is also emphasised in comparisons with other ecosystems, such as Stockholm. The number of financing rounds saw an increase up to 2016, after which the trend has been declining.
Helsinki has a particularly strong gaming ecosystem
When comparing Helsinki's start-up ecosystem with other Nordic countries, it takes second place in both the number of financing rounds and new financing. According to the report, the gaming industry in Helsinki is remaining particularly strong, and the gaming industry ecosystem is the third most important in Europe, right after London and Paris. However, food and business app software start-ups collect the most financing.
Helsinki holds eighth place in Europe in the number of unicorn start-ups, i.e. start-ups worth more than $ 1billion. There are four start-ups worth over $ 1billion in Helsinki, the most recent of which are Wolt and HMD Global. There are eight potential new unicorns, i.e. startups worth EUR 200-800 million, in Helsinki. Helsinki is, thus ranked in comparisons before many larger European cities. In terms of diversities, Helsinki still has things to do, just like the other Nordic countries: only 20 per cent of start-ups have at least one woman as one of their founders.
But what matters have contributed to the success of the Helsinki start-up ecosystem? The world-famous Slush event has created enthusiasm and has accelerated the growth of the ecosystem. The road for entrepreneurs has been paved with both start-up entrepreneur permits and Business Finland's financing programs. Maria 01 has provided a home for a huge number of start-ups and is now on its way to being the largest start-up campus in Northern Europe. In addition to these, a great deal more is happening in Helsinki, such as the Circular and Share Economy Roadmap launched by the City in 2020.
“A strong community is one of the success factors of the Helsinki start-up ecosystem. We have succeeded in getting venture capital into the ecosystem, but that is not enough. More is needed. Attracting foreign talent and teams to Helsinki is also critical to the city's success. Good cooperation is our strength. We have a diverse and well-functioning network whose role in the flourishing of the ecosystem is invaluable. It is based on trust, and success is achieved together”, says Tommo Koivusalo, Head of NewCo Helsinki.
The report is based on a database maintained by Dealroom and NewCo Helsinki, which provides a comprehensive view of the Helsinki metropolitan area's start-up field and provides a detailed picture of the Helsinki technology sector's ecosystem in particular. The report in the Dealroom database, which has been in operation for a year, is the first of its kind.