Breaking the ice with Petri Lehmuskoski, an angel investor in the 4th most innovative country
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Photo Credit: Start Smart, YouTube

Interested in Finland’s startup scene? One of the country’s foremost investors shares his insights, from hot startups to why Finns don’t boast

Did you know that according to Bloomberg, Finland is the 4th most innovative country in the world, pushing out two places ahead of the United States? Even before this ranking, Geektime had noticed Finland’s strong startup and investment scene for a while, and are glad they are finally getting the exposure they deserve.

To understand what makes Finland’s startup ecosystem unique from other countries, we talked to Petri Lehmuskoski, an esteemed serial entrepreneur who became a full-time angel investor in 2008. His portfolio consists of more than 40 companies, many of them Finnish.

In short, he said it all starts with Finnish culture. Finland’s cold, dark Arctic winters have made Finnish people resourceful, he explained, as well as hardworking and not prone to boasting. No wonder Finland is now home to 880 startups in a country of 5.4 million, making it a much larger success story than just the home of Nokia.

Geektime: What would you say makes Finland’s startup scene work? What makes it successful?

Lehmuskoski: It comes back to our culture. Finns are great at building things. When I was running my company, we had this joke. The idea was that if we could build a dream team, we would get a Swede to plan [a product], a Finn to build it, Danes to sell it and the Norwegians to finance it.

For about 15 years, we Finns have had the world’s highest ratio of designers and engineers. Finns are great at building products. We do that really well.

I think it was Nokia that researched the question of whether it was better to get software programmers locally or outsource to India. The answer was to do it locally in Finland because the efficiency is so much higher it actually saved money.

I recently read a book about the world’s smartest kids, and it claimed that Finnish students had the highest scores in the world on international tests.

Yes, being a teacher is one of the most respected professions in Finland.

If you want to build a dream team to build your product, in my experience, you should hire Finns, but you have to tell them what to build.

What are your tips for someone who wants to invest in Finland?

Partner with the Finns. If you want to invest in Finland, get someone who can help you do due diligence on the companies. There is a large number of Finnish venture capital firms. The Finnish business network has a number of professional angel investors.

There is Ari Korhonen, myself, Riku Asikainen.  There are about 15 full-time angel investors in Finland. Partner with them.  There are also a number of early-stage venture companies that do syndicated investments. That’s another way to partner.

What are the important tech events to go to in Finland as well as the main places for entrepreneurs to meet each other?

The big challenge of Finland is that it’s a geographically large country with people spread all over. Definitely the main action is in Helsinki, Tampere, Oulu: those three cities.

There are multiple small events. The big event of course is Slush. That’s in November and I think it was the world’s biggest startup event last year.

But things are flexible. If an investor is interested in meeting startups and can specify what industries and companies, we will arrange meetings. There are databases of companies you can look at.

Where do you see Finland’s startup ecosystem going in the next 5-10 years?

We’re seeing something a little bit similar to what’s happening in Silicon Valley. There are startups and now people are leaving those startups and starting new companies.

There is a great company called DealDash. They are extremely successful in the UK and have done business in the United States. But now their analytics team left the company to start a new company, based on what they learned at DealDash. If we get this ecosystem going where people from successful companies build new successful companies, that’s an extremely good sign.

Because lots of ecosystems don’t produce this. People will leave the country. And it’s happening more and more that the Finnish startup ecosystem has a critical mass to build on itself.

What do you think is one of the biggest mistakes Finnish startups have made?

Relying on government money. We have excellent government subsidies, grants and loans for startups. Too many companies are relying on that and not chasing the customer money. More than half of startups have that problem, I would say.

Also, the government money directs you to go to solve the Finnish problems, [which is problematic because] some of these Finnish problems don’t exist anywhere else … Some of our startups think first we will build for the Finnish market and then we will go to the world. And their concept deviates so much from the world market that it’s really hard to backtrack.

For instance, there are startups building great healthcare products – the problem is the only market for those products is Finland. The startups that have been successful build for the world market from the start.

The Finnish problems don’t exist in Norway or Denmark?

There are lots of small differences between the markets. Even though Finns think that Swedes are close to us because they’re next door, there are lots of strong cultural differences that take time to learn. To me there is no such thing as Nordic. There are different countries, different particularities and different cultures.

What are the best startups in Finland right now?

Bitbar, Translucent, Walkbase, OneMind Dogs, Smart.ly, HappyOrNot.

There’s also DealDash, but they’re past the startup scene. They are making $30 million in revenue.

Is there a story about Finland that’s been under-reported?

We have, even on a global scale, one of the most successful venture capital firms. Actually it’s a micro-vc. It’s called Lifeline Ventures. Their success rate is huge.

They’re a small operation. Not much has been written about them. They’re two great guys: Timo Ahopelto and Petteri Koponen.

Another example is Bitbar. It’s not a cultural thing in Finland to boast about being successful. You don’t say that you’re successful.

Then how do you market yourself?

You don’t. It’s bad.

If you don’t boast about being successful, does that hold Finnish companies back?

Yes it does.  For example the company I mentioned, Bitbar. I would say they are one of the most successful companies, they have a state-of-the-art operation. The entrepreneurs are really humble. You have to extract from them how good they are.

If you go to their web page and look at their customer references, they have Fortune 500 companies as their references. They don’t even disclose most of their customers. They are extremely proficient. They will be one of the next big successes outside Finland.

Is there a company that’s going to be the next Nokia?

I would say they are on the track to being something quite big. Of course they are in the B2B segment. DealDash is addressing a big market. OneMind Dogs is at an early stage. It’s just a one-year-old company but it has a huge traction.

What advice do you have for foreigners coming to do business in Finland?

We Finns don’t like to make small talk. We get straight to the point.

Featured Image Credit: StartSmart / YouTube

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Simona Weinglass

About Simona Weinglass


I'm an old-school journalist who recently decided to pivot into high-tech. I work in high-tech marketing as well as print and broadcast media covering politics, business culture and everything in between.

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