Finland is the fourth most innovative country in the world. What is its secret? Trust, cold weather and sense of common purpose, says the seasoned tech VC
Finland is a small, Nordic country of 5.5 million people that consistently bats above its average, or should we say ski jumps above its height?
Geektime caught up with Riku Asikainen, one of Finland’s prominent angel investors to try to crack the nut of the country’s hi-tech creativity. Asikainen is a founder of FIBAN, the Finnish Business Angels Network, as well as a serial entrepreneur and angel investor with an impressive track record. Of the 30 companies Asikainen invested in in the past 15 years, ten exited, including Librerie DÉducation (whose yearly revenue was €32 million at the time it got sold), Nixu Oy (which had yearly revenue of €14 million at the time it IPO’d, where it was valued at €25 million), and Cr-Keskus Oy (whose yearly revenue was €8 million at the time it exited). His investment interests include healthcare, education, mobile, industrial production, and food security, among others.
When we asked him about the sources of Finland’s creativity, his answer in a nutshell is that Finland is nice – nice to outsiders, a nice place to live, a place where people are equal and help each other out.
“Finland is a fairly small place so people know each other,” Asikainen told Geektime. “There is a feeling of inclusiveness, that you are inside a community.”
In fact, the angel investor said, there is little rivalry within Finland’s 880-plus startup community.
“People see clearly that the competition is global and therefore your neighbor is not your competition. There are so many companies out there that if your neighbor happens to be your primary competitor, that’s really bad luck. So instead of fearing that your competition will steal something from you, there is a great culture of sharing and helping out.”
Yes, but how far does that go? They’re not sharing IP?
“It’s more like, ‘do you know somebody in London? Can you help me out with financing in San Francisco?’ I don’t believe in trade secrets anyway. I don’t believe many companies really have them.”
Social theorists like Francis Fukuyama have famously argued that social capital and interpersonal trust are the essential ingredients for a society to prosper.
This trust, says Asikainen, is at the heart of Finland’s success.
“There is a small village type of feeling in Finland. It’s expected from you that you need to be a part of the society. My boy who is seven years old can go to school by himself, and I’m not going to be arrested because I left him by himself on the street.”
“Why is this trust important for innovation? Because if you fear losing it all, you will not be innovative. When you are relaxed you can let your mind go free.”
The best place on Earth?
If you ask the average person outside of Finland what they know about the country, they might mention saunas or moose. The truth is, Finland doesn’t show up much in international headlines, perhaps because it is doing so many things right.
International surveys show Finland to be one of the countries highest in trust, least corrupt, best for mothers and highest in freedom of the press. Newsweek Magazine came right out and declared Finland the very best place to live on earth. And to top it off, Finland’s students consistently get among the highest scores on international math and reading tests.
But there is also a quirky side to Finnish innovation.
“We are at the end of the world. It’s cold and not the most favorable place for humans to live. We probably come up with some different ideas than other people do.”
The country’s best startups
Asked to name the best startups in Finland, Asikainen mentions three:
Thirdpresence, a white-label video adtech platform.
Synoste, a medical technology that uses magnets to correct the problem for the 1 percent of the population when one leg is longer than the other.
A third startup is Kyynel, which has developed a low-frequency radio technology for long-distance communications.
What is the main lesson he has learned as an angel investor?
Asikainen says that the main thing he has learned in his 15 years of angel investing is the importance of the team.
“Some people get things done. They see problems, they solve them. Other people stop when they see the problem and look for too much guidance.”
“They all have a good idea for a product. There must be something interesting in the product, otherwise I would not look at them. The market is there. I can identify that. I’d say the great successes and the great failures they are around the team, around the entrepreneurs.”