With more than 500 established startups and counting, Helsinki is quickly becoming known as the next center for startups
As Silicon Valley, NYC and Tel Aviv burst with innovative startups, rents skyrocket, government grants get pushed to the limit and VCs pull back on their investments, waiting for the local bubbles to pop. But that won’t stop talent from coming to the surface.
Like any growing market, companies are moving out of the main hubs and looking for more reasonable options for location and funding: including Helsinki.
Helsinki is a great place to build a startup
With political turmoil abound in so much of Europe, a simple, yet burgeoning city in Finland is getting some well-deserved attention. The government has plenty of resources and gives generous grants to startups for early stage product development. Marjo Ilmari, Director of the startup program at TEKES, the Finnish Funding Agency for Technology and Innovation responsible for Finland’s generous government grants, states that “TEKES funding has had a major role in 60 percent of innovations in Finland. Supercell and Rovio for example both had funding at the initial stage. Gaming companies are paving the way for other companies from areas such as health tech, Internet of Things and ed tech.”
Pekka Koskinen, CEO and founder of LeadFeeder, a company that gathers data and provides intelligence about your website’s anonymous visitors and has their headquarters in the heart of Finland, explains to Geektime, “Helsinki is a great place to build a startup. There are a lot of educated people interested in working in a startup, business environment is stable, there’s no corruption and government gives loans and grants to early stage startups for product development. Finland as a market is very small, so companies should already in the beginning concentrate in international markets and not only stay in Finland. It’s fairly easy to compete and be successful in Finnish markets and this can create a false view of the competition.”
With a recent rank of the most livable city in the world, it seems like an organic option for companies to push to settle there. Even rent in the burgeoning city is still reasonable enough for companies to grab private space rather than co-working quarters. And of late, Helsinki has risen to popularity for U.S. companies that want to develop a bridge to Europe: It’s a ‘quick’ plane ride to the States, making it easy to expand and commute back and forth for events and client meetings without too much hassle.
In addition, Helsinki is seen as a viable middle ground between vastly different cultures. Boris Milkowski, who works for the Tokyo-based software company Goodpatch, believes that Europe and specifically Helsinki is a great cultural midpoint, claiming, “So many startups fail in Japan because they think too small. They need to re-succeed on the global stage. Many are interested in Silicon Valley, but culturally Europe is a better fit.”
Programmers and marketers are in high demand
The balance between getting your product developed and then getting it to market are delicate. Everyone needs a team of developers to build faster than the competition and then an expert marketer or two (or three) to get the product to market.
However, competition is fierce. At one point, Finland was an untapped resource for talent. But with so many companies moving over there, grabbing the best and the brightest before they get snapped up by other companies has become more and more difficult. Although there are global tech giants sitting in Helsinki — think Nokia — engineers there often haven’t had to develop the skills needed to thrive at a startup, leaving workers needing to take time for a steep learning curve or additional courses to get up to the speed startups need yesterday. Considering this reality, companies have no option but to look out of city and country limits and often across the world.
Koskinen tells Geektime that, “There’s a big shortage of programmers in Finland and we’ve found that it’s been easier to find skilled programmers outside Finland. The demand for software development seems to be bigger than how many people graduate from universities. There are engineers from a Nokia background that are looking for jobs, but unfortunately their skills many times don’t serve the needs of a startup.”
Remote talent — just another tool for startup success
With over 40% of the global population self-employed, the incentive to hire consultants for project or long-term work has moved to the forefront of convenience, also in Helsinki.
In the same way that companies don’t think twice about utilizing ‘remote’ or ‘freelance’ tools like AWS for cloud services or Salesforce for customer relationship management software vs. building their own, startups need to maintain an ‘agile’ thought process when outsourcing projects to skilled remote workers.
Even with all the incentives granted to startups in Finland, paying the competitive salaries to steal away talent is too expensive for most early stage companies whose name isn’t Facebook. Koskinen agrees with the outsourcing model, stating that, “Startups and small companies increasingly improve efficiency and time-to-market while minimizing economic risks by hiring temporary workers.”
Taxes are high everywhere for employees; benefits like pensions are costly and bonuses, vacation days, sick days and other paid non-working days need to be accounted for as well. Europe also has many laws that protect employees from being fired for false claims, but a downside to this is that it can be difficult for a company to fire a poor employee — so the costs add up, despite the incentives. So, even paying a higher rate for a consultant or freelancer is often still less costly to the company.
With so many benefits to hiring a skilled freelancer, from running test projects or hiring a programmer with a made-to-order skill set that you need, on-demand, companies don’t have to lose time advertising and posting jobs, holding multiple interviews, paying for flights or relocation packages, and getting locked into contracts or dealing with long learning curves for short-term projects. Also, the aforementioned benefit-free costs, the convenience factor and savings can be very substantial.
Whether you are interested in relocating to Finland or doing remote, contract work, the Helsinki startup scene could be well worth checking out. Startup leaders don’t have time to go through the HR courtship process. They need to build a viable business or product and they need to get it tested and to market before the fierce competition squeezes them out. Perhaps you can be part of it.
The views expressed are of the author.
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