Finns Pitch Frightful Weather as a Competitive Advantage

NOVEMBER 15, 2013, 9:02 AM

Finns Pitch Frightful Weather as a Competitive Advantage



Ilkka Paananen, founder and chief executive of Supercell, a Finnish company that last month had a 51 percent stake bought by SoftBank, a Japanese telecommunications giant, for $1.5 billion.

HELSINKI – In Europe’s crowded technology scene, cities are eager to differentiate themselves from local rivals. London has its connections with global finance. Berlin has a thriving local arts and music community. And Helsinki has its wintry weather.That was the message to around 6,000 attendees at a recent tech conference here in the capital of Finland, where local investors, entrepreneurs and large tech companies mingled looking to spot the next major start-up to come from Northern Europe.

On a big screen that opened the event, the words “Welcome to the Dark, Embrace the Cold” reminded the gathered crowd of Finland’s long winter nights and temperatures that can fall well below zero. Even Jyrki Katainen, the country’s prime minister, made an appearance at the event, wearing a hoodie to blend in with the dressed-down tech crowd — and surely also to shield him from the cold.

And many entrepreneurs joked that the country’s limited daylight hours during the winter months gave local developers and engineers few distractions to take them away from writing code.

“Weather is a competitive advantage for us,” said Christian Lindholm, a local entrepreneur, who – like many in Finland’s tech community – spent several years working at Nokia. “Too much good weather would be bad for us.”

The Finnish tech industry is going through a reboot as focus shifts from struggling Nokia, which is selling its cellphone division to Microsoft for $7.2 billion, to some of the country’s smaller companies.

The most recent success is Supercell, the local online gaming company whose hits include Clash of Clans and Hay Day.

Last month, the Japanese telecommunications giant SoftBank agreed to buy a 51 percent in the Finnish company for $1.5 billion. The deal valued Supercell at roughly the same level as Zynga, an American rival, whose current market capitalization is around $3 billion.

For many Finnish entrepreneurs and investors, the rapid rise of Supercell, which was founded in 2010 and is reported to be making around $2.4 million a day from its online games, shows that local start-ups can compete on a global stage.

“Our problem has been exits,” said Will Caldwell, an American professor at Aalto University in Espoo, Finland, who has spent almost two decades working in the country’s tech scene. “Supercell was a huge signal. It showed that Finnish companies could achieve very large valuations.”

Along with Rovio, the creator of the Angry Birds franchise, Supercell is the largest of a growing number of Finnish start-ups that are looking to take advantage of local talent to break into the world of gaming.

Yet other tech firms are also benefiting from the investment flowing into companies based in and around Helsinki. With a lack of Finnish early-stage investors to back start-ups, much of the funding still comes through government support, including from Tekes, the country’s technology and innovation agency, and other state-backed venture funds.

The government money varies from one-off grants for research and development at universities to six-figure investments aimed at boosting start-ups efforts to market their products in international markets.

“If innovation fails, we can bear some of the risk,” said Timo Nieminen, a development manager at the Foundation for Finnish Inventions, a government-funded investment group.

One area getting increased attention, both from private and state investors in Finland, is health care.

As Finland’s population ages, the country’s government is looking for ways to use technology to reduce people’s reliance on the country’s hospitals and medical professionals. The efforts include online games that help the elderly to exercise better and an electronic health care database based on Finns’ medical information, which start-ups can mine as the building blocks for new products.

“We don’t have enough resources to solve all our health care problems,” said Ville Koiste, an investor from the Finnish innovation fund Sitra, which has backed several health care projects. “We need to create active citizens.”

Olli Oksanen is one local entrepreneur hoping to ride the wave of healthcare investment. An exercise app that he helped create, HeiaHeia, allows users to share their activities with friends and colleagues online. He has raised money from government agencies, and has signed up companies like PepsiCo, who pay a monthly subscription to include the app in their corporate wellness programs.

He and his co-founders also have benefited from their ties to Nokia. Several of them left the struggling tech giant in 2009 with large buyouts, and they used the money to start the fledging health care firm.

“Our company’s early-stage investment round was our golden parachutes from Nokia,” said Mr. Oksanen.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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