The Finnish startup field is developing rapidly: Finnish startups are attracting investments at an accelerating pace, and their societal role is growing rapidly. The share of science-based businesses in the startup field is significant. Between 2013 and 2022, 8.2% of the capital funding invested in Finnish startups was allocated to VTT's spin-off companies. Science-based companies typically develop solutions to global challenges and sustainable growth.
According to a VTT survey, 8.2% of the capital funding raised by Finnish startups between 2013 and 2022 was allocated to VTT’s spin-off companies. During this period, these 35 companies raised a total of EUR 526 million in investments. Overall, Finnish companies collected a total of EUR 6.4 billion in funding.
In 2022, the funding invested in Finnish startups reached a new record amount of EUR 1.8 billion, of which EUR 165 million was allocated to companies originating from VTT. Companies attracting the largest sums were quantum computer manufacturer IQM (EUR 128 million), egg white protein producer Onego Bio (EUR 10 million), and Solar Foods (EUR 10 million), a company specialising in food protein production from carbon dioxide.
Aalto University and the University of Helsinki have also created science-based startups that are growing significantly. Of the companies that raised most funding last year, satellite technology company Iceye (EUR 120 million) and the aforementioned IQM, whose technology is based on research carried out at Aalto University and VTT, have originated from Aalto University.
"In spin-off companies, instead of quantity, we focus on quality and the potential for significant international growth. We are now approaching the stage where the first spin-offs, such as Spinnova and Infinited Fiber Company, are becoming global growth companies," says Lotta Partanen, Manager of the VTT LaunchPad business incubator.
VTT aims to achieve global impact through its research work by creating innovations in response to global challenges. Impact is created when scientific breakthroughs can be expanded into scalable business. The purpose of the VTT LaunchPad business incubator is to transform VTT's research and technology into fundable companies that can create completely new ways of manufacturing materials, recycling raw materials, producing food, or steering industrial processes.
“During funding rounds, Finnish startups have found it difficult to attract enough Finnish capital funding. However, the number of capital investments is growing strongly, and Finnish companies are also attracting international investors," Partanen says. The growth of the Finnish capital investment market is important for growth companies. We also need entrepreneurs who have the vision, competence, and ambition needed to take business to the global market," she continues.
According to a study published by venture capital company Tesi in December, while Finnish deep tech companies are growing, funding rounds have proved difficult especially for later growth stages. Tesi's study also highlights the concern that the number of new Finnish deep tech companies has not increased. It typically takes a lot of time and capital funding for science-based startups to become global growth companies. Their impact on the society, however, is significant.
"As deep tech companies focus on solving global challenges, there will be an increasing demand for their products. In Finland, we should invest in research, innovation, and education over the long term. Investments are needed both to create new business ideas and to scale existing solutions. It is also important to facilitate labour immigration, as the availability of experts is a clear bottleneck for growth," says Laura Juvonen, VTT’s Senior Vice President, Strategy.
The Finnish startup community agrees that there is global competition for experts. If we can attract more international experts to Finland, the startup sector could become a new pillar in our economic structure, creating jobs and tax revenue. At the moment, the Finnish startup community comprises 180 startup and growth companies with a combined net turnover of EUR 5 billion.
VTT has developed a number of interesting solutions to global challenges, which in turn have triggered promising business activities. Examples include Onego Bio, which began the promotion of bioreactor-based egg white production a year ago, eniferBio whose Pekilo mushroom-based method makes protein production possible around the world, and Infinited Fiber Company which is about to launch the production of regenerated textile fibre from textile waste. Trailblazer companies such as IQM, Dispelix, Solar Foods, Spinnova, TactoTek, Paptic, and Volare have also gained public visibility. All of these businesses are backed by strong VTT expertise.
Many of VTT's business ideas have been developed into commercially viable businesses with the help of Business Finland's Research to Business funding. It has played an important role in exploring the possibilities of exploiting research ideas and conducting applied research that supports commercialisation.
Funding collected by VTT-based startups in 2013–2022 (including equity financing, not including debt financing, grants or exchange listings). Source: Pitchbook.
Funding collected by Finnish startups in 2013–2022. Source: Finnish Venture Capital Association, 13 April 2023