A joint study by Finnish Venture Capital Association, Tesi (Finnish Industry Investment) and the Finnish Startup Community reveals continued strong growth in Finland’s startup ecosystem, even while the rest of the economy struggles against headwinds. Finnish startups already generate over EUR 12.5 billion in revenues and employ nearly 50,000 people.
“Total revenues are actually even higher because some of the companies that have transferred to foreign ownership no longer report their revenues in Finland. The growth in total revenues proves that Finnish startups can grow into large-scale global players in their sectors,” says Youssef Zad, Chief Economist of the Finnish Startup Community.
Finnish startups now employ some 50,000 people worldwide. The number of jobs they generate has increased significantly over three years as just over 30,000 people worked in startups in 2020. Above all, growth is driven by those companies that have moved from the early stage to the next phase of growth, becoming scaleups.
Scaleups as engines of growth
The number of scaleups (startups that have already grown further and are still developing rapidly) has almost tripled in just a few years. In 2020, there were some 20 scaleups while now there are about 60. Their combined revenue also doubled from one billion to about two billion euros between 2020 and 2023.
“Scaleups are not only excellent growth stories, but also the engines of the entire ecosystem. An emerging growth cluster captures the interest of foreign investors and experts, which in turn benefits other new companies, improving their chances to succeed,” says Henri Hakamo, Tesi‘s Chief Strategy and Research Officer.
“The study shows that the amount of needed growth capital on average doubles or triples in each funding round, and even faster for the best performing startups. This year, for instance, smart ring company Oura raised Finland’s largest funding round ever, EUR 777 million, while quantum computer company IQM raised EUR 275 million,” says Jonne Kuittinen, Deputy Chief Executive of the Finnish Venture Capital Association.
A typical Finnish startup is a young IT company that employs just a few people in its early stage. The Finnish startup field is dominated by tech and software companies, which comprise around one-half of all the companies surveyed. Traditional sectors such as manufacturing are less common. New emerging sectors, such as artificial intelligence and health technology, are growing rapidly, especially among the newest generations of companies.
Cornerstones of growth: diverse talent and new companies
Startups are international by nature. Over one-quarter of employees have a foreign background, with the proportion in scale-ups already reaching some 40 percent.
“The actual proportion is even higher, because our data covers those employees who are in Finland and who permanently reside in Finland. The importance of international talent is also recognised in startups. English is often used as the working language right from the start,” Zad points out.
Although the tech sector is still generally male-dominated, the gender balance is gradually improving: women now account for one-third of the workforce in startups, with scale-ups having the highest proportion.
The number of new startups established was highest in 2020, when 584 new companies were founded. However, since 2021, the number of new startups has declined to about 270 companies a year. Startup activities in Finland are still strongly concentrated in the Helsinki metropolitan area, but Tampere, Oulu and Turku form significant regional growth clusters.
“The declining number of startups is a European trend that we are closely monitoring. Typically, however, the best scaleups create new founders, which means that many of Finland’s startup entrepreneurs of the future are perhaps currently gaining experience in the global market leaders of today,” explains Hakamo.
