When companies make cross-border strategic investments, it’s always about increasing competitiveness – usually by improving offering or market position either geographically or within the value chain.
Companies in growth markets such as China are looking for higher positions in domestic and global value chains. This enables them to provide more competitive offering to home markets as well as for expansion activities. Whether it is done through technology or IPR purchases or via company acquisitions or joint R&D projects, Finland’s technology offering, innovation and design expertise and collaborative research capability represents a good match.
The Greater Helsinki Account Management Team gathers the regional investment promotion agencies; Greater Helsinki Promotion, Otaniemi Marketing, Vantaa Innovation institute, Finnish Mobile Association and Invest in Finland; in monthly meetings to share information about prominent leads. During 2010, the Greater Helsinki Account Management Team has been working with approximately 30 active cases, most of which come from China, as China has been in the scope of GHP’s activities through building the China-Finland Innovation Centre (» www.goldenbridge.fi). There are also some European and US cases in the pipeline. Companies in the GHP pipeline vary from multinational 1st tier companies to 2nd tier growth companies and medium-sized technology companies making their first international expansion moves out of their home markets.
Defining foreign investments
GHP focuses on four types of strategic investment cases. FDI, foreign direct investment, occurs when international organizations establish completely new operations in Greater Helsinki or when international organizations with pre-existing operations significantly expand their operations in the region. Joint ventures can also be foreign direct investments.
M&A, a merger between a Finnish company and a foreign company or an acquisition of a Finnish company by a foreign company, where the Finnish company is based in Greater Helsinki, have been the type of foreign investments that have not suffered as much during the economic downturn as other modes of foreign investments. For example, the Netherlands-based Gemalto, the world leader in digital security, purchased the Finnish company Valimo Wireless Oy, the world leader in mobile authentication, in February this year (» read more in GHP Newsletter 01/2010). Chinese companies are also expanding to western markets through acquisitions; Neusoft, a leading IT solutions & services company from China acquired the Finnish Sesca Group Ltd’s mobile phone software development and testing business operations, strengthening its mobile expertise and market position.
R&D&I driven cooperation seems to be a very interesting option for foreign players to enter the Finnish and European markets and also to increase competitiveness in home markets. Contractual agreements for R&D&Ibetween a Finnish and a foreign player (companies or universities) opens the door for various partnering and funding opportunities, which can create new technologies or validate and develop existing technology.
Finnish companies Microtask and Footbalance are excellent examples of cross-border, growth capital investments into high growth companies situated in Greater Helsinki. The Swedish private equity firm Scope has invested 7 million euros in the young Finnish company Footbalance and Microtask closed a round of seed financing in August, lead by Danish Sunstone Capital followed by a group of Angel investors.
Right and timely value proposition
No matter which of the mentioned types of foreign investment cases a company is considering, the process of making the decisions takes time. Often the most time consuming part of the process is the business model consulting, finding the right mode of investment; matchmaking the international players with the right player(s) in Helsinki, facilitating the international company in searching available funding for example for R&D&I activities, and investment and acquisition target screening are important services the Greater Helsinki team provides for the clients.
The challenge is in networking with the right players and in keeping up with the business intelligence: learning about the strong and internationally interesting ecosystems and domains in Helsinki, the right and internationally interesting companies in those domains and even more importantly, finding the right contacts in the right companies.
All in all, success in delivering foreign investments into Helsinki is about creating a value proposition that the client can’t afford to miss. A value proposition that supports the needs of Helsinki but also adds the most value to the company considering Helsinki and Finland as an investment location.
