Strong Corporate Venture Capital investment trend continues in Finland

CVC investors continued to invest in Finnish startups in 2019. This year also the strategic partnerships raised interest. Helsinki Business Hub had the pleasure to facilitate many new success stories especially between Japanese and US-based CVCs and Finnish startups.

International corporate venture capital investments in Finnish startups continues at a high level, a second year in a row. The CVC investments represent the majority of all investments facilitated by the Helsinki Business Hub in 2019.

“The investors have started to acknowledge Finland as the hidden gem of the Nordics. We have a very versatile offering in various industries where you can choose from. The promising startups welcome international funding to properly scale up the business as the lack of domestic strategic investors is a fact,” says Jukka Jokinen, Senior Venture Advisor at Helsinki Business Hub.

Helsinki Business Hub facilitated investment agreements with a total value of 71,2 million euros in 2019, while the deal pipeline remains strong with many investors for the ongoing year. The key investors in 2019 were global players mainly from Japan and America.

Japanese corporate investors found Finland

Last year the CVC investors from Japan continued to invest in Finnish startups. A multi-corporate investment fund with Japanese background, Nordic Ninja, even started an office in Helsinki with over 100 million euros to support startups. The fund is backed by the Japan Bank for International Cooperation and Japanese blue-chip companies Honda, Omron and Panasonic.

In the blog of the Finnish Venture Capital Association, Nordic Ninja says that “the Nordic and Baltic region was picked up, because of its viral startup ecosystem and the request for additional scale-up funding. Helsinki was a natural choice as the price level is reasonable and the direct flights to Japan and Asia are very convenient.”

Nordic Ninja together with Mitsui Fudosan and Mitsubishi Corporation from Japan and British BP Ventures’ American unit invested in Helsinki-based MaaS Global, the world’s first Mobility-as-a-Service operator.

To add up, Nordic Ninja invested in two other startups, Combionostics, the developer of a software platform for early-stage Alzheimer’s diagnosis and Flexound, whose solution adds a sensation of touch to audio-visual listening experience be it music, games, television, streaming, or movies.

“The Japanese CVC investors have looked for opportunities as they have big cash reserves and promising disruptive businesses exist outside their country. We think that there is potential for even more,” tells Zhenni Liang, Venture Advisor at Helsinki Business Hub.

Liang adds that Tokyo is known worldwide for its drive to become a smart city. It is a great window of opportunity for the Finnish startups and cooperation between Japan and Finland.

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Strategic partnerships on the rise

In addition to the investments, many CVC investors approached Helsinki Business Hub for a different reason in 2019.

“Many CVCs want to establish strategic partnerships such as channel or R&D collaboration, or buy services from startups. We warmly welcome this as it adds value to whole Finland,” states Jokinen.

Mitsui Fudosan announced a strategic partnership with MaaS Global to present Whim in Japan. The deal includes cooperation with local transport operators and a proof-of-concept trial in Greater Tokyo.

Another partnership case is HP Tech Ventures’ business unit from the US, who ordered products from Finnish growth companies. HP Tech Ventures is also a regular visitor to Slush, the world’s leading startup event, where Helsinki Business Hub has invited hundreds of investors including CVCs from around the world. Slush gathers 25,000 people to Helsinki including 3,500 startups and 2,000 investors.

Good reputation spreads around the world

Helsinki Business Hub is also on the call list of many global and professional investors. The good reputation of the hub has created a viral phenomenon among investors; they recommend Helsinki Business Hub’s Investor Services to their peers including various Tier1 investors.

“We don’t push anything to potential clients, but serve them with reliable information. We are happy to pick potential Finnish startup candidates from the chosen industries for our clients,” comments Matias Cavén, Venture Analyst at Helsinki Business Hub.

Cavén adds that there is a special algorithm, which helps in the endeavor. In general, the database boasts startups that have been powered with Nokia’s heritage and experience. They not only have top-notch tech knowhow, but the mindset and culture for growth, innovation and cooperation.

Arising interest from German-speaking countries

It has become clear that the global CVCs have made investments to different kind of startups in Finland. This is due to the fact that there are several growth-driven and innovative startups in all industries.

“We get a lot of requests from CVC investors, who are, for example, interested in smart mobility, health and ICT. Last year also entertainment, automotive and furniture and nanotechnology were among the top industries,” lists Jokinen.

An example within nanotechnology is American 3M, who took its share from Canatu and 3D shaped touch devices in 2019 with the help of Helsinki Business Hub.

The future looks promising as there is interest from many countries.

”Year 2020 has started strong with corporate backed investments from the United States and Japan. Interestingly, there is also appetite from Israel. We also look forward to the German-speaking countries,” ends Jokinen.

Writer: Katja Alaja