The large foreign investment highlights the success of creating knowledge-intensive companies
The Swedish private equity firm Scope has invested 7 million euros in the young Finnish company Footbalance. The investment will allow Footbalance to accelerate their global expansion and emphasises the success of the Finnish start-up system.
“Since its early days Footbalance has been growing rapidly, and internationalisation started in 2008 in Norway,” explains Footbalance CEO Antti Pihlakoski. “The investment enables even faster growth as we have the resources to hire the best people in each market to ensure our success. During 2010 Footbalance will continue to grow in its existing markets and enter new markets.”
The investment will allow the company to hire new personnel for their expansion. “This growth will create positions in the target markets and in the headquarters in Helsinki,” continues Pihlakoski. “Currently we are looking to hire six more people in Helsinki.”
Footbalance works with health care and exercise professionals to develop individually moulded insoles. These insoles help correct and support the foot position and walking gait. It creates these insoles through computer-aided foot analysis and in-store production. The insoles are available through Road Runner Sports in North America and Intersport in Europe. Pihlakoski says that this year they will expand to Australia, Austria, Germany, Sweden, Switzerland and the UK.
According to Will Cardwell of Technopolis Ventures, who acted as advisor to Footbalance, this deal marks the largest first round international investment into a product of the Finnish “Innovation System” in ten years. “By ‘Innovation System-born’ we mean that the innovator, founder and main owner Erkki Hakkala was able to leverage many of the excellent tools available uniquely in Finland since the company was founded in 2003,” Cardwell writes.
The Finnish “Innovation System” is a national strategy designed to promote knowledge-intensive industry. It places strong emphasis on education, funding and research and development through a partnership between the public and private sectors. As examples of some of the uniquely Finnish tools, Cardwell cites the Foundation for Finnish Inventions, incubation financing, and Tekes programs such as GAP, Born Global and Finnvera. Clearly this system is producing companies of interest to international investors.
Vote of confidence
“Footbalance has a unique value proposition and has proven itself on the international sports market,” says Scope Partner Andreas Ossmark. “We believe that Footbalance will continue to benefit from the current health and exercise trend and that the company will further strengthen its leadership in new markets and segments. We look forward to taking an active role as an owner and being involved in the company’s continued development.”
Scope has a strong track-record in its past investments, such as with Monty Widenius’ MySQL. Their five-year investment in MySQL gave them a 69 per cent return each year. They tend to be active investors and use no, or minimal, debt financing. Scope has about EUR 120 million currently committed in their investments.
“This is a vote of confidence towards our team, our product, our concept and our business strategy,” sums up Pihlakoski. “We are very honoured to have a respected and professional investor on board. We are proud of our Finnish roots and see Footbalance as a Scandinavian brand. We are happy that as Scope is a Swedish company they are close to us both geographically and culturally. We also wouldn’t be where we are today without Tekes, which have given us both financial and advisory support.”
Text: DAVID J. CORD, HELSINKI TIMES