The value of Helsinki’s start-up ecosystem tripled in six years

The Helsinki region is a larger area than its size when comparing European start-up ecosystems. The value of Helsinki’s start-up ecosystem has tripled since 2015, and the combined value of start-up companies exceeds €25 billion. This can be seen in a recent report published by NewCo Helsinki, the city of Helsinki’s new entrepreneurship centre, and Dealroom, a Dutch start-up. Dealroom is a leading provider of start-up data with some of the world’s most important cities and investment companies as customers.

Attractive Helsinki draws venture capitalists

In the report, Helsinki’s start-up ecosystem is shown to be very attractive. The average annual growth rate of investments in start-ups has been 32% over the last five years. So far in the best year, 2020, funding was €916 million– more than 57% more than the previous year. Among European ecosystems, Helsinki is growing at the fourth fastest pace in capital investments. In turn, impact investments have tripled over a period of five years.

“Helsinki aims to be the most functional city in the world. Start-ups and scale-ups play an important role in achieving this aim. We want to promote entrepreneurship and growth in every possible way. We are delighted with how companies have coped with the Coronavirus pandemic. Helsinki’s start-up ecosystem has an incredible sense of doing things and an attitude that makes anything possible,” said Marja-Leena Rinkineva, Director of Economic Development for the City of Helsinki.

According to the report, domestic investments have been relatively low when compared with the rest of Europe or the United States. This is also emphasised in comparisons with other ecosystems, such as Stockholm. The number of financing rounds saw an increase up to 2016, after which the trend has been declining.

Helsinki has a particularly strong gaming ecosystem

When comparing Helsinki’s start-up ecosystem with other Nordic countries, it takes second place in both the number of financing rounds and new financing. According to the report, the gaming industry in Helsinki is remaining particularly strong, and the gaming industry ecosystem is the third most important in Europe, right after London and Paris. However, food and business app software start-ups collect the most financing.

Helsinki holds eighth place in Europe in the number of unicorn start-ups, i.e., start-ups worth more than $1 billion. There are four start-ups worth over $1 billion in Helsinki, the most recent of which are Wolt and HMD Global. There are eight potential new unicorns, i.e., start-ups worth €200-800 million, in Helsinki. Helsinki is, thus ranked in comparisons before many larger European cities. In terms of diversities, Helsinki still has things to do, just like the other Nordic countries: only 20% of start-ups have at least one woman as one of their founders.

But what matters have contributed to the success of the Helsinki start-up ecosystem? The world-famous Slush event has created enthusiasm and has accelerated the growth of the ecosystem. The road for entrepreneurs has been paved with both start-up entrepreneur permits and Business Finland’s financing programmes.