The Finnish Cleantech Market In 2010
Recently, we have seen increasing investor interest in the Finnish cleantech market, which closed a total of €40-50m worth of investments in Q3 including those in companies such as European Batteries, a large scale lithium ion battery manufacturer, Nokia spin-off There Corporation, a sub/smart metering technology provider, and Preseco, a waste-to-energy company. Investments in Finnish clean technologies represented around 50% of cleantech VC investments in the Nordics, which closed a total of €100m worth of investments (source: Cleantech Scandinavia). Examples of Nordic investments are in companies like Danish biomass fuelled engine technology provides Stirling, Swedish nanowire semiconductor LED developer Glo (a link to release), Norwegian solar cell manufacturer Innotech Solar and EV company Think Global.
But will the investments in Finnish clean technologies in 2010 exceed those for 2009? We do not know the final figures for 2009 yet. In 2008, Finnish cleantech companies posted a total of €139.5m in investments, which represented the highest proportion (37%) of total investments (€372m) in all Nordic countries.
If making predictions about investment in 2010 we might look at the following themes:
1. Finland has set a national goal for renewable energy to be 60 per cent of total energy consumption. To meet this target financial incentives need to be introduced. There is a plan for tariff systems for wind and biogas effective from 2010 but the final decisions have not been made yet. Clearer policy and price signals will also fuel market demand in other cleantech segments, encouraging investors to deploy capital in Finnish clean technologies.
2. Feed-in tariffs and other financial incentives are also essential for piloting new technologies for global growth. The most rapidly growing market areas in cleantech are outside Finland in China and India: the absence or unattractiveness of incentives continues to be a problem for piloting new technologies in the home market. This will be very negative for VC investments in Finnish cleantech, especially for the area of clean energy production.
3. The fragmented Finnish market with over 1,600 cleantech enterprises offers consolidation opportunities for both small and large players while the medium-sized class is missing. Energy efficiency and sustainability in traditional Finnish industries create new spin-off industries like the biofuel or waste-to-energy industries, based on the pulp and paper industry (e.g. St1, Mzymes, BMH Technology, Preseco and Voxstonetech); the smart grid industry based on the integration of the energy, mobile and software industries (e.g. There Corporation, BaseN, Aidon and Viola Systems); clean industrial process technologies based on base metal manufacturing (like Outotec and Numcore); and let's not miss the equipment and new materials technology required for energy technologies (e.g. BraggOne, Beneq, Picodeon and Canatu) or the EV transportation industry (e.g. Valmet Automotive, European Batteries and Ensto). I am proud of the cleantech companies from Finland.
4. The digital revolution and the clean economy imperative will converge even more dramatically in 2010: software-based innovations are going to make up a much larger proportion of cleantech venture and PE investment than they currently do (source: Cleantech Group). The strong Finnish software and mobile communications sector combined with the talented former employees (and externals) from Nokia could create synergies in this segment.
5. And finally the money: there is a limited amount of Finnish smart money/venture capital available in Finnish cleantech companies, especially when we are talking about seed-phase financing or angel financing. However, the number of foreign investors observing the Finnish clean technology market is clearly increasing. Let's hope this is a leading indicator of increased syndicate investments in 2010.
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The cleantech is definitely a puller. I mean it creates a chain of opportunities and with the whole environment thing on the rise, the software based solutions will fare pretty well over time.
I know i will swing away from the topic here. But there is one thing I always need to ask: How long lasting will this be? I mean will it eventually see a saturation? What happens then?
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Hey Sardar, good question! My guess is that in time, cleantech will became mainstream e.g integrated in technologies & business models. But those ideas of zero waste/carbon free economies, can believe only with some limitations. What's your view?
I think, the finnish market for clean technologies is one of the leading one in europe. I like the way finnish entrepreneurs push their business especially the way they create websites.
I don't think there is anything such as an absolute Carbon free tech and there will be some waste here and there will be economies using/wasting carbon whatever way you put it. Cleantech is still very young [on economy level] and there are regions [many] in the world who haven't even thought of utilizing such ideas in businesses. Look at Social Media for one, there are people speedily adopting it, but many still remain reluctant to it. But that's a different case.
What is more possible happen is some sort of transition over time, which will of course be slow but that is how it is bound to happen.
I remember writing last year on how authorities complained that even a Web Search on Google emits CO2. So you have it right there, there is no Absolute Cleantech.. just a much Cleaner tech compared to present.
Following are the article; specially the second one from Rob Hopkins[video]:
1. http://startupmeme.com/google-web-search-creates-co2-the-drama-continues/
2. http://blog.ted.com/2009/11/transition_to_a.php
Blah i wrote a comment as a response :(.... it hasn't yet appeared here :(
Sardar, sorry. Our Akismed market it as spam.
Thanks Karri.. I am sorry for putting the links there. Will try not to, but the response was pretty long and there a need to put those links there.
Thanks again though:)
Sardar Mohkim Khan,
I think the clean tech is at least a 30 to 50 year wave. Think ICT taking off circa 1995 for reference, but in clean tech its about changing much of the current infra which takes a lot longer time.
I think what's interesting here is that in 2008 Finnish clean tech investments represented €139.5m of total of €372m that was invested in clean tech companies in the Nordics. Yet this was only 33 out of total of 202 deals in the Nordics, where for example Sweden saw 88 investments taking place with the total amount of €137m.
Thus, I don't think the euro amounts tell the whole truth if you don't break it down number wise. In this case you see that Masdar's (Abu Dhabi's multi-billion dollar renewable energy and clean technology initiative) €120m in WinWinD accounted for much of the €139.5m.
What is interesting though, is to see whether Finland sees more big individual investments in 2010 and if so, why that might be. Are some industry areas that pull bigger amounts better represented in Finland vis-a-vis other Nordics.
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Ville Vesterinen,
Exactly, the infra-s is the key thing here. Generally speaking on this one, the many industries set up have been running for a century [or almost half] and to make them move over globally will take a very long time.
As for more investments be made in clean tech in Finland or not and to what extent, remains to be seen. If i take into consideration the total Number of investments, that is roughly 20% but the money value says a different story. Meaning there is so much space for more investments being made.
Does this have anything to with Entrepreneurship gripping the markets? What about the existing industries, how open are they to this idea in Finland?
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