Arctic Startup

I and Miikka had a chat yesterday with Tatu Laurila, CEO of Greater Helsinki Promotions about a venture they are organising for Finnish startups and prospects to Israel. Greater Helsinki Promotions is co-organising the event with Technopolis ventures.

Ten of the finest Finnish companies eligible for this venture will be sent to Israel to the IVA Hi-Tech Conference 2008. The event is held in Tel Aviv 19.-20.5.2008. The Israeli Venture Capital Association (IVA) has offered the Finnish organizers an opportunity to bring 5-10 promising start-ups plus an accompanying delegation to Tel Aviv for IVA’s annual conference, which attracts about 1,500 global players from the high tech industry, including VC and Corporate investors. Large number of global VC’s will attend the conference. The estimated cost for the whole program is a maximum of 5000 € at the maximum, a more exact budget will be available in the next couple weeks.

Deadline for enrollment is 2.4.2008. If you’re interested, contact Will Cardwell of Technopolis Ventures for more information on how to apply.

For those who are unaware with the startup and entrepreneurship environment in Israel, it is a lot more effective than it is in Finland. The countries themselves are similar in size and population. With a focus on entrepreneurship and a 15-year strong track record, Israel has managed to enlist over 100 companies to Nasdaq and there seems to be more in the pipeline. There’s definitely a lot there to learn. Arctic Startup will try to cover the process, preparaion up to the event and the event itself as thoroughly as possible. Stay tuned!

Finnish software cluster needs growth. That much was evident as the first seminar of Growth Forum 08 (in Finnish, Kasvufoorumi08) kicked off last week. The forum is an initiative lead by Microsoft Finland and Association of Software Entrepreneurs. The software industry has more than doubled its share of Finland’s GDP over the last ten years. Yet there are few Finnish software (or strongly software-related) companies that have grown beyond 100 M€ in annual revenues.

The organizing parties had been able to gather influential backers from governmental level as well. Matti Vanhanen, prime minister of Finland, delivered the keynote speech. He had recently been to United States and had met top executives from Cisco, Google and Microsoft. Mr. Vanhanen said that Finnish government is taking steps to create a fertile environment for software businesses. For example, we can expect possible tax benefits on VC investments to growth companies. In addition, the whole public funding sector needs simplifying. Many panelists agreed that public funding should be concentrated on growth companies, not on entrepreneurs who are reluctant or incapable to grow.

Key problems of the Finnish software industry are: lack of mid-sized internationally competitive software companies and growth difficulties of companies that employ 50 to 100 people. Those companies find themselves in a very competitive global landscape while the domestic market in Finland no longer supports their growth. In addition, according to panelists too many companies still believe that “our product sells itself”. When going international many companies would need a so-called “Finnsoftbroker”, which would basically be a bridge between the local markets and Finnish companies. According to general opinion no organization yet fills that role.

Ok, so the software industry grows, but not fast enough. What to do? Panelists strongly believed that off-shoring is a strong opportunity, not a threat, to Finland. Finnish economy can never compete with Asian countries on sheer production force. Rather all Finnish software companies planning to go global or international should practice off-shoring from the start. Finland also has relatively few business angels, but currently there are increasingly more people with strong international expertise. These experts should be much more active in aiding startups and other growth companies by investing not money, but sweat equity. Naturally entrepreneurs themselves must aggressively seek out this kind of help and form at least an advisory board shortly after establishing their companies.

Furthermore, forum participants emphasized the need for patents, especially in the US. Mergers and acquisitions is a difficult way to grow and few Finnish companies have yet mastered it. Perhaps too many Finnish software companies get acquired. To build “new F-Secures” they should rather grow organically or do acquisitions themselves.

The forum continues throughout the year 2008. The next seminar is scheduled on June. In the meantime three theme groups (internalization, growth paths and financing) gather and try to come up with recommendations for the future of Finnish software. I participate in the “growth” group and I will be reporting its progress later on.

What do think, where is Finnish software cluster heading to? What needs to be done? Please share your views.

Fromdistance Ltd. has won the MobileMonday Global Peer Awards Round Finland, and will represent us in MobileMonday European Peer Awards in Barcelona on February 11. The two other nominees were community-driven live TV streaming startup Floobs, and Intelligent SMS provider BookIT.

Fromdistance is actually registered in Estonia, though founded by a Finn. It was allowed to enter the competition nevertheless. The nomination was based on Fromdistance’s amateur reporting tool called Mobile Citizen Reporter (already available in Finland). The jury found the company to possess the strongest characteristics with an innovative idea, lucrative and high potential market with a global appeal, as well as a good overall presentation. The privately-owned company was founded in 2004, and sells software licenses to large enterprises and media companies.

The participation in the peer awards Finland competition was quite light, though, compared to e.g. Norway, which witnessed the following nominees for the Norway Peer Awards 2008:

• Opera Mini
• Colibria IM
• mBricks
• mobilize by Adactus
• Fluid by Favourite Systems
• Studio1: by Rubberduck MediaLab
• Zizzr
• Dextella by Mobiletech
• SMT Phonename
• Mobile Manager by Touch Mobility
• MobiSearch by ZapDance
• her.no by MobileInfo

According to still unverified news Adactus won with their cross-platform content delivery system mobilize. Interestingly, Adactus also offers a mobile reporter solution, although with not as end-to-end business offering as Fromdistance.

Altogether, despite lacking competition participants, there were some really interesting companies represented in the Helsinki event, which we’ll hopefully have a chance to cover later on.

I had lunch today with Juha Huttunen and Leo Koivulehto of Vailoma.com. We discussed entrepreneurship in Finland and how it differs from the rest of the world.

The conversations pretty much rolled around the difficulty of raising funds in Finland, compared to availability of funds in Europe and the US. The problem was again tied to the post I blogged some time ago: scale or revenue. The Finnish VCs usually wanted to see revenue and a potentially profitable business model compared to their European counterparts who are willing to take more risks. I believe this has got to do with two main points: (1) No previous success in internet companies, ie. no culture and knowledge in these sort of investments and (2) lack of funds.

The reason why I see this a problem is that as foreign VCs keep investing in Finnish startups, we won’t see a culture evolve here nor do we see any growth in capital as those successful investments pay off. This further creates problems in starting born global, growth companies in Finland.

Would it make sense to start a government owned fund to help companies grow in this stage of their lifecycle? We have TEKES, who helps with financing startups in their birth stage - what about helping startups more aggressively in their growth phase?

Google has began recruiting in Finland. They have 5 positions open for their office here in Helsinki. Google Finland is lead by the former figure skating champ Petri Kokko.

The positions seem like regular “support” functions for AdSense so nothing too dramatic there for the time being.

Here’s the winner’s pitch - Beneq.

I finally managed to upload all the HS Startup Competition pitches online after a little detective work to find the best alternative where to host them. It turned out that Viddler seems to have the best flexibility with relatively good video quality as well. Above is the winner, Beneq, and below you will find the rest. Here are the videos for the rest of the companies who participated in the competition: Ekahau, Movial, Plenware, Sulake, Xtract, Digium, Floobs, Codenomicon and Idean.

The upside of using Viddler is that you can download the videos for yourself/offline use if you wish to do so.

ReadWriteWeb has a good article debating on the future of Jaiku. The truth is that the userbase is slowly shrinking could diminish alltogether if Google does not speed things up. RWW has also some possibilities on the future use of Jaiku, something in the field of SocialStream.

I personally think that we’ll see a lot more Life Streams pop-up in 2008 - after all, Facebook has shown all of us how powerful they can be.

Here’s the keynote from Olli-Pekka Kallasvuo from yesterday’s Helsingin Sanomat Startup Competition. We will be adding all the different pitches online later on.

The talk is in Finnish, so apologies to our foreign readers.

BeneQ has won the Helsingin Sanomat Startup competition yesterday. Beneq is a nanotechnology company an IPR portfolio offering industrialised equipment and technology for functional coatings.

The public’s choice for the next growth company from Finland went to Sulake.

The competition was an interesting event and nice to see such an event being hosted in Helsinki, but somehow it still lacked the enthusiasm of a big event. Some of the contestants were relatively poorly prepared and some even went overtime with the 2-minute elevator pitch. There’s definitely still a lot to learn in terms of selling and marketing as most companies were self-centric and focused on their technology instead of the problems it solves and why it would become the next phenomenon out of Finland.

Vailoma Oy, a company enabling community generated guides and tips for travel planning, has secured seed financing from Valve Branding Oy and Veraventure. The amount invested was not disclosed.

Vailoma offers currently over 260.000 destinations, cities, sights and so forth to help make decisions on the next travel destination. The content is gathered from all over the internet and filtered by the community. You build up a profile to enable suggestions based on what kind of holidays and travels you enjoy.

Valve Branding, which also invested in Jaiku, wants to seek new investments in the area of internet startups. “Valve sees Vailoma as an interesting opportunity to participate in the development of an interesting web service. We received some experience with Jaiku and this time we wanted to be a more active”, says Toni Laturi from Valve.

The investement is aimed towards internationalisation and the launch of the service (it is currently in private beta). Vailoma is also recruiting - web developers and GUI designers.

Update: Apparently Valve did not invest in Jaiku and therefore the information above was false.