Business

Finnish phoenix: The start-ups rising from Nokia's ashes

  • 30 January 2015
  • From the section Business
Polar Bear Pitching in the Northern Finnish city of Oulu, in an ice hole in the River Oulujoki
Image caption Cold calling: Polar Bear Pitching in the northern Finnish city of Oulu, in an ice hole in the River Oulujoki

For many, Finland and Nokia were synonymous.

And when in 2012 and 2013, Nokia shed 24,500 employees and sold Nokia House (and its mobile phone division to Microsoft), they called it the "Elopcalypse" after then-chief executive Stephen Elop.

But the sinking of Nokia has led to an explosion of start-ups, as a skilled workforce jumps ship and begin businesses.

And the coolest pitching in the world now takes place in a cut-out ice hole in the northern city of Oulu in February, where you can speak about your company for as long as you like - so long as you remain standing in freezing water.

"I am willing to say that the Elopcalypse was the best thing to happen to Finnish ICT," says Mika Bostrom, vice president of peer-to-peer betting market Smarkets.

Image copyright Getty Images
Image caption Nokia's catastrophic shrinkage has been the start-up scene's gain in Finland

Nokia era Finnished

The first two years post-Elopcalypse in Finland involved painful readjustment.

But profitable exits and eye-watering funding infusions have drawn attention to the sparkling northern lights of the tech sector.

This shopping spree included Google's purchase of Helsinki-based mobile 3D graphics venture drawElements last July for an eight-figure sum.

Facebook bought Pryte last summer, a Finnish start-up developing passes to let mobile customers in the developing world use mobile apps without a data plan.

Japan's SoftBank paid $1.5bn (£990m; €1.3bn) for a 51% stake in mobile game developer Supercell, after its Clash of Clans and Hay Day attracted 8.5 million daily plays and revenues of $892m.

And in three years, Helsinki's Slush tech start-up conference has grown from 300 participants to more than 10,000.

"Slush 2012 was a small venue. Slush 2013 was larger. Slush 2014 was huge by anything outside US or UK standards," says Mr Bostrom.

Image copyright Supercell
Image caption Japan's SoftBank paid $1.5bn for a 51% stake in mobile game developer Supercell, the creators of Hay Day

Norse code

Not surprisingly, many of these start-ups have involved mobile phone technology.

Jolla is one lifeboat which launched from Nokia, with Sailfish, a partly open sourced operating system created from a spiked Nokia project, Meego.

Sailfish debuted at Slush 2012, with all the company's then-60 employees taking the stage.

Co-founder Marc Dillon, who spent 11 years at Nokia, says it offers easier multitasking than existing mobile operating systems.

"You have the ability to see all your applications at once, and interact with them at the same time without going deeply into one, then taking several steps back to go into another," he says.

A second key aspect of Sailfish, says Mr Dylan, is it is open source.

"If 80% of the world is running Android phones, then all the companies and ecosystems and devices are basically tied to one company strategy."

He says the operating system has native apps "in the thousands" but can also run Android ones.

Mr Dylan sees Sailfish's next steps as working with chiefly Asian original design manufacturers, who make the modules mobile companies use.

"You create devices now with modules and other companies do the integration," he says.

Image copyright Elias Markkula
Image caption Marc Dillon, Jolla's co-founder, with his Sailfish OS
Image copyright Slush
Image caption Helsinki's Slush tech start-up conference

The sauna side

Jolla is a poster boy for the Nokia Bridge programme, the company's start-up seed funding for departing employees.

Public funding of research and development is another part of Finland's tech start-up success.

It is third in equity financing in Europe, after the UK and France. Tekes, a public R&D funding body, has a €550m (£423m; $637m) annual budget.

There are tech incubators such as Aalto University's Startup Sauna in Helsinki, modelled on Google labs with, yes, saunas. Some 126 start-ups have graduated since 2010.

And the well-reviewed Vigo accelerator, launched by Finland's Ministry of Employment and Economy, follows an Israeli and Singaporean model by giving mentors financial stakes in the companies.

One beneficiary from Tekes was Helsinki wallpaper start-up Feathr.com, started by husband and wife duo Anne and Tom Puukko. She is Finnish and ex-Nokia, he English.

Image copyright Feathr
Image caption Tom and Anne Puuko, co-founders of Feathr.com

"The investment gives you a stamp of approval. If you start a business with your own money, even if you're going well, people say no-one else has looked at you and said it's a good idea," says Mrs Puukko.

The couple have gathered wallpaper designs from roughly 300 artists, "everything from tattooists, surfware designers, photographers, fine artists," says Mrs Puukko, and will focus initially on the UK market.

She says wallpaper still largely uses Victorian printing techniques, and digital printing in the sector has not yet been explored.

"We're going back to William Morris," she says.

"He saw wallpaper as a way of bringing beauty into people's lives. Everyone has this amazing canvas in the wall - you've got four of them surrounding you."

Robot wasteland

Another bright spark in the wintry Finnish night is robotics.

ZenRobotics' Recycler robot sorts bits from a conveyor belt of rubbish, and uses artificial intelligence technology to learn to identify different waste objects.

Timo Taalas, the company's chief executive, says the capital's two universities, University of Helsinki and Aalto University, are quite strong in artificial intelligence and machine learning.

"The background of the founders was in artificial intelligence and robotics. We had to find a complex enough problem that could be solved with the combination of those," he says.

Image copyright Jari Nummelin
Image caption ZenRobotics' Recycler robot sorts bits from a conveyor belt of rubbish

More than 200 gaming start-ups have followed the example of Angry Birds, created in 2009 by Rovio Entertainment in Finland's second largest city of Espoo.

One, Best Fiends, the debut title of Seriously, founded by former Rovio executives, had a million downloads in the week after its October release.

Petri Jarvilehto, Seriously's co-founder, says Nokia invested heavily in mobile gaming from 2003.

"We're kind of a talent pool here that's been already working on mobile games for 10 years," he says. He describes Angry Birds as the first game created from the start for touch.

"In today's world you have mobile games that are reaching 100 million players every single day - there's never been any media, television, movies, where you could have that sort of reach," he says.

Rovio, though, let a fifth of its Finnish employees go in October, saying they had hired "on assumptions of faster growth than have materialised".

Some might call this counting their chickens before they hatched.

Image caption Tomi Kaukinen, chief executive of Sportacam

While Finland's strong secondary and university education and skilled workforce have attracted investors from Silicon Valley and Japan, some wonder whether Finland isn't too awash with investment money.

Tomi Kaukinen, chief executive of Sportacam, a photograph-sharing site for sports, cites the example of the founders of a start-up he met last year who had raised €1.7m.

When he met them again a couple of months ago, they were once again fundraising. "I was like, you need money again?" he says.

"They said, no, we don't really need it, but it's so easy to get - and they raised a couple more million."

Nokia's heyday might be over. But the tech sector here is not Finnished - it's only beginning.

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