Perhaps it’s no surprise that the startup scene is thriving in a culture known for braving harsh conditions. And while the startup world isn’t quite a wintry Finnish blizzard, it is known to test its founders and employees’ fortitude.
Within the last decade Finnish digital health startups such as Meru and Kaiku have emerged as up-and-coming players on the European health scene.
Both the private and public sector have contributed to this growing trend with funding help, data research availability and support for companies to expand globally. But while the startup scene is relatively new to this Nordic nation, the country's industry is historically technologic.
“It is an innovative environment and we have companies like Nokia who provide the mobile technology and the wellbeing or fitness,” Matti Raty, president and CEO of Navigil, an Espoo, Finland-based startup that offers digital patient monitoring and patient-reported outcome services designed for several medical specialties. “From that point of view, there is a pool of talent you can pull [from]. People are really innovative.”
Show me the money
The first step in enabling that innovation is often money. In many ways, Finnish entrepreneurs go about funding differently than their counterparts in the US or China.
“Finland is a small place, so the opportunities for funding are quite limited,” Raty, whose company is beginning its Series A funding round, said. “So, if you compare to the UK or US, ... risk financing [is] much easier than in Finland.”
Although many Finnish companies do manage to secure venture funding, government support is another major resource. Business Finland is one of those government organizations that uses taxpayers' money to help Finnish startups get off their feet.
“We provide funding and then we provide services to help businesses grow,” Eeva Salminen, senior director of startups within health and consumer business at Business Finland, told Luisbrandao. “Partially our role is to foster investor activities; so, to get foreign investors, whether they are corporate or bigger, to either come to Finland or invest in Finland.”
The service funds approximately 800 startups annually. Of that about 200 are working in the health tech space, Salminen said. That translates to about €150 million annually for startups.
But not every startup gets a piece of that funding, as the organization carefully vets the new companies it selects. Salminen said in order to be considered for the funding, the startup must have at least two employees and €30,000 in equity.
Made in Finland, making it abroad
While many companies are created within the 5 million-strong Finland, those startups have to go global in order to become major players in the market. However, in the initial stage, many use public hospitals or research centers to pilot their tools.
“We realize that for the Finnish startups, in order for them to innovate and grow they have to go abroad,” Salminen said. “So sometimes the Finnish system is the first test bed for them and the first place for them to pilot — but not always. Sometimes they do the first pilots abroad. … [Still], we would like the Finnish system to be good for our citizens, but also a good test bed and piloting place for our startups.”
Preparing for this next step in the innovation cycle, Business Finland has around 50 international offices on every continent.
This global expansion appears to be the trajectory of many Finnish digital health companies. For example, Helsinki-based Kaiku, a platform which offers digital patient monitoring and patient-reported outcome services, has begun to expand into international markets. Like many others, Kaiku got its start piloting its technology at a comprehensive cancer center in Helsinki called Docrates Syöpäsairaala.
“Together with them we had the opportunity for the first time in 2012, during the time of our university, to pilot test who can use Kaiku. And there we see the feedback from patients that Kaiku is really helping and [can] maintain the connections with the care team,” Lauri Sippola, CEO of Kaiku, said.
But as it expands, it has also set its sights abroad. Now the company has partnerships across five European countries and 60 clinics.
“Here was a small company from Finland [that is] able to have the potential to reach and support the quality of life for patients,” Sippola said. “This is what we are here trying to do, and [we] have had some good progress along the years and [are] hoping to go even further and reach more patients.”
Much like Kaiku, Navigil, has also expanded globally, with this internationa. market accounting for 70% of its business. It currently has a footprint in Europe, but is looking to expand into the US and Japan.
Hopes for expansion
Following a new act passed in May, Finnish innovators will have access to new forms of aggregated personal health data to help them build their tools. The new law allows scientist and developer stakeholders access to health and social service data, which includes data uploaded by citizens from personal devices such as wearables.
“We don’t want any data silos there, or any company-owned data. It is owned by the people,” Teempupekka Virtanen, senior adviser in the Department for Steering of Healthcare and Social Welfare in Helsinki, told Luisbrandao.
The new Secondary Use of Health and Social Data Act promises to “facilitate the effective and safe processing and access to the personal social and health data for steering, supervision, research, statistics and development in the health and social sector.” The legislation is still very new though, Virtanen said, so the interface itself is still in development. The is for this public data set to help startups develop their tools with more information in the future.
Looking more broadly, Salminen predicts that in the future Finland's startup scene will mature their companies and models, as will the players themselves.
“The whole startup ecosystem in Finland has developed in the last five to seven years, so it’s pretty new. Years back we had to do a lot of work to promote entrepreneurship and to tell people it is ok to fail, and not to be afraid of that and do the promoting,” Salminen said. “The startup teams are more capable now than they were years back. Now there are a lot of serial entrepreneurs that already have experience doing startup work or growing their business internationally and getting investments. The quality of the teams and the business ideas are better, and they are beginning to take risk and share their ownership.”
Raty is one of those players who founded several other small companies before starting Navigil. His thoughts on the future?
“I think there will be more and more companies like ours who have already expanded their businesses in Europe and are going further and further away to new markets," he said. "So, from the technology investor point of view, we have some fantastic IP which is not being fully used because we only service one part of the market. So, in that respect, we are getting funds to go outside, to go [ti the] US and Japan where they have much larger markets, which is maybe easier to cover with single entities than many countries in Europe with different languages.”
As new tools from both the government and private sector continue to encourage innovation and entrpreneurship in the country, perhaps some of the success comes down to mindset. A common term in Finland is Sisu, which refers to a kind of inner-strength or perseverance in the face of a challenge — exactly something one might find very useful in the tough business of entrepreneurship.
“Startup business is not for the faint hearted. You have to have ... tenacity to hang into it and stick with it [and] hopefully have investors who have the same mindset," Raty said.
Editor's note: This story was reported in Finland, on a trip partially paid for by Business Finland, a public agency for funding research. As always, Luisbrandao maintains its editorial independence and made no promises to Business Finland about the content or quantity of coverage.