After a busy start to the year, the funding announcements slowed down a little in March, meaning that ultimately Q1 turned out to be a fairly standard funding quarter for the Finnish ecosystem, with 21 investments totalling $49.2 million.
There was a dip from Q4, as there was across the region, however, due to such a phenomenal final quarter of 2016, the drop-off was particularly pronounced in Finland, with nearly half of the number of investments that were announced in the final three months of last year. Finland is always a slow starter so a much quieter Q1 is no surprise, however, 0% growth compared to Q1 of 2016 is particularly sluggish, but again, I fully expect the number of investments to pick up as the year goes on.
The amount of capital was also halved from Q4, and again, things look particularly slow, with $49.2 million lower than any quarter in 2016, which is strange when you look at the make-up of the size of investments.
But although there was an investment of $20 million and a couple above $5 million, the low amount of capital can be explained by 75% of the deals happening below $3 million.
Interestingly, there were three manufacturing investments in Q1, which is the first time that it has been a ‘hot’ vertical in any of our analyses (Or indeed the first time that anyone has ever referred to manufacturing as “hot”). Very surprisingly, Enterprise SaaS, the dominant vertical in 2016 in Finland, has been nowhere to be seen so far in Q1 2017, I’d certainly expect to see a strong uptick in SaaS investments throughout the rest of 2017.
Very “untraditional” investments attracted the biggest investments in Q1 (apart from the two gaming investments), with TaktoTek leading the way with their $20 million investment for their injection-molded structural electronics (IMSE) solutions.
Helsinki has captured 52.38% of the investments so far in 2017, which is a slight dip on the 58.58% seen in 2016. As always, multiple hubs, particularly Espoo, Oulu and Tampere continue to attract investors attention away from the capital.
Finland is the country that attracts the most International capital in the region, and that didn’t change in Q1. This is due to a lack of later-stage money available locally in Finland meaning there is a reliance on outside money for these stages. However, International money can pretty much be found at all stages, as Finland benefits from a strong reputation on an International front, and in all honesty requires this due to less local investment firms than we see in Sweden and even in Denmark.
In conclusion, after a quick start, Finland promptly slowed down once more to record a standard funding quarter. The Finnish investment scene barely saw any growth in 2016 from 2015, and if Q1 is anything to go by, that could well be the case again in 2017.