Capital investments in startups and growth companies surge in Helsinki metropolitan area

This growth has been particularly notable since 2017: the capital raised in the area amounted to approximately 277 million euros in 2017, surpassing the one billion euro mark by 2020. This increase in funding is attributed not to a rise in the number of funding rounds, but to an average increase in the amount raised per round.

There has also been a shift in the types of investment rounds as funding amounts have increased. During 2021 and 2022, companies in the capital region secured a record number of large-scale capital investments exceeding 40 million euros. In 2022 alone, these large-scale investments surpassed the total funding amount of 2020.

The vast majority of companies receiving capital investments are based in Helsinki, with nearly all (98 percent) of the total capital investments in 2022, amounting to over 1.6 billion euros, targeting companies in Helsinki and Espoo. Since 2013, nearly three-quarters (457) of the funded companies are located in Helsinki, and about one-fifth (123) in Espoo.

An increasing number of startups and growth companies in the region have received funding over 100 million euros in recent years, with the three largest companies valued at over one billion euros each. Approximately 40 companies in the examined dataset are valued at at least one hundred million euros. Common to the listed companies is their connection to software development or solutions requiring innovative programming in various functions, including companies specialized in manufacturing mobile phones and computers.

The majority of investors funding startups and growth companies in the capital region are strongly domestic. Since 2018, about 53 percent of investors participating in funding rounds have been Finland-based venture capital firms, funds, corporations, individual investors ("angel investors"), or state actors.

The role of investors from the United States has become significant in the capital region. U.S. investors have been involved in more substantial funding rounds compared to investors from other countries, focusing on technology companies with significant business potential.

However, the amounts of capital investments in 2023 appear to be trailing behind the record years. As of September 2023, companies have received about 580 million euros in capital investments, with Helsinki accounting for 523 million euros of this total. This indicates a potential decrease from the record year 2022, likely due to the deteriorating economic situation and tightening financing environment. Additionally, large funding rounds for individual companies may not recur annually.

Nevertheless, the Helsinki metropolitan area has developed a vibrant network of startups, growth companies, and capital investors. The region's startup and growth entrepreneurship are on a solid foundation, promising a bright future for local business and competitiveness.

This information is from a new research article by the city office, examining the capital investments in the capital region, their development, investors, and companies.

HT