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Cold inspires hot run on high-tech

The Economist/ AFR | Feb. 5, 2013
A group of Finnish students have embarked on a most constructive piece of entrepreneurialism in history after returning from MIT.

In 2010, a group of students at Aalto University, just outside Helsinki, embarked on the most constructive piece of student activism in the history of the genre. They had been converted to the power of entrepreneurialism during a visit to the Massachusetts Institute of Technology. When they got home they organised a “summer of start-ups” to spread the word that Finland’s future lay with new companies, not old giants. The summer of start-ups turned into a season of innovation.

The Start-Up Sauna, a business accelerator that is still run by young enthusiasts but now funded by government, business and academia, occupies a dilapidated warehouse next to the university. It offers a wide range of services: working space, coaching for budding entrepreneurs, study trips to Silicon Valley and plenty of networking opportunities (including in the Sauna’s many saunas).

The Sauna masters have an understanding of entrepreneurship in advance of their years. They recognise that there is more to innovation than high tech: the Sauna also has design and knitting factories. They understand the importance of bridging the gap between engineering and design. They realise that promoting entrepreneurship is a matter of changing culture as much as providing money. They look to Russia and the Baltic states as well as to Boston and San Francisco.

The student revolution was part of a wider reconsideration of the proper relationship between government and business. This had started in 2008, when the Finnish government shook up the universities (and created Aalto) in an attempt to spur innovation. But it was speeded up by Nokia’s problems. Finland had become dangerously dependent on this one company: in 2000 Nokia accounted for 4 per cent of the country’s GDP. The government wanted to make the mobile-phone giant’s decline as painless as possible and ensure that Finland would never again become so dependent on a single company.

The Finns created an innovation and technology agency, Tekes, with an annual budget of €600m and a staff of 360. They also established a venture-capital fund, Finnvera, to find early-stage companies and help them get established. The centrepiece of their innovation system is a collection of business accelerators, partly funded by the government and partly by private enterprise, that operate in every significant area of business and provide potential high-growth companies with advice and support from experienced businesspeople and angel investors.

As a result, Finland has become much more market- and entrepreneur-friendly. It has produced an impressive number of start-ups, including 300 founded by former Nokia employees. Microtask outsources office work. Zen Robotics specialises in automating recycling. Valkee makes a device that lifts wintry dark moods by shooting bright light into the ear canal. The country has also acquired the paraphernalia of a tech cluster, such as a celebratory blog (Arctic Startup) and a valley-related name (Arctic Valley). The fashionable argument now is that Nokia’s decline is “the best thing that ever happened to this country”.

 

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