A seemingly unlikely candidate in the ‘Global Startup Hub Leaders’ category, Helsinki has emerged as a viable contender for entrepreneurs searching for a place to start their company.

Startup Hubs Around the World: Helsinki

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To discover the benefits of this north European city, we’ll look at 1) the location, 2) the tax incentives of the city, 3) the legal incentives, 4) investors, 5) local resources, 6) specialization of the city, and 7) startups to watch.

LOCATION

Geographical Benefits

Tucked in southern Finland, Helsinki sits on the Gulf of Finland, an extension of the Baltic Sea. Just fifty miles north of Estonia and two hundred miles west of St Petersburg, Russia, Helsinki is perfectly positioned to impact their corner of the world. A short plane ride to nearby Europe allows the entrepreneur direct access to the majority of the world’s cities quickly. The proximity to other nations draws entrepreneurs who come seeking business freedom and support that they don’t get in their business community at home.

As the capital city of Finland, it is the most populous city in the nation, with a population of just over 1 million people. The banking, cultural, political and educational center of Finland, Helsinki is uniquely poised to challenge the startup markets in their quest for becoming a global leader. Recently ranked eighth in the top ten cities of the world to live in, the beautiful surroundings combined with the architecture and historical aspects of the city combine to make a view that is breathtaking and invigorating.

Advantages of choosing the city

In an effort to continue to improve the city of Helsinki, the Helsinki City Planning Department has developed a Mobility as a Service (MaaS) plan. Under MaaS, the city will move towards having zero personally owned vehicles in the city. To achieve this, they are putting into effect a mobility sharing plan (MaaS) that provides for vehicle sharing. A centrally located hub would direct users to bikes, train and ride-sharing stops through the city. Monthly service fees could be paid via mobile telephone or a monthly membership agreement for use of the MaaS.

Efforts such as these are just an example of the progressive thinking and planning that Helsinki takes part in; efforts to ensure that the next generation not only survives, but it thrives. Entrepreneurs who establish their company in Helsinki can take full advantage of the opportunity to be a part of the change that betters the environment.

A skilled workforce is another important advantage of choosing Helsinki. With a strong educational system, as well as a leading university in the city, students are joining the workforce secure, confident in their skills and knowledge.

TAX INCENTIVES

Recently announced tax benefits for investors and small businesses in Finland have proven to be successful in helping to ease the burden of entrepreneurs. Finland’s Prime Minister introduced a plan to provide tax relief to angel investors and remove the minimum threshold that prevented companies from taking advantage of it.

There are relatively few tax incentives for companies in Finland to take advantage of, but as the government continues to push towards startup innovation, the opportunity for the creation of tax incentives will grow. One of the most telling reasons behind the high number of foreign companies starting in Finland is their ease of doing business. To further promote the Helsinki startup hub, the leadership of the city can promote the financial and legal benefits to doing business in the entrepreneurship friendly city.

Taxation on foreign residents who work in Finland seems high at over 25%, but compared to some other nations, it isn’t out of scale. If the government wants to continue to attract entrepreneurs to the city, a reduction in tax for startups and investors is essential. There is very little known corruption at the government level, making it attractive to startups in surrounding areas where government corruption is the norm and creating an environment where entrepreneurs can be confident the government is working with them – not against them.

LEGAL INCENTIVES

One of the strongest arguments for selecting Helsinki as a startup location is the low levels of bureaucracy there are. Simple registration and paperwork can be completed through a public liability company if needed, and the whole process takes two or three weeks. With an easy registration process, the young entrepreneur can focus on more important tasks like finding office space, securing funding and getting their product to market.

Establishing the company with the proper credentials and licensure is simple to handle, and the recurring paperwork that needs to be done in the future can all be handled by one person, and typically can be completed online.

Maintaining the easy to navigate registration forms, as well as the clear, non-corrupt form of government will continue to encourage entrepreneurs to select Helsinki as their startup hub. A further incentive by creating special ‘Hub Zone’ areas within the city limits would help to draw startups in. Special zones that are based around housing, office sharing and investors can help to generate creativity and innovation, as well as help entrepreneurs share information about navigating the startup road.

INVESTORS

As an entrepreneur, one of the most difficult challenges is to secure funding by investors. Startup hubs that seek to be competitive on a global scale must bring together the investor and the entrepreneur. For startups in Helsinki, one of the biggest events to bring entrepreneurs and investors together is the Slush conference. With attendance topping 10,000 people, this annual event brings some of the world’s largest angel investing and production firms, as well as some of the most promising new startups under one roof in a weekend of glitz and glam, as well as serious negotiation and business. Planned and executed with the intention of helping the next generation of startups move forward, Slush gives startups the opportunity to interact with investors from various funds as well as hear from energetic speakers who have reached success in their startup.

Beyond the workshops and concerts, Slush is a two-day constant pitch to people who have not only the money, but the drive to engage in business with startups. With attendance by some of the world’s most significant, top-tier investors, Slush is guaranteeing that not only the ‘who’s who in the startup market’ will be at their event, but they’ll be looking to connect with promising startups. An event of this caliber draws attention, driving the Finnish startup market even higher on the global list of ‘places to watch’.

Recent success stories like Nokia or Angry Birds have drawn interest in the Helsinki startup market, and investors have been surging into the city seeking the next big idea. Angel funds, growth capital and venture firms are all establishing offices within the city, a move that benefits the investors and the entrepreneur as well.

Helsinki’s startup market is still relatively new, and investors are moving quickly to become the one to find the next big Angry Birds. This creates a level of competition in the city – there aren’t that many investment firms to choose from at this point, and the number of startups is limited as well. With a high demand for investors and a low supply, the competition for those investments can be fierce.

LOCAL RESOURCES

The city of Helsinki has much to offer the entrepreneur. Media attention on both Nokia and Angry Birds has drawn people from around the world, hoping to get in on the next big idea that is developing beyond Russia. The city is awash in skilled labor as entrepreneurs and workers from Russia and other northern European nations seek the calming, steady and strategic planning evidenced in larger towns with large populations.

With eight universities and four polytechnic colleges, the population has a large number of skilled workers for startups to draw upon. By partnering with the colleges, startups could have the opportunity to develop a strategic curriculum that will train students in needed areas. In addition, the startups have a chance to establish a protocol for learning that will ensure graduates are prepared to enter the world of technology development.

Available housing will become more of a challenge as the city continues to grow. Many people moving into Helsinki end up opting to move to the suburb, the rural areas outside of the city, of Helsinki to avoid the crowded city’s resident traffic.

A metropolitan city, Helsinki is Finland’s global gateway and has over 140 nations represented within the city. This cross-cultural environment will allow for startups from all over the world to thrive and the entrepreneurs to feel at home through cultural exchange and language.

Several success stories have already come out of the Helsinki market: Angry Birds, Linux, Nokia to name a few. In typical fashion, success bread success, and the more success Helsinki has, the more success Helsinki will have. As a resource, having highly successful entrepreneurs available for support and guidance is pivotal.

Part of the appeal of Helsinki’s livability is the breadth of activities that are available. Sports teams in ice hockey and football provide respite from work when a startup has been working around the clock to get their product to market. Theaters and museums anchor several large spots on the map, and walking visitors can take advantage of the beautiful climate and things to do.

Capitalizing on the resources available within the city, entrepreneurs can develop a richer base of experiences, and can offer a well-rounded perspective to their products and services. The discovery of the need (or problem) can often lead to the greatest innovations, and entrepreneurs in Helsinki are determined to be the ones to solve the world’s ills.

SPECIALIZATION

With a clear mandate from the government of Finland, Helsinki has taken aim at becoming the most entrepreneurial friendly city in Finland. Rather than haphazardly putting together an entrepreneur organization and hoping for the best, Helsinki is strategically working towards bringing more startups to the city and is encouraging entrepreneurs to choose their industry wisely.

At the present time, startups in Helsinki are focused on service: bank transactions, mobile apps, and online stores, to name a few. With the push towards globalization and the opportunity to interact with customers worldwide, the city realizes that services are not enough to give their startups traction. New technologies and inventions are more likely to succeed outside of Finland, providing the city with the startup motivation needed to springboard into success. Rather than continuing to create technology and apps that mainly serve the people in Helsinki, entrepreneurs need to focus on developing innovative technology and services.

Thanks to the unique location and diverse population, more than half of Helsinki’s startups are led by immigrants to the city. This creates a unique opportunity for companies to specialize in fields that Finnish nationals may not consider. Due to the proximity of the city to Russia, a large number of Russian entrepreneurs travel to Helsinki to set up their company, allowing them to take advantage of the friendlier business climate in Finland. Another large number of startups are led by Estonians who are drawn to Helsinki for ease in entrepreneurship. The diversity of the city contributes to the creative vibe that is necessary to truly become a startup hub in the global market.

The directive from the government to influence the growth of the tech market gives an indication of the direction the country wants to move. Finding an area of specialization in the city can be as simple as listening to the problems and concerns of the people around and then finding workable solutions. Historically, Finland is known for the development of gaming and digital products. Outside of the tech world, they have always had a strong presence in the area of medical solutions, allowing for innovative design and development in this area as well.

STARTUPS TO WATCH

Rovio: Creators of perhaps one of the most wildly popular mobile games of all time, Rovio is the company responsible for the Angry Birds invasion that has taken over the world. Statistically the most downloaded game ever, Rovio’s game has spun a line of apparel, plush toys, Halloween costumes and a whole lot more. Even with their off the charts success, however, Rovio is continuing to develop and design new games and apps, proof that success does not mean ‘sit back and relax’.

Holvi: Tired of not being in control of their finances, Holvi developers created a user-friendly interface that allows customers to manage their money in a new way. Through their program, customers can share accounts, create invoices and manage bills. Budgeting tools generate reports detailing cash flow based on categories. Developers are currently working through the red tape that will allow the service to be offered to customers in Europe, joining the 1,000 customers already taking advantage of the banking program for the non-bank user.

ProtoGeo: Health fanatics have embraced fitness tools such as the Nike+ and the Jawbone UP, so ProtoGeo took the idea a step farther. Eliminating the need for additional equipment, the Moves app capitalizes on smartphone technology to sense when the user is cycling, running or walking.

Foodie.fm: A connection point between grocers and shoppers, Foodie.fm is a tool that promotes healthy eating. By allowing grocers to communicate with customers directly, shoppers are able to stay informed about their eating habits.

Walkbase: Capitalizing on the continued growth of smartphone usage, Walkbase uses sensors in retail shops to track customer information. Tracking software in the sensors can identify shopper behavior, count the number of shoppers and determine where (and how long) they browse in certain areas in the store.

Kippt: Internet users know that keeping track of web content is one of the biggest challenges they face. Kippt has managed to eliminate the hassle, storing through bookmarking and allowing users to work with others on the content.

Founders Week 2012

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