I just returned from a trip to Finland last week, where I spent considerable time learning what it is that has made Finland a true leader in Cleantech. What I found, actually, is that there are 10 underlying reasons why Finland has positioned itself as such a cutting edge market in the clean tech sector. Here are my findings:
1. Innovator companies in the driving seat
As a country, Finland has been a leading innovator across multiple sectors. In fact, R&D investments amount to roughly 4% of GDP, positioning Finland as having the third-highest R&D funding of any country in the world as a percentage of GDP. That funding is being especially targeted at cutting edge opportunities, especially in power electronics, clean combustion technologies, and environmental monitoring and utilizing ICT in cleantech.
Among the most recent success stories has been the development and promotion of robots in recycling: ZenRobotics, which adds artificial intelligence to industrial robots to enable them to recycle waste. The company recently won Finland’s CleanTech Open competition and represented the country at Cleantech Open Global Ideas Final. This same innovative, pioneering spirit is evident in other areas, in everything from nano-engineered solar coatings to "printed batteries," paper-plastic hybrid materials to wireless device chargers.
2. The Lahti team and Finnish cleantech cluster
Overall, the Cleantech sector in Finland is made up of primarily Kuopio, Lahti, Oulu, and Helsinki and the surrounding areas. Each of the four centers of expertise specializes in different aspects of cleantech, and each strives to promote the growth and internationalization of the associated businesses. The four centers of expertise cover around 60 percent of Finland's Cleantech business and 80 percent of cleantech research. Just as importantly, Finland’s cleantech sector is spearheaded by the best of the best, incorporating a publicly-boosted, bottom-up approach. Finland truly has a genuine cluster, one that is marked by collaboration instead of competition -- both on regional, national and EU levels.
3. Strong R&D support
Many countries claim to back cleantech development, but in Finland one sees action in the form of strong governmental R&D and growth financing. As an example, Finnish governmental R&D financing in 2010 totaled 230 million euros for energy and environmentally sound solutions, making it a record year. Moreover, help can be seen through the government-backed VC funds’ efforts to support growth companies such as Veraventure Finnish Industry Investment. With regard to deployment of proven but new technologies, Finland offers subsidy and tariff schemes e. g. for renewable energy. Subsidies are also available for households to install energy saving applications, such as heat pumps and geothermal energy. In addition taxation is increasingly geared towards environmentally motivated taxes.
4. Vivid VC ecosystem with public & private risk sharing
Unlike countries saddled with government interference, in Finland the public and private sector share the risk, with new financing tools combining public & private capital while making sure the government takes no stand on technology being selected for development and funding. But most importantly there are a good handful of private VCs and angel investors investing solely in cleantech.
5. Lifestyle
The Finns are an entrepreneurial-driven, co-operative, market and solution-oriented people. Challenged by nature and distances in their everyday life, they have found a way to turn that into an advantage: “Suomalainen sisu” = the Finnish Strength of Will. The Finns have always valued clean nature because they have over the time had their livelihood depend on it: Forests and clean water. Also there are no major oil or gas reserves, thus the Finns have had to develop their own customized ways for energy generation and energy efficiency.
6. Location
A gateway to both Scandinavia Baltics Russia and Asia, Finland’s location is pivotal in yet another way: The country can also be seen as a mental gateway to the East given its long history in business relations with Russia. As a result, Finland is logistically turning into a good crossing point: On the atlas, Finland seems rather far from the center of things. But turn that map around. With its close links to powerhouse centers Russia, the Baltics, Nordics and possibly the shortest direct flight path to Asia and the Americas, one sees Finland as a grand gateway to international business.
7. Waste to energy since 1930
And it’s not like Finns are new to the cleantech and green trend currently sweeping the globe. In some form, Finns have been practicing and developing such industries since the 1930s. As an example of public private partnership, one only needs to look at the municipal waste management company’s modern waste management center in Lahti. There, 90% of the municipal waste in Lahti is recycled, with sludge being converted into bio-gas.
8. Modest and law-abiding people
This is, it turns out, a double-edged sword. On the one hand, the Finns' general modesty allows for a harmonious and team-oriented existence. However, in business that can be a negative: Finnish companies have cutting edge technology but are too modest to use superlatives when presenting their products. One other thing said about the Finns are that they are very by the book in following laws and regulations, and the country has one of the most stringent environmental set of laws in the world. It has given the companies motivation to innovate new technology to meet the regulations cost efficiently.
9. Old stronghold industries’ timely transition to cleantech
Traditional Finnish industries, e.g. pulp & paper, chemistry and telecommunications, are becoming more active in cleantech innovation and opening up their corporations as test beds. They have opened their doors for young teams and jumped in as investors, partners, licensees or customers.
10. Global partnerships
Finland is a small country with GDP growth that is very dependent on exports. Accordingly, the driving force is to build good relationships between global partners. Finland was among the first to build and support the Global Cleantech Cluster Association, the cleantech operators are strongly participating in EU projects with multiple partners around the world, for example, in EcoClup collaboration of 13 cleantech clusters from 10 European countries.
**Shawn Lesser is the president and founder of Atlanta-based Sustainable World Capital, which is focused on fund-raising for private equity cleantech/sustainable funds, as well as private cleantech companies and M&A. He is also a co- founder of the GCCA Global Cleantech Cluster Association, and can be reached at shawn.lesser@sworldcap.com
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Energy".
Omitted in your article was the fact
that a very large part of Finland's
energy is supplied by nuclear power
stations.