Deep tech companies are strongly technology-oriented companies springing almost always from academic research. These companies are hardly ever aiming to rapidly enter large consumer markets. Instead, they focus on, say, how we can exploit outer space, harness the business opportunities of qubits, or efficiently remove carbon dioxide from the atmosphere. The success of these companies can change the world and safeguard our future wellbeing.
For once Finland has a competitive edge
Deep tech companies need a surrounding culture that supports hi-tech development. Finland – renowned as a country of engineers – offers an ideal framework. No surprise then that, although a small country, Finland is a heavyweight player and compared to its peers has a higher proportion of deep tech ventures among her growth companies. Depending on the definition, some 20–40% of Finland’s venture capital and private equity investments are made in deep tech companies. If growth figures and valuations hold true, the role these companies play in Finland’s economy will grow dramatically going forward.
According to our survey, however, market growth has mainly been driven by the growth of companies rather than an increase in the actual number of companies. Around 20 companies a year are created in Finland in this category, and this figure is declining. To reverse this trend, processes need to be streamlined so that innovations from the academic become templates for companies. Clarity in the rules for transferring IPR rights to companies, for example, would enable teams commercialising innovations to focus on the essential – starting up the business and developing their ideas further. This would also help private financers take part in sharing the risk and commit to follow-on financing of development over the long term.
People in the centre – researchers the stars
Researchers are indisputably the stars of deep tech companies. Nevertheless, good researchers still need supplementary expertise for support. Researchers should be allowed to focus on their core competencies, which rarely include seeking financial backing, designing business models, or handling the challenges of international recruitment. Aalto University’s guiding principle, for instance, is to bring diverse players together already at the grass roots level in the studying phase – not forgetting Finland’s annual Slush event. Likewise, VTT Technical Research Centre’s LaunchPad is a deep tech incubator for developing slightly more advanced ventures.
Growth also necessitates constant expansion of the team. After their founding, deep tech companies immediately have to compete in international markets because the cutting-edge talent they need simply cannot be found in Finland. This sets a challenge for public sector processes, which have recently stirred up welcome calls for improvement. Researchers come to Finland in search of opportunities but coping with the practicalities of everyday family life often takes precedence. In addition to work permits, we, as a society, need to offer employment opportunities for researchers’ spouses, schooling (in English) in our education system for smaller family members, and preferably rapid access to banking IDs to smooth workaday life. The solution to these problems must not be left on the shoulders of companies.
The success of these companies can change the world and safeguard our future wellbeing.
- Henri Hakamo
Recent global turbulence in geopolitics have also drastically transformed future outlooks. The maintenance and supply security of European technology has become a hot topic of discussion, and the EU is channelling generous funding into the sector. Finland must be wide awake to avoid being trampled by larger countries when companies genuinely start scaling up. This calls for seamless cooperation between the academic, public, and private sectors.
There will likely be more demand than ever before for the products of deep tech companies. This population of companies is focused on addressing known global challenges and problems. So, demand will undoubtedly last long into the future. This message has been heard in Finland: R&D investments have aroused unanimous support. Finland must be built boldly into a competitive country that dares to invest in transformation, even if at slight risk. While risks might be realised in individual cases, deep tech ventures have produced new knowledge and researchers are ever more willing to address new challenges. Taxpayers and society at large will be the winners.
Tesi wants to raise Finland to the forefront of transformative economic growth. We develop the market, and work for the success of Finnish growth companies. We invest in private equity and venture capital funds, and also directly in growth companies. We provide long-running support, reasoned insights, patient capital, and skilled ownership. tesi.fi | Twitter | LinkedIn | Newsletter