With nearly 17 companies per million inhabitants, Finland has the highest concentration of proptech companies in Europe, according to Unissu (a global platform for proptech). How has this small Nordic country with a population of just 5.5 million people developed into a proptech cluster?
As the birthplace of Nokia and global gaming leader Supercell, Finland is a hub for innovation and a promised land for engineers and coders. Key institutions such as Aalto University and VTT Technical Research Center of Finland Ltd drive R&D and have strong programs that encourage commercialization of innovation. Business Finland, a government-funded organization, promotes Finnish businesses abroad, works to attract investment to Finland, and finances innovation.
In 2016, the Finnish government and key industry stakeholders launched Kiradigi to stimulate sustainable digitalization and innovation in the built environment. This project brought government representatives, municipal leaders, and industry companies together to drive change. In a larger country, involving all key decision makers might not have been possible, due to the sheer number of players involved. Between 2016 and 2018, Kiradigi channelled about 16 million Euros of public and private funding into the sector, including 130 different projects to stimulate innovation and create new businesses. Kiradigi will now continue as KiraHub, a non-profit funded by key industry organizations.
The Platform of Trust was recently established to serve as a digital platform for sector companies to exchange and share data in order to enable new opportunities, including more efficient management of buildings, improved construction productivity, and disruptive service models. Proptech Finland was launched in 2018 to create a community for proptech. Proptech Finland has forged strong connections in the Nordics and Europe and has been using them to foster links between startups, corporations, and investors in Finland and internationally.
SLUSH, the world-renowned startup event in Helsinki, has brought attention to the startup scene and attracted global investors. Since 2016, RAKLI (the Finnish Association of Building Owners and Construction Clients), Proptech Finland, and the Nordic Proptech Initiative have organized a proptechfocused side event, RecoTech, building further momentum for the movement.
Most Finnish proptech companies are still small, with average revenues at almost 2 million Euros in 2017, but growing quickly with an average revenue CAGR in 2015-2017 of 63 percent. Sub-clusters in design, planning, and property management are emerging. Companies are using all the technologies typically associated with proptech, but most frequently build their businesses around 3D design, BIM, augmented and virtual reality, cloud computing, and IoT.
For example, Fira, based in the Helsinki region, has an entirely new focus on the customer experience and has revolutionized traditional plumbing projects with its twoweek pipe renovations. Fira has invested significantly in smart services and tests innovations first within its own business before commercializing them. Jussi Aho, Fira’s CEO, said, “Digital innovations in construction need to correspond to the technical reality of the site. They must be tested. I believe that innovation is created through the interaction between different types of people. The solutions are found between us.”
Currently, no proptech-focused fund exists in Finland or the Nordic countries. Finns often excel at creating technically-advanced products, but struggle with marketing or building successful service businesses around them. Established players have been slow to test innovations emerging from local startups. According to Proptech Finland founder, Mikael Långström, “even when companies have success piloting a startup’s services, significant delays often occur, as the processes for implementing innovation more broadly do not exist.”
Some startups have had to prove their concepts with sales to leading players in other countries before Finnish companies would even consider purchasing their services. Nearly all recognize the vast potential of proptech. To succeed, Finnish startups need to continue focusing on solving real pain points and validating their value propositions. They also need established players willing to test their products and services and to find committed investors.