It’s been frequently said that on going deacade is the decade of early stage venture financing. For instance according to Mark Suster the upcommign decade is “one of the best and most rational investment periods”. While there’s several factors contributing to this view, probably the most important reasons is the technological rupture that has made initial stages of startups cheaper and therefore investing into early stages more attractive.
Oulu is one of the leading technological hubs, especially when it comes to innovation. For instance, in 2011 the Foundation for Finnish Inventions received >1.2 submissions / 1000 people from Oulu region. That is about twice the ratio of Helsinki region. Overall Finland has a higher rate of annually granted patents to population than the US for instance, and Oulu, in terms of density, spots out like a Silicon Valley there. Indeed Fortune Magazine selected Oulu as one of the 7 best new global cities for startups. Still venture investments in the province of Oulu are <10 € per capita. This is significantly less than in Helsinki (>20 €) or primary competitors (Sweden >12 €, Great Britain >20 €, US >70 €), let alone in Israel (>150 €) or Silicon Valley (>1000 €)*. The same type of trend can be seen in the GDP venture investment ratio. In practice this means that startups in Oulu are somewhat underfunded and one gets to select better startups with reasonable valuations there.
At the same time there has been huge transformation in the employment markets of Oulu, which has improved the startups’ ability to recruit the best. Nokia and its subcontractors have released significant amount of talent and they don’t recruit full cohorts from university as they used to. A career as a founder of a startup is a very viable option right now. As Oulu is eligible for EU regional aid, for instance TEKES NIY funding maximum is 1.25M€ instead of normal 1M€. In addition Oulu has invested heavily into services and infrastructure required by the startups.
All these factors make the Oulu region a very attractive option for an early stage venture capital fund like ours right now.