Finnish Deep Tech Scene Needs an Ecosystem, Not Just Heroes
Finnish deep tech companies raised a record €1.6 billion in funding last year. The figure is impressive, until you understand its true meaning. Take away three giant companies and the year was quieter than usual. So the real question isn’t whether Finland can produce industry titans, but whether we can replicate the recipe for success.
Text: Martti Asikainen, 22.1.2026 | Photo: Adobe Stock Photos
Finnish startups are aiming for space, healthtech, and defence technology. Solutions range from cancer diagnostics to surveillance and nuclear power plant safety. Many of today’s innovations sound like they’ve been lifted straight from Philip K. Dick’s classic novels. The deep tech sector in particular has made enormous strides in recent years, which is also attracting foreign investors.
According to the Deep Tech Study Finland report published by Finnish Industry Investment Tesi, domestic deep tech companies raised €1.6 billion in investments last year. That’s growth of 170 per cent on the previous year (Sirviö, Majanen & Palmgren 2025). The figure is altogether exceptional for a country the size of Finland, whose population roughly matches that of a medium-sized European metropolitan area.
But before we fetch the champagne from the fridge and dig out the crystal glasses, it’s worth pausing to ask what this growth actually tells us. Tesi’s report offers a direct and unabashed answer. The record came from mega-rounds by Oura, IQM, and Iceye—without which the year might well have looked rather quiet, even quieter than usual.
This isn’t just a statistical observation, but a sign of a structural problem that threatens the sustainability of the entire ecosystem. When the overall picture rests on the shoulders of a few, we’re no longer talking simply about cyclical fluctuations but about the fact that Finland can produce excellence, but can’t scale and fund a broad cohort of next-wave companies.
The Missing Middle
According to Tesi’s report, funding rounds under €20 million have actually decreased compared to previous years (Sirviö, Majanen & Palmgren 2025). Yet it’s precisely this size of funding that represents the critical leap for many deep tech companies—where the prototype becomes a product, piloting becomes a supply chain, and technical credibility becomes commercial repeatability.
Typically, without these rounds, talent and research never reach the stage where international scaling is in any way realistic. In that sense, the infamous discussion about the Series A/B funding gap is no longer remotely abstract for company management, but everyday reality and a growing concern for the future of domestic companies.
When it comes to deep tech, mid-stage funding isn’t money for growth, but funding for transformation. It pays for certifications, regulatory compliance, industrial production, and that painful development phase where technology must be made to work in real conditions, with real customers and a real cost structure (e.g. VTT Research 2022). That’s why deep tech startups also carry greater risks than traditional tech startups (McKinsey & Company 2024).
If the middle stage remains thin, domestic deep tech companies won’t just grow more slowly—some of them will never even reach a state where growth would be possible at all. Tesi’s report confirms this interpretation. A full 73% of companies cite access to appropriate funding as a key obstacle to growth, and 53% highlight market validation as a significant bottleneck (Sirviö, Majanen & Palmgren 2025).
The combination is revealing in many ways, as money and proof are fundamentally interlinked. An investor wants proof before committing, a customer wants maturity before buying, and the company needs funding to mature. When you add to this equation the constraint of a small domestic market and venture capital’s tendency to concentrate geographically (e.g. Chen & Ewens 2023), you get a vicious circle that won’t be solved simply by working harder.
Pan-European Problem, Local Responsibility
Finland isn’t the only country grappling with this problem, however. In fact, the gap between Series A/B funding rounds is a common problem for European startups that was identified years ago (Duruflé et al. 2017). Europe produces strong startups, but the depth of funding doesn’t always suffice to keep the growth trajectory within Europe’s borders.
The European Investment Bank (EIB) has also described how European companies’ growth funding is often thinner than in the United States, which increases pressure to seek capital from abroad and can partly influence where value creation ultimately happens (e.g. Arnold et al. 2024; Fratto et al. 2024; Jia et al. 2025). There are other reasons as well, such as market bureaucracy, regulation, and fragmentation.
Many European countries have responded to the challenge with market formation rather than individual support programmes. The UK’s Patient Capital Review identified the funding gap at the scale-up stage and led to strengthening long-term growth capital structures (British Business Bank 2023a; 2023b). France’s Tibi initiative, meanwhile, mobilises institutional investors to channel capital into growth and venture capital funds.
Finland’s closest equivalent is Tesi’s Fund of Funds (KRR), which acts as an anchor investor in Finnish private equity funds. They aim to grow the market indirectly through funds, much like Tibi and British Patient Capital. However, Finland lacks an equally visible national strategy process or a campaign coordinating institutional investors.
Three Fixes for Finland
Finland’s problem isn’t just that there’s too little money, but in how funding is organised. Improving the situation would require three simultaneous corrective moves.
The first is the shortage of growth-stage investors. There’s a reasonable amount of early-stage funding in Finland, but when a company grows and needs millions of euros for its next level, the investors usually run out. Finland doesn’t have enough large funds willing to take the risk, lead a funding round, and support a company over several years. This leads to companies having to seek smaller bridge financing or shift entirely to relying on foreign investors. Both options weaken Finnish ownership and how much influence can be exerted from within Finland.
The second is combining diverse financing instruments. Technology companies especially—those developing physical products like new energy solutions or machinery—need vast amounts of capital. Investor money alone isn’t enough. Public support, loans, guarantees, and project financing are all needed simultaneously. This works in individual projects, but each company has to invent its own solution to the cash crisis (European Commission 2025).
At the European level, a nearly equivalent combined financing model for deep tech startups is offered by the European Innovation Council (EIC) funding system, which supports growth by combining grants and equity into a single financing package.
The third is the customer shortage. Beyond funding, customers are needed. New technology is difficult to sell when it doesn’t yet have proven use cases. Nobody wants to be the first customer, but without that first customer, the technology can’t prove it works. In a small country like Finland, the public sector and large companies should be bolder about purchasing new technology on a trial basis.
With that first reference, investors also join more readily. This doesn’t mean the state should integrate unfinished services into its platforms or act as an innovation engine for new technology, but rather create various testing platforms and a bolder culture of experimentation. This would free us from the unfortunate cycle where technological solutions don’t scale because they haven’t been adopted—and the reason they haven’t been adopted is that they haven’t yet scaled (e.g. Chen & Ewens 2023).
Heroes Don't Make an Ecosystem
With hindsight, it’s easy to note that 2025 was a turning point for Finland’s deep tech scene precisely because it was both a success and a mirror. It proves our ability to produce world-class players, but simultaneously demonstrates that our system doesn’t produce winners consistently, because mid-stage rounds are thinning out and companies experience funding and market validation as key obstacles.
For deep tech to deliver the needed shot in the arm for Finland’s entire economy, the next natural step is to build infrastructure where growth-stage funding rounds aren’t rare exceptions but a predictable and normal part of a company’s lifecycle. Success must be a result of the system, not a lucky accident and an achievement based on individual performances.
This, however, requires major investors to lead growth rounds, a more systematic way to combine different forms of financing, and a market that buys and tries new technology rather than merely encouraging its development. Last year’s funding record tells me we’re good at running short sprints. Now it’s time to build a sustainable path for the marathon ahead.
References
Arnold, N., Claveres, G. & Frie, J. (2024). Stepping Up Venture Capital to Finance Innovation in Europe. IMF Working Paper. International Monetary Fund.
British Business Bank (2023a). British Patient Capital central to scale up Britain boosting company valuations, turnover, and employment by up to 5,000 jobs. Published on the British Business Bank website on 20 February 2023. Accessed 14 January 2025.
British Business Bank (2023b). Interim Evaluation of British Patient Capital. Research Report. Research Report. London.
Chen, J. & Ewens, M. (2023). Venture capital and startup agglomeration. Working Paper 29211. Originally published September 2021. Updated June 2023. National Bureau of Economic Research. New York.
Duruflé, G., Hellmann, T., Wilson, K. E. (2017). From start-up to scale-up: Examining public policies for the financing of high-growth ventures. Working paper. Policy contribution. Bruegel.
European Commission. (2025). The EU Startup and Scaleup Strategy. Choose Europe to start and scale. Communication from the Commission to the European Parliament, the Council of European Economic and Social Committee and the Committee of the Regions. COM(2025) 270 final. Brussels.
Jia, J., Ginger, Z.J., Leccese, M. & Wagman, L. (2025). How Does Privacy Regulation Affect Transatlantic Venture Investment? Evidence from GDPR. National Bureau of Economic Research. New York.
McKinsey & Company. (2024). European Deep Tech – Opportunities and Discoveries. An investment perspective.
VTT Research. (2022). Discovering exponential hope: Finnish deep tech startups. VTT Research. Helsinki.
Fratto, C., Gatti, M., Kivernyk, A., Sinnott, E. & Van der Wielen, W. (2024). The scale-up gap financial market constraints holding back innovative firms in the European Union. ECONOMICS. THEMATIC STUDIES. European Investment Bank.
Martti Asikainen
Communications Lead
Finnish AI Region
+358 44 920 7374
martti.asikainen@haaga-helia.fi
Finnish AI Region
2022-2025.
Media contacts