The global technology sector is experiencing robust growth, with the 2024 Translink Corporate Finance Megatrends Report revealing that global IT spending reached $4.7 trillion in 2023, a 4.3% increase from 2022.
Nordic countries have emerged as a powerhouse within this thriving landscape, with Finland and Norway establishing themselves as dynamic IT development, innovation, and investment hubs. Ruben Moring, Partner at Translink Corporate Finance Finland, and Nora Håberg, Partner at Translink Corporate Finance Norway, shed light on why the Nordic region is a hotbed for tech innovation and a prime target for growth-oriented mid-market investors.
Moring says, “Finland’s tech scene goes beyond individual success stories; it represents a thriving ecosystem that fosters early-stage innovation across various sectors. Whether in AI or cleantech, there’s a growing wave of emerging mid-market companies, primed for investment and ready for substantial growth.”
He adds that Finland has experienced a surge in foreign investments, filling the gap left by late-stage growth investors who have lacked the resources to support and elevate the most successful businesses to global leadership.
“Despite the relatively small size and maturity of Finland’s capital markets, the early-stage ecosystem is punching above its weight. There’s considerable potential for growth in the late-stage sector, creating attractive opportunities for foreign investors looking to capitalise on this market gap. Finland and the broader Nordic region are home to world-class tech companies.”
Håberg echoes this sentiment for Norway, “We’re leveraging our expertise in traditional industries to drive innovation in renewables and cleantech while fostering an environment of trust, cooperation, and flat hierarchies. This creates unique opportunities for investors looking to be part of the green transition and benefit from our efficient, innovative approach.”
Here are the unique factors driving this Nordic tech surge.
Thriving startup ecosystems
Finland and Norway have cultivated vibrant startup ecosystems that attract attention from investors worldwide.
- Norway has carved out a robust startup ecosystem with approximately 70 000 new companies created annually in recent years. While the five-year survival rate is around 40%, this high entrepreneurial activity drives innovation across various sectors.
“The ecosystem spans companies working on AI in various sectors, proptech and various digital innovations to better service the main industrial activity in the country within healthcare, energy, maritime industry, fish farming, edtech and fintech and more regular company enterprise solutions within HR, accounting and ERP systems,” adds Håberg.
- Finland has earned recognition for its standout companies in gaming, artificial intelligence, databases, analytics, and cleantech. Moring says Finland’s startup scene is remarkably diverse, with exciting advancements across sectors such as industrial AI, IoT construction tech, healthcare, and sustainable technologies. He adds that this diversity offers numerous opportunities for mid-market buyers seeking to invest in cutting-edge solutions.
“Finland’s startup scene is fuelled by a strong tech heritage and a wealth of skilled engineering talent. Many professionals, drawing on their experience from Nokia’s heyday and more recent successes like Supercell and Wolt, have moved on to launch new ventures, especially in deep tech and software. Furthermore, the region’s use of the Euro, its EU and NATO membership, and political stability history foster a favourable environment for business operations.”
Government support is catalysing innovation
Finland and Norway have implemented robust government initiatives to support technological innovation and digitalisation.
“The Finnish government’s support for AI development creates a fertile ground for innovation and we are already seeing early AI success stories coming out of the region. These included leading consultancies in Europe like Silo AI, recently acquired by AMD in an all-cash transaction for $665 million, and globally competitive product companies such as Aiven, Oura, Supermetrics and Smartly,” explains Moring.
He adds that while the debate in Finland continues over the appropriate level of government funding for early-stage tech companies, this support is viewed as a valuable effort to accelerate innovation across the board.
Norway’s support for innovation is equally impressive. Håberg highlights, “Norway offers substantial government funding incentives that have created an excellent environment for startups and scale-ups. For instance, Innovation Norway contributed 7.1 billion NOK (617 million EUR) in financial support in 2023 through a combination of subsidies, loans, and guarantees.”
Sustainability is a core Nordic focus
Sustainability is ingrained in Finland and Norway’s tech DNA and is an essential differentiator for tech firms. Moring elaborates, “The Nordic countries offer some of Europe’s cheapest and cleanest energy, supported by a shared commitment to advancing sustainable and green technologies. This makes the Nordic region an attractive destination for energy-intensive infrastructure investments, such as cloud computing and AI data centre hubs. Notable examples include data centres from Microsoft and Google.”
Norway balances its energy agenda between being a significant oil and gas producer, primarily exported outside Norway, and relying on environmentally friendly hydropower for domestic energy consumption and additional export to Europe. Hydropower accounts for 89.2% of the electricity production in Norway in 2023. This clean energy infrastructure attracts significant foreign investment. Google is one example announcing a 600 million EUR investment in a green data centre in Skien, Norway, in February 2024.
The Nordic talent pool is driving innovation
Finland and Norway boast highly educated workforces, particularly in STEM (science, technology, engineering, and mathematics) fields. “The talent in Finland is exceptional when considering the small size of the population. The country’s highly educated population ensures a robust supply of skilled professionals. Additionally, we’re seeing an influx of international talent, mostly attracted by the startup scene, good work-life balance and high quality of life,” says Moring.
Norway, too, has implemented initiatives to attract and retain global tech talent, creating a diverse, skilled workforce that is driving innovation across the tech sector. “Norway’s workforce is equally impressive, with 48.1% of the adult population having tertiary education as of 2022 which is above the OECD average of 40.7% . The country’s low unemployment rate of 4% (as of July 2024) and its attractiveness to international talent in IT, engineering, and healthcare sectors further strengthen its position as a tech hub,” adds Håberg.
AI as a co-pilot is enhancing efficiency
As highlighted in the 2024 Translink Megatrends Report, AI is playing an increasingly important role in the tech landscape of both countries in a supplementary role, much like a co-pilot.
“AI is enhancing efficiency and enabling companies to grow with leaner workforces. We do not foresee AI replacing human expertise, at least in the short-term, but expect AI to have a significant impact on most industries, transforming the nature of work by an order of magnitude, augmenting human capabilities, allowing professionals to focus on more impactful and profound endeavours,” explains Moring.
Moring adds that this transformation allows companies to function with fewer human resources while boosting product development, productivity, and scalability. Additionally, by systematically integrating AI into their workflows and developing next-generation AI-powered products, these companies can drive creative disruption and challenge the dominance of legacy players.
“In the M&A landscape, buyers are becoming increasingly adept at distinguishing high-value opportunities. Companies that either develop proprietary AI technology or innovatively apply existing technology are considered attractive targets among investors and strategic buyers.”
Nordic M&A investment opportunities
Moring says Translink is seeing plenty of high-quality mid-market opportunities in the region and is observing an uptick in activity. He says M&A activities can create larger, more competitive entities poised to dominate niche markets.
“Many local and regional companies are eager to partner with strong players, seeking mutually beneficial collaborations that provide a fast track to global markets for top-tier Nordic companies. Finland is an excellent incubator for such ventures, and we are seeing a growing presence of sophisticated global investors capitalising on these opportunities.”
Håberg says that in Norway, approximately 60% of announced M&A transactions in 2023 were cross-border, indicating high international interest and activity. “We expect this trend to continue, driven by acquisition targets and changes in taxation for Norwegian business owners that aren’t relevant for foreign investors. We have also experienced acquisitions and delistings from the Oslo stock exchange driven primarily by Private Equity investors such as Q-Free (December 2023), Kahoot (January 2024) and Adevinta (June 2024), to mention some from the last 12 months.”
While Norway’s tech scene is thriving, Håberg notes a recent trend that has sparked debate. “Norway has experienced business owners and founders moving to Switzerland or other countries to avoid taxation burden due to fiscal changes. This tax burden is not applicable for foreign investors and has led to an intense political debate about innovation, incentives and tax.”
She adds that this situation underscores the complex interplay between taxation policies and startups while highlighting potential opportunities for foreign investors not subject to the same tax considerations.
Håberg concludes, “The tech ecosystems in Finland and Norway are continually evolving. We’re seeing innovation clusters emerge, cross-pollination between different tech sectors, and an increasing focus on deep tech. Translink Corporate Finance can help mid-market investors navigate this constant stream of new investment opportunities in the Nordic region.
TRANSLINK INTERNATIONAL AG
