In 2021, 13 investors and business owners, along with their families, relocated to Helsinki, the capital city of Finland, under a special three-month visa.
Investment promotion agency Helsinki Partners launched the 90 Day Finn programme to attract highly skilled workers to the city. Helsinki’s tech sector has been growing fast in recent years and so has the demand for talent.
“I have worked for this company for a long time, and I think this is best project we have done,” says Sandeep Shah, senior business advisor for Helsinki Partners.
Although only one of those original 13 participants has permanently relocated to Helsinki, Shah says others have extended their temporary visa. “There have been various positive outcomes from the programme”, he says, noting the global publicity it has generated. The programme is ongoing and another 15 successful applicants are expected to relocate in August 2022.
The 90 Day Finn programme highlights both Helsinki’s strengths and its deficits. The city ranks at or near the top of a whole range of international quality of life, education, environmental and business rankings. Yet Finland has an ageing population and needs to vastly increase the share of working-age citizens to support its economy over the longer term. Helsinki’s success in attracting talent may prove pivotal to the country’s efforts to meet its demographic challenges.
How Helsinki rose to the top of the rankings
Helsinki is a small city by international standards. Central Helsinki houses about half-a-million people, and the wider metropolitan area, encompassing commuter towns and neighbouring cities, has a population just shy of 1.7 million.
Yet it punches above its weight in terms of foreign direct investment (FDI). Helsinki accounts for about one-third of Finland’s GDP, according to the World Bank. In 2019, Finland recorded FDI inflows of $15.6bn (€13.7bn), just $1.5bn below Sweden, a country that has a population double its size.
Helsinki’s economy also proved resilient in the face of the Covid-19 pandemic, according to GlobaData.
Helsinki was ranked the top city in the world for work-life balance in 2021 by US-based security systems developer Kisi. It was also ranked as the second-safest city in the world in 2019, and the fourth-healthiest capital in Europe in 2020.
Helsinki is a “fabulous place to live and work”, according to international investment consultant Michel Lemagnen. “It is a very modern, clean, green and smart city. It is hugely impressive the way they have undertaken urban renovation… [Helsinki] gets things done.”
The city markets itself as 'conveniently boring', with a safe and efficient city centre supported by the Helsinki ‘ring of industry’ consisting of ten neighbouring cities that all connect to the region’s airport and ports within 15–40 minutes.
From Nokia and beyond: a history of tech innovation
Finland’s most famous company is telecoms giant Nokia, which was the largest mobile phone company in the world in the late 1990s and earlier 2000s but saw a sharp decline in market share after the launch of the iPhone and Google’s Android operating system.
Its struggling mobile and devices division was eventually sold to Microsoft in 2013, but this downfall of a former giant led to the birth of many new tech businesses in Helsinki.
“Microsoft did an audit of all the people who had been laid off and created a sort of recruitment platform for them,” says Lemagnen. “Another programme was to create an enormous Nokia alumni community to attract international companies they had worked with in the past to set up teams in Finland.”
This network of residual tech talent has led to a tripling of Helsinki’s start-up ecosystem since 2015 to a value of more than $28.47bn, according to a report in 2021 by Dealroom and NewCo Helsinki.
HMD global, the local company that manufactures Nokia-branded smartphones today, received funding of $230m from partners including Google and Qualcomm in 2020. More recently, US food delivery business DoorDash acquired Finnish start-up Wolt in a $8bn all-stock takeover in late 2021.
Helsinki’s tech ecosystem ranges from games companies such as Angry Birds creator Rovio and Clash of Clans developer Supercell, to medical products company Evondos, which was acquired by Norwegian private equity firm Verdane Capital in 2020.
Helsinki’s economy is dominated by service sectors and Shah says Helsinki's main FDI focus can be split between three broad sector groups: ICT and digitalisation, sustainability and clean tech, and healthtech and life sciences.
“We have a long history of strong digital capabilities, with a great emphasis on investment in innovation,” says Shah. “We have a very collaborative business environment where companies, universities and state research centres all come together, supported by a funding system fostered and enabled by the government.”
Recent government schemes to help further support start-ups in these sectors include the introduction of the country’s first R&D tax deduction, and the Smart Life programme, which provides funding, networking and support services to businesses in the health and well-being sectors.
Demographic challenges for Helsinki
A major challenge for Finland economically is its ageing population. Statistics Finland predicts that from 2034 the national population will decline and that only three of the country’s 19 regions will be growing in population by 2040, with Finland’s birth rate at a 200-year low.
With the working age population set to decline to just 57% by 2060, initiatives abound to try to attract more young, highly skilled workers to the country.
Along with the 90 Day Finn programme, the government announced in February 2022 that it would seek to double the length of visas for students post-graduation and also simplify the process of gaining and renewing student visas. University students in Helsinki number 70,000, more than 10% of the city population, and about 8,000 of these are international students.
Lemagnen co-wrote a labour report for Business Finland in 2021, which showed that although Finland is a leader in tech, it has a tight labour market with very low unemployment among the core resource of ICT and engineering professionals.
With many of its regional rivals also targeting tech sectors for FDI growth, competition to attract the best talent is high. One area it outcompetes other Nordic cities is cost of living. Although it historically had the reputation of being a very expensive place to live, it is now much cheaper than all other Nordic capitals.
Shah says: “I think in a lot of areas we can be considered a high-quality location – but does a high-quality location have to be high-price? We will never say Helsinki is the cheapest, because it is not, but it is all about return on investment, and I think you get a lot of quality for your money in Helsinki.”
In a world increasingly ravaged by Covid-19, climate change and political upheaval, Helsinki's self-cultivated reputation of being 'conveniently boring' may well work in its favour, as will its stellar reputation for providing a dynamic home for high-tech industries. It is not the only city struggling to cope with the demands of an ageing population, however, and simply having a cheaper cost of living than other cities in a region that has a reputation for being expensive to reside in may not be enough to draw in younger workers. Helsinki's innovative prowess may have to go a little further to crack that particular problem.
This is the first in Investment Monitor's Future of Nordic Cities series. In the coming weeks we will cover Bergen, Malmo, Reykjavík, Stockholm, Oslo, Copenhagen and Gothenburg.