The Finnish defence tech companies ‘on steroids’ | EUROtoday

Wearing a laboratory coat and skinny silver gloves, manufacturing specialist Jose Barrientos is painstakingly piecing collectively a white-framed goggle-like headset.

It contains a number of cameras, eye-tracking applied sciences and electronics that work collectively to simulate eventualities from excessive stakes army operations.

“Everything has to be perfect,” says the manufacturing specialist. “So many different things can affect other things that can affect the final product in such a massive, massive way.”

Mr Barrientos works for Varjo, one in every of a rising variety of firms in Finland creating improvements that may help army forces and governments in getting ready for or reacting to battle.

The Nordic nation, with a inhabitants of simply 5 million, has 368 defence tech firms, in line with analysis for Tesi, a state-funded enterprise capital firm, launched final September.

Around 40% of those are start-ups and scale-ups, with many rising at charges of 30% to 40% if their instruments are dual-use applied sciences that may also be utilized in different industries.

Helsinki is now among the many high 5 cities in Europe for defence, safety and resilience investments, in line with a separate report launched in February by tech information platform Dealroom, in collaboration with the Nato Innovation Fund, an impartial enterprise capital fund launched in 2023 with funding from 24 Nato allies.

Varjo says its headsets are getting used to supply 80 simulation programmes to Nato forces within the US and Europe.

In easy phrases, its merchandise are extra superior variations of the digital actuality headsets utilized in gaming.

But they mix artificial synthetic content material with views of real-world environments.

This “mixed reality” expertise “squeezes the training continuum” for fighter pilots, says the agency’s CEO Timo Toikkanen, as a result of they not need to journey lengthy distances to finish conflict simulations in big plane hangers, that are costly to energy and run. “You can do 99% of the same [training] inside of the headset.”

The start-up had already attracted heavy funding previous to Russia’s invasion of Ukraine, and began working with medical analysis firms and automotive producers.

But Mr Toikkanen says the beginning of the battle and Finland’s admission to Nato a yr later “just kind of put everything on steroids” when it comes to curiosity in its defence providing.

Since March 2022 the corporate has raised greater than €50m (£42m; $54m) in extra funding.

Mr Toikkanen says that earlier than the conflict applied sciences that might be utilized by army forces was “kind of a red flag” for traders involved about social and environmental tasks, and Varjo’s executives would “tiptoe around” that facet of the enterprise when in search of funding.

Now the alternative is now true.

“Investors are looking for companies that are active in the field of defence technology and it’s not frowned upon anymore,” he explains.

Following President Trump’s return to workplace in January, Mr Toikkanen says there’s been a renewed curiosity in its merchandise from European militaries within the wake of rising geopolitical tensions.

“Suddenly, there’s a new understanding that we need to prepare, and we can’t only rely on Nato and the United States for our defence.”

Listen: Business Daily – Finland’s Defence Tech

Other quickly increasing Finnish start-ups within the defence and dual-use sectors embody Iceye, which has developed fine-resolution microsatellite-based imaging and information providers, and Re-orbit which provides satellite tv for pc software program.

Distance Technologies, a start-up backed by Google creates headset-free immersive applied sciences. In March it introduced a collaboration with Patria, a Finnish legacy defence agency, which can trial the tech on its armoured autos.

Finland shares round 1,340 km (830 miles) of its border with Russia, and the Finnish authorities spent a better proportion of its finances on defence than many different European international locations even earlier than the conflict in Ukraine.

“There’s a phrase I like to leverage, which is ‘the tyranny of geography’ – the closer you are to a threat, the more likely you are to perceive it as more apparent and indeed more existential,” says Nicholas Nelson, a UK-based defence tech investor and visiting fellow on the University of Oxford.

“They also have a memory of the Winter War, which transpired during World War Two, where they were invaded by the Soviet Union.”

The obligation of Finns to defend their nation is enshrined within the Finnish structure, and there’s obligatory army service for males.

Mr Nelson believes this publicity might also have inspired proficient residents to develop into founders or traders in defence tech, reasonably than different fast-growing industries in Europe akin to renewable power or monetary applied sciences.

At Maria 01, a former hospital turned startup campus in Helsinki, entrepreneur Janne Heitela opens his laptop computer to scroll by means of photographs of unmanned airships gathering information above snow-covered Arctic forests.

He is the CEO of Kelluu, an organization that initially anticipated its expertise for use by local weather researchers, however pivoted to turning into a surveillance platform focused at cities, governments and analysis establishments in 2022.

“It was a very concrete, personal feeling that we need to also do something for the security situation,” says Mr Heitela.

He highlights nationwide surveys which recommend a minimum of 80% of the Finnish inhabitants are ready to battle for his or her nation, and agrees with Mr Nelson that this “spirit to be ready to defend” has trickled into start-up and enterprise methods, and is more likely to gas the sector’s continued development.

Defence tech firms launching in Finland have additionally been boosted by a powerful basic tech scene within the nation.

Many of the nation’s tech alumni – together with Mr Toikkanen at Varjo – honed their expertise at Nokia, the previous world cell phone big which has its roots in Finland.

It bumped into monetary difficulties following the launch of Apple’s iPhone within the mid-2000s, however this inspired a large variety of former workers to launch or put money into new firms.

Although not as mature as different European start-up hubs like Sweden and the UK, Helsinki has spawned a handful of unicorn companies, value a billion {dollars} or extra, together with sleep and health monitoring ring Oura and sport developer Supercell.

There can also be sturdy state assist for the defence tech scene. Last yr Business Finland, a authorities company that promotes funding and innovation, launched a brand new defence and digital resilience programme which is directing €120m in direction of supporting analysis and growth initiatives from small companies and startups.

“Our current government… they are really enforcing this kind of public-private collaboration,” says the programme’s director Kirsi Kokko. “I think they understand the urgency.”

Despite the speedy development of defence tech in Finland, the sector is dealing with a spread of native and European-wide challenges.

Mr Heitela, the founding father of airship expertise platform Kelluu, describes one thing of a “culture clash” between agile start-ups and enormous defence firms and governments which have usually required years of experimentation and prototyping earlier than buying new applied sciences.

“That’s really on the opposite side of the spectrum for start-ups, in which the DNA is that we will fail fast and rapidly, and you don’t have every start-up succeed.”

At Business Finland, Ms Kokko says the Nordic nation can also be impacted by sturdy world competitors for the software program expertise wanted to develop defence tech and twin use companies.

But whereas Finland’s compact dimension and lengthy darkish winters may delay some potential recruitments, she hopes the nation’s status for innovation, flat working hierarchies and low crime ranges can appeal to workers with the best ability units – alongside its success within the sector up to now.

“We need to have a good story,” says Kokko. “And I think we do.”