Finland has become a hub for medical R&D, with many startups, established companies, and steps being taken to improve access to capital and provide business development expertise.
While Finland has a long history of innovation, it was not until the early 2000s that healthcare and biotech began to attract significant venture capital (VC) investment. In recent years, however, there has been a surge in funding for life sciences startups, with firms like Innovestor, founded in 2014, leading the charge.
In order to change that we need excellent networks with other Nordic countries, where the pharmaceutical industries have been historically much bigger and successful.”
Pekka Simula, a partner at Innovestor, believes that Finland has a lot of potential for life science innovation. “We have great science in Finland, but we have much less expertise, for instance in drug development,” he says. “It’s very challenging to find the international-level business development expertise, clinical development expertise, and management expertise that you see in Sweden and Denmark. In order to change that we need excellent networks with other Nordic countries, where the pharmaceutical industries have been historically much bigger and successful.”
Simula is responsible for leading the firm’s investment strategy and overseeing its portfolio of companies. He is deeply committed to the life sciences sector and has a passion for supporting early-stage startups that are developing innovative solutions to healthcare challenges. This is quite a change from his early work. A physicist by training, when asked how he ended up in the life science industry, he says modestly, “One of my first employers, CRF Books, was developing data collection systems for clinical trials. That was my entry into life sciences and understanding of drug development and the pharmaceutical industry.”
Underfunded in drug development
Innovestor has a strong track record of investing in life science companies and has recently launched a new fund dedicated to the Nordic life sciences and health sector. The new fund aims to raise capital to invest in early-stage life science companies that have the potential to make a significant impact on healthcare. Pekka Simula, having already had a successful background in startups, explained his transition to the capital side of the equation simply.
“After 20 years in the life science industry, mostly at startups, I came to realize that Finland is underfunded especially in drug development. Unlike Sweden and Denmark in particular, we didn’t have specific focused life science VC investors who could then also pull international capital companies. When I left my previous life science company I had a clear ambition to try to fix this in Finland,” he says.
Help and guidance
While providing capital is a core part of the role of a VC, Innovestor offers its portfolio companies a range of support services, including strategic guidance, operational expertise, and access to its network of industry contacts. Simula explains that this is a consequence of the investment landscape for life sciences and highlights the fact that Finland has been lacking a dedicated VC for more than a decade.
So, we really had to educate the researchers and show them that the opportunities now exist, and that there are people who invest in their fields. There are people with expertise and experience in this field who can guide them through the different steps.”
“So there is almost a lost generation of researchers who haven’t really had opportunities,” he says. “There hasn’t really been anyone who could seriously help them found a company and provide the funding for it. So, we really had to educate the researchers and show them that the opportunities now exist, and that there are people who invest in their fields. There are people with expertise and experience in this field who can guide them through the different steps.”
This can also help academics who may not always have been ready to make the jump into business. For Simula, it’s about addressing unmet clinical needs.
“Our focus is helping good scientists to spin out their ideas. We want to encourage them and make them consider how they could move outside academia. First of all, we say that if you are a world-leading expert, you can take your invention and run and do something with it, because your expertise is a crucial part of the equation.”
An ideal location for life science startups
Finnish life science companies can also benefit from the country’s R&D infrastructure, which is world-class. There is a strong academic research network, with several leading universities conducting cutting-edge research in life sciences. The Finnish government has also implemented several initiatives to support R&D, such as Business Finland (part of the Finnish Ministry of Employment and the Economy), which provides financial support to companies for R&D projects. Finland’s healthcare system is also considered one of the best in the world, providing an excellent platform for companies to test and validate their technologies and treatments. This is important for Simula and Innovestor.
“All the Nordic countries have very good healthcare records. The ability to combine those records with genetic profiling has already yielded a lot of exciting data, which makes it an ideal location for life science startups,” he says.
The Nordic ecosystem
Being a new player in the landscape, Simula credits VCs in the Nordic region with their open and collaborative spirit, saying, “We’ve been very happy to have been adopted into the Nordic ecosystem. All the professional investors in the Nordic region have warmly welcomed us as a new player in the field. That has been tremendously valuable for us. As a team of previous entrepreneurs who turned into a team of investors, we remain very humble.”
With the right support, Finnish life science companies can continue to make significant contributions to healthcare and improve patient outcomes globally.”
The Finnish life sciences industry has enormous potential for innovation and growth, and despite the challenges faced by companies, the ecosystem is evolving to provide more funding, support, and resources to help companies succeed. With the right support, Finnish life science companies can continue to make significant contributions to healthcare and improve patient outcomes globally, believes Simula.
“Being a new player in the field means we are not only ready to help but we are also aware of what more needs to be done. We have a lot to learn from this side of the table, so it’s great to collaborate with our more experienced peers in the region,” he concludes.