Insight Into Appetite Of Finnish Clean Tech Investing

Posted on August 24th, 2011 by
   

Kari Herlevi, Senior Business Advisor for Tekes, discusses at the GCCA California Cleantech Collaboration, the current clean tech investing landscape in Finland and what types of companies are making strides to becoming global leaders in clean tech. The GCCA California Cleantech Collaboration was organized by Finnish Cleantech Cluster.

Full Transcript:

Ben Lack:  I’m with Kari Herlevi, the Senior Business Advisor for Tekes’s Energy and Environment Industries Group.  Thanks so much for being with us today.
Kari Herlevi:  Thanks, Ben.  It’s a pleasure being here.
Ben Lack:  Can you talk to us about the clean-tech environment in Finland and what you guys are trying to do to help stimulate clean-tech businesses in your country?
Kari Herlevi:  Sure, it’s a very exciting area because there’s a lot of activity in the green biomass clean processes energy-efficiency side.  Obviously, Finland has many multinational companies in biofuels and pulp and paper sector and in heavy industries and generally. So, those have been the kind of traditional areas, but then we have hot companies in renewable energy and the electric vehicle side, as well.
Ben Lack:  Are you finding that a lot of the innovation that’s happening in these spaces, are they really coming from the multinational groups, or is there is a fairly strong, small-business entrepreneurial community that’s chosen to tackle some of these problems?
Kari Herlevi:  There is definitely an entrepreneurial culture outside of the multinational, as well, but I think they are also role models; still the multinationals, as well, to show that you can do global business, but obviously, you know, from the entrepreneurial side, they are big challenges to take care of.
Ben Lack: When you guys get involved in projects, are you typically investing in the project itself?  Or are your investing in the company that’s working on that type of problem solving?
Kari Herlevi:  So Tekes, from the governmental side, is doing the R&D investments for Finland, so we use grants and loans to invest in companies.  Basically it’s a project-based funding, which could be all the way from a couple of hundred thousand to millions of Euros and the company has to provide the matching funding for the projects.  In many cases, we come very early to the picture and share the risk of the R&D developments with the company and later on also with the private investors.
Ben Lack:  Is it a dollar for dollar match?
Kari Herlevi:  Pretty much, that would be the equal.  Yeah.
Ben Lack:  So for electric vehicles in Finland and really in Europe, what types of obstacles are these companies trying to overcome?  What are some of the innovative solutions that these groups are coming up with?
Kari Herlevi:  Well, that’s an exciting area.  We have just formed this 80 million program for EV development in Finland and definitely it’s an early stage for EV, so it’s hard to say how it will work out in Europe or in any place.  We are just trying to first fund these kind of demonstration pilots where we get to the roads a couple of hundred cars in Finland and that is the starting point, so that we can understand, what are the business models, what other opportunities, and what the consumer is really looking for.  I think Finland is a good place to start because there are long distances; it’s a harsh winter, so the conditions are different than in some of the other countries.
Ben Lack:  Is the pilot only in a specific city?  Or is the test to really use a couple of different cities to see how these cars interact in the communities?
Kari Herlevi:  Well, it’s still not decided how we actually will do it, but there are certainly different cities involved in this project, so we have to see, but it will happen this year, for sure.
Ben Lack:  The project includes electric vehicles, as well as the infrastructure itself?
Kari Herlevi:  It’s not only about the car, itself, but definitely about the infrastructure and the services you could make out of the EV business itself.
Ben Lack:  When people think about Europe and clean tech, many times the first thought is renewable energy and the work that’s being done.  Talk to us a little bit about some of the innovation that’s happening on the renewable energy side of things.
Kari Herlevi:  I would say that obviously the Renewable Energy sector has been interesting from our side.  We have good companies in that area, Win Wind and Switch, to name some of the companies in those areas.  I think it always comes from the thing that the Finnish mentality, their engineering capabilities, and able to solve difficult problems and to try to find the kind of global scale for that. So I think we come from there, and especially I think the green energy side has been very good example of that kind of solution we could provide.  For example, Switch is already a multinational company, but not that big, but still the mentality of what they have is amazing and what they can do in green energy business.
Ben Lack:  Give me some of your thoughts about how the entrepreneurial community is unique in Finland comparing it to other vibrant entrepreneurial communities that you either might see in the United States or other parts of the world?
Kari Herlevi:  I have lived here in Silicon Valley for a couple of years, and I was, this year, in China for a couple of months.  There are big differences I think in different continents, but what is actually something that is shared with this community is the driving force of finding solutions.  I think the engineers are similar everywhere, but the other thing is obviously how do you make money off that.  I think Silicon Valley is a great place from that perspective that you have everything in place to grow a startup to a multinational company.  I think China is coming to that picture, as well.  They have a lot of entrepreneurial activity and you know stuff going over there.   I think when they get to place of  venture capital side of things and they get more kind of global perspective, they will come to the picture as well.  I think Europeans are kind of in the middle, that we have already realized a long time ago in clean-tech sector, that the nature is important and you try to be carbon neutral and you know the European inactivity is what we have.  So, it’s kind of different kind of aspects, but still you know going into the same direction.
Ben Lack:  How much of an impact or assistance would you say that the government has in the growth of clean-tech innovation in Finland?
Kari Herlevi: It’s strong support, especially from the industry and policy perspective.  We, as Tekes, are interested in innovation.  The best offer from Tekes’s side for a startup is 1 million Euro, what we can deploy for a full startup and it really compares to whatever the Silicon Valley startup needs in the early stage, so it’s a very strong supporter.  The reason for that is actually that it’s a small nation of 5 million people. So, you need to go global on day one, so it’s not like the internation market that you can tackle.  Obviously, it’s important to have that, as well as a presence in Finland.  But, you need to go outside fast.
Ben Lack:  The relationship with the government could always be better though, so what are some of the things that clean-tech entrepreneurial community are facing that might be a little frustrating in working with the government that the community is trying to work towards to help get these projects out faster and more efficiently.
Kari Herlevi:  I think it’s in any place it’s the same, but you know you have to write policies and, in many cases, like in electric vehicles for example, that it’s not sure you know how it will play out. When you have entrepreneurial mentality, you want to go straight away and do things, but the policy sometimes are you know lagging behind and try to show the things in more you know bigger context in the Economy.
Ben Lack:  You had mentioned a little bit earlier that you will work with universities in some instances on certain types of projects.  Can you elaborate on a couple of either projects that you can share with us?  Or what does that relationship really look like?
Kari Herlevi: So, basically how we operate with the universities is pretty unique on the European scale, as well.  When we have funding-applied sciences in universities, we invite the companies to join the project, so they are actually doing their project together, so that there is also the industry need involved.  So, it’s not like pure academics all the time, but it is also that you have to work together to see what the industry needs as well and try to find new breakthrough solutions through that.  It’s hard to name single  projects, but I would say that in any sector.  Well, obviously, Finland is well known for IT and other kind of history of the policies and research related to that and that’s I think one great example how a small nation could work together to get an industry in place.
Ben Lack:  When you take a look at all the different projects that Tekes has their hands in, whether it’s working with universities or providing grants or capital to the startup community, when you add all of that up, how much of a financial commitment is Tekes really putting into the clean-tech sector?
Kari Herlevi:  In clean-tech sector, we put yearly roughly 200 million Euros in investment> If you think about five-year time, it’s like a very big investment if you compare to any private sector business. So, it’s a sizable amount of money we are investing in that area.
Ben Lack: Why does the clean-tech industry interests you? And why you have chosen to work in the space?
Kari Herlevi: Well, it’s fantastic because you are not just putting another product in the market.  It’s more about you know doing something good as well, but then you still have the business application behind it, so it’s kind of combination of doing something for the nature, but still from the business perspective.  Hey, you know the EV sector, for example, who wouldn’t love to have new cars coming in, for example, from the electric side and the hybrids.  It’s a fascinating area.  I couldn’t think about any more interesting area than clean tech.
Ben Lack:  Is there anything else that you want to share with us today?
Kari Herlevi:  Well, I think we are now here in San Francisco and in Silicon Valley, so I’m just glad that we had the possibility to come here and showcase some of the companies today and has been very good event.  I think in the future, when we are working let say with Chinese and the American companies, I’m sure that there will be possibilities to find new partnership with you know obviously with the companies, but also with VC’s across the oceans, so we can really find new deal flow and to do something together.
Ben Lack:  Kari, thanks so much being with us and I kindly appreciate it.
Kari Herlevi:  Thanks a lot.  It was my pleasure.

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