Maddie Savage
BBC News, Helsinki
BBC
Jose Barientos builds headsets for military training
Wearing a laboratory coat and thin silver gloves, production specialist Jose Barientos struggles to stitch together a headset that looks like a white-framed goggle.
It includes multiple cameras, eye tracking technology, and electronics that work together to simulate scenarios from high-stakes military operations.
“Everything has to be perfect,” says the production specialist. “So many different things can affect others that can affect the final product in such a huge, huge way.”
Mr. Varjo is one of the growing numbers of companies developing Finnish development innovations that allow the military and government to help prepare or respond to conflicts.
The Scandinavian country, with a population of just 5 million, has 368 defense technology companies, according to a survey by Tesi, a state-funded venture capital firm released last September.
About 40% of these are startups and scale-ups, and when the tool is a dual-use technology that can also be used in other industries, it is often increasing at a rate of 30% to 40%.
Helsinki is currently one of Europe’s top five cities for defense, security and resilience investments, according to another report released in February in collaboration with the NATO Innovation Fund, an independent venture capital fund in 2023.
Varjo says the headset is being used to provide 80 simulation programs to the US and European NATO forces.
Simply put, its product is a more advanced version of the virtual reality headset used in games.
However, they combine synthetic artificial content with real environment scenery.
This “mixed reality” experience narrows down the training continuum of fighter pilots, says Timoto Ikkanen, the company’s CEO. “You can do 99% of the same thing [training] Inside the headset. ”
The startup has already attracted significant investments before Russia invades the Ukraine invasion and is beginning to work with medical research companies and automakers.
However, Toikkanen said that, a year after the start of the conflict and the entry into Finland’s NATO, “just put everything on steroids” from a viewpoint of interest in providing its defense.
Since March 2022, the company has raised more than 50 million euros (£42 million, $54 million) in additional funds.
The war in Ukraine put Timo Toykkonen’s defense company “on steroids”
Before the war technology that the military can use, Toikkanen says was once a “type of red flag” for investors concerned about social and environmental responsibility, and that Varjo executives will “toe” that side of the business when seeking funds.
The opposite is the truth now.
“Investors are looking for companies operating in the field of defense technology, but they’re not frowning anymore,” he explains.
After President Trump took office in January, Toykkonen says there has been a renewed interest in products from the European military as a result of rising geopolitical tensions.
“All of a sudden, there’s a new understanding that we need to prepare, and we can’t rely solely on NATO and the US.”
Listen: Business Daily – Finland’s Defense Technology
Other startups that are rapidly expanding Finnish startups in the defense and dual use sector include Iceye, who developed micro-satellite-based imaging and data services in microresolution, and once again orbitals supplying satellite software.
A Google-backed startup, Distance Technologies, creates immersive technology without headsets. In March, they announced a collaboration with Finnish legacy defense company Patria.
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Finland has a long border with Russia
Finland shares about 1,340 km (830 miles) from its border with Russia, and the Finnish government spent most of its budget on defense, even before the war in Ukraine, than many other European countries.
“There’s a phrase I would like to use: “geography tyranny.” The closer you are to a threat, the more likely you will perceive it as more obvious and existential.”
“They also have memories of the Winter War, which was invaded by the Soviet Union during World War II.”
The Finnish obligation to protect their country is set out in the Finland Constitution, and men are forced to serve military service.
Nelson believes the revelation may have encouraged talented citizens to become founders or investors in defence technology rather than other fast-growing industries in Europe, such as renewable energy and financial technology.
At Maria 01, where former hospital became a startup campus in Helsinki, entrepreneur Jeanne Hiterra opens her laptop and scrolls through images of an unmanned airship collecting data over a snowy Arctic forest.
He is Kelluu’s CEO, who originally hoped that the technology would be used by climate researchers, but in 2022 he hoped it would become a surveillance platform aimed at cities, governments and research institutions.
“It was a very specific and personal feeling that something needs to be done due to the security situation,” says Hitera.
He highlights a national survey that suggests that at least 80% of Finland’s population is ready to fight for their country, and emphasizes to Nelson that this “ready to protect” spirit is likely to be fooled by startups and business strategies and drive continued growth in the sector.
Keru
Kelluu’s airships are currently on sale as surveillance platforms
The defence tech company launched in Finland is also supported by the powerful general tech scene in the country.
Many of the country’s high-tech alumni, including Varjo’s Toikkanen, have hone their skills at Nokia, a former global mobile titan with Finnish roots.
After the launch of Apple’s iPhone in the mid-2000s, it was financially challenging, which encouraged a considerable number of former employees to launch and invest in new companies.
Though not as mature as other emerging European hubs like Sweden and the UK, Helsinki has produced several unicorn businesses worth over $1 billion, including ourra, sleep and fitness tracking rings and game developer supercell.
There is also strong state support for the defense technology scene. Last year, Business Finland, a government agency that promotes investment and innovation, launched a new defense and digital resilience programme that directs 110 million euros to support research and development initiatives from small and medium-sized businesses and startups.
“Our current government… they really enforce this kind of public-private collaboration,” says Kirsi Kokko, director of the program. “I think they understand the urgency.”
Despite the rapid growth of defence technology in Finland, the sector faces a variety of local and European-wide challenges.
Heitela, founder of airship technology platform Kelluu, describes things like “cultural clashes” between agile startups and large defense companies and governments that require years of experimentation and prototyping before acquiring new technologies.
“It’s really on the other side of the startup spectrum. This means that DNA is what we fail quickly and quickly, and not all startups will succeed.”
At Business Finland, Kokko says Nordic countries are affected by strong global competition for the software talent needed to grow defense technology and dual-use businesses.
However, while Finland’s compact size and long winter winter may postpone potential adoption, she hopes that the public’s reputation for innovation, flat work classes and low crime levels can attract employees with the right skill set, along with success in the sector so far.
“We need a good story,” says Kokko. “And I think we do.”
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