Finland offers various defence technologies that interest the US. There's a growing demand especially for non-traditional defence tech like connectivity, future G (5/6 G), quantum tech, AI, autonomous systems, and microelectronics. We interviewed Martti Wallin, the Industrial Counselor at the Embassy of Finland in USA, about what companies should know about the US defence market.
Entering the gigantic US defence market and finding the right stakeholders may seem daunting for any company – let alone for small tech startups. With approximately 100,000 companies crowding the market and about 3,2 million people working for the US Department of Defense (DOD) alone, is it realistic for Finnish companies to harbour hopes of making it in the USA?
We have good news for you. Firstly, it may not be as complicated as you think. And secondly, Finnish deep tech companies excel in many of the key technology areas in demand in the US defence market. We talked to Martti Wallin, the Industrial Counselor at the Embassy of Finland in the USA, who helps companies with the defence market requirements and provides advice and training, about what companies should know about the US defence market.
Finland's non-traditional defence tech offering is a match for the US
Finland is a world-class player in many key technologies that are in demand in the US defence market. In addition to traditional solutions, there is an ever-growing need for non-traditional defence technologies such as connectivity, future G (5/6 G), quantum tech, AI, autonomous systems, and microelectronics.
"More and more critical capabilities are coming from civilian technologies that enhance the effectiveness of weapon systems. Finland has great unused potential in many of our major industries that could contribute to defence capabilities in the United States," Wallin says.
The aforementioned fields are all included in the White House's list of 18 critical technologies for national security while the US government, particularly the DOD, is doing a tremendous amount of outreach to non-traditional defence players and investing heavily in the best civilian technologies.
Finnish deep tech companies therefore have plenty to offer the US defence market. However, the biggest obstacle is how the companies can sustain a continued presence there.
Your company needs to be there
To be successful in the US defence market, companies need a strong presence, typically achieved through a local representative or distributor. Therefore, companies must invest in footwork and networking and understand the market's needs. Companies should carefully choose where to be in the market rather than trying to reach it from afar.
"The most important question is who will do the footwork. Who talks to customers and finds the right ones for your offering? Sending someone to the USA a few times a year is not commitment. It's seen as harassment," Wallin says.
Wallin also points out that the USA is not an export market but a collaborative market. This means that the US defence customers won't come to you, but you must go to them. In addition to establishing a presence, your company needs to build a collaborative network before you can become a long-term supplier to the defence end-user (i.e. the military) or the prime contractors.
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Who are the potential US defence customers?
It's stating the obvious that there's no shortage of potential buyers of innovative defence solutions in the US. But who actually are they? And how can companies do business with them?
Let's start with the military. Wallin says that Finnish companies can, of course, collaborate directly with the US military. It just depends on what you're doing. For example, foreign companies aren't accepted for strategic nuclear weapons programs, but they may be good to go in many other fields. However, when collaborating with the military, it's paramount that companies comply with defence regulations and understand the unique requirements of the marketplace.
How about the private sector, then? First of all, it's important to understand that when dealing with the private sector, the end user is a defence customer. This means that many of the requirements from the end user flow down from the prime contractor to the subcontractors. Therefore, you must meet the exact requirements and regulations as if selling directly to the military. However, if you're selling a commercial, off-the-shelf product, then it's much easier to sell because you don't require collaboration with the end user.
What about the location? It's good to keep in mind that the USA is a confederation of states and not a single, unified market. Each state may offer different opportunities and even have its own funding sources available to innovative companies. For example, in 2023, the State of Texas announced a $1.4 billion investment in the CHIPS Act, making Texas potentially an interesting place for semiconductor companies.
Access to innovation ecosystems is another thing that may separate the 50 states from one another. Innovation ecosystems are entities that play a crucial role in fostering growth and development in a given field. For instance, the DOD has 294 innovation organisations building new defence capabilities. Well-known examples include Defensewerx, an accelerator located in the Florida Panhandle near Eglin Air Force Base, and DARPA, an R&D agency of the DOD, that focuses on radical, disruptive innovations. Through ecosystem membership, innovative companies can, for example, apply for grants, participate in events, and do networking.
"What is extremely important to understand is that the traditional buyer-seller relationship is just one way to interact with end users. If your product is competitive and state-of-the-art in a narrow field, you may find interested parties in the innovation ecosystems. This can be a critical path, even if your product doesn't directly benefit the end user," Wallin says.
In other words, innovation ecosystems can help non-traditional defence companies reach the end customer by, for example, making the military aware of your product's potential and pressuring prime contractors or system integrators to adopt it.
The Trump administration may offer new opportunities for disruptive companies
Many people may be wondering how the Trump administration will affect the opportunities available for non-American companies. While it's hard to predict the specific effects, Wallin is certain that some things will remain consistent in the US defence market.
"The US is systematically building its military capabilities and needs non-traditional defence players and technologies from its allies and partners. This hasn't changed and isn't dependent on the president."
The disruptive approach of the current administration may even offer new opportunities for "newcomers" like Finland.
"It's in our interest to benefit from this disruption when things are rethought. So, this is a great opportunity if you have a competitive offering and people willing to do the footwork," Wallin concludes.
