This is a short document about the Startup Ecosystem in Finland.

1. Let’s learn from Finland
How to Create a Startup Ecosystem
Done by Abdullah Alshalabi
Date: 30/8/2012
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2. Finland
A brief about Finland
 Finland is ranked no. 21 in terms of GDP per capita higher than UK, France and Japan
 Finland is considered one of the most active countries in terms technology and innovation.
Regardless of it’s small population, Finland is the home of Nokia and some other successful
companies such as MySQL, Linux and Rovio (the famous game maker of Angry Birds)
 Finland have one of the best education systems in the world
 Finland entrepreneurship scene is fairly active and consists many organizations and
companies supported by a mix of public and private entities. The main drivers of the startup
eco-system are shown below:
Government Funding Venture Capital Universities Startup Accelerators
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3. Finland – Government Organizations
Established: Established: Established:
1983 1999 1967
Annual Budget: Annual Budget: Annual Budget:
Around EU500M More than EU500M More than EU500M
Team: Team: Team:
7 board members 11 board members Undisclosed
400 employees Undisclosed no. of employees Goal:
Regions: Goal: We are forward thinking and anticipate
Finland, Beijing, Silicon Valley, Tokyo Finnvera strengthens the operating potential social change and its effect on people. Our
and Brussels and competitiveness of Finnish enterprises activities promote new operating models
Goal: Program description: and stimulate business that aims at
Tekes works with the top innovative Offering loans, domestic guarantees, venture sustainable well-being.
companies and research units in capital investments, export credit guarantees Program description:
Finland. Every year, Tekes finances and other services associated with the financing Invests in Venture Capital funds locally and
some 1,500 business research and of exports. globally. Currently invested in more than 40
development projects, and almost 600 Results: VC funds, mostly to help Finnish startups to
public research projects at Domestic Financing € 3.0 billion grow and expand globally.
universities, research institutes and Export Financing € 10,4 billion Results:
polytechnics. Sitra is the oldest organization in Finland
Program description: that was established to boost innovation
Tekes offers businesses a low-interest and entrepreneurship. Its investments and
loan or a grant, depending on the activities through the last 40 years are
distance to the market and on the enormous and is spread into many other
nature of the proposed project. sub-organizations. The organization
Results: currently reports directly to the Finnish
In 2011 Tekes made funding decisions parliament.
regarding 1,928 projects, which resulted
www.tekes.fi
in total investment of 610 million euros www.finnvera.fi www.sitra.fi
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4. Finland – Incubators
Established: Established:
2005 2009 Established:
Goal: Goal: 2010
Seeking opportunities from Finland has many promising start-ups with lots of Goal:
discontinuities in the way we use potential. Yet very few of them ever reach We push the selected startups develop to
natural resources. international scale. We want to change that. a stage where they’re ready to take over
Benefits of the program: Benefits of the program: the international markets.
Creating success stories by combining Helps entrepreneurs realize their dreams by Benefits of the program:
capital, technology & sector know-how making seed investments and participating in the Incubation, coaching and hopefully
and access to key players in the operational running of the company – whether funding
cleantech sector, globally strategy and customer development, go-to- Funding:
Project Funding: market execution or globalization. They help startups to secure funding after
1-2 Million Euros Project Funding: the program. They only provide 1,500
Program duration: Depends on project Euros during the program
No specific duration 50K-750K Euros Program duration:
Requirements: Program duration: 6 weeks
Providing capital and support for None Requirements:
ventures with significant global Requirements: Startups should be from Northern Europe,
potential. We look for entrepreneurs An idea with potential to disrupt existing Baltics or Russia
with the ability and will to build a global businesses Results:
success story. Target market is big and growing 70 startups benefited from the progrma
Results: Studied the customer’s needs really well Team:
Invested in 9 companies working in the Results: 5 full-time employees
cleantech industry Investment in 16 companies 20 coaches
Team: Team:
3 employees 4 executive employees
www.cleaninvest.com www. gorillaventures.fi ww.newentures.com
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5. Finland – Aalto University Ecosystem
Startup Sauna is an incubator funded by Aalto university and takes Aalto Venture Garage as its base.
Startup Sauna serves as the main incubator of Aalto students, however teams and startups are not
restricted to be from Aalto university neither are supposed to be from Finland.
Aalto Entrepreneurship
Society gathers the most
Startup Sauna talented students and
(Incubator) researchers to create more
startups and build international
Aalto Aalto Center for connections in and around Aalto
University in Helsinki, Finland.
University Entrepreneurship
Aaltoes organizes lots of events
Aalto and gathers every week. The
Entrepreneurship main two programs are the 10
Society weeks Summer of Startups
(Students society) program and the international
exchange programs
Aalto Center for Entrepreneurship (ACE) offers innovation, commercialization, and start-up services for Aalto
University researchers, students and other stakeholders. The center serves as a bridge between the academic and real
life entrepreneurship scene. The main goal of the center is to push graduate students to become entrepreneurs.
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6. Finland’s analysis
What can we learn from Finland’s experience?
The Finnish government realized that they failed to build a first class startup ecosystem because
they realized that even after more than 20 years of government support for innovation and
startups, they failed to produce not even one successful global company.
Below are some of the major reason of Finland’s failure:
- Public direct funding: The government tracked it’s performance by measuring the number of
companies funded every year. But, it’s not about quantity, it’s about quality. The government
gave money like crazy, most companies created are lifestyle companies that don’t become large
companies at the end and don’t actually create any jobs. Its nice to give everyone a chance, but
that wasn’t what the whole system was built for
- Risk aversion: Risk aversion attitude lead to accepting businesses that have a high possibility to
survive, but that doesn’t have high potential to become large companies that change the world.
Lack of international skills: Lack of global business competence and serial entrepreneurs.
Talented people only work in big companies.
- No viable VC industry: Lack of real venture capital activity. Most of the activity is derived by
public funding.
- Lack of business competences: Lack of business competence that help companies to grow
globally and attract global investors and international talent.
- Finland didn’t consider the globally existing systems to learn from their experiences
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7. Finland’s analysis
Suggested solutions for Finland’s situation (by Steve Blank 2011 and VICTA 2007)
- Indirect funding: The government should stop funding startups directly and should instead fund global
incubators and VC’s that can then start funding Finnish startups based on commercial and market driven
criteria's.
- Remove lifestyle companies from the equation: Lifestyle companies are not growth companies, they
will not create jobs or add value to the society. This type of companies should be removed or separated from
the startup ecosystem. These companies are sucking resources (time and money) and distracting the
government performance measurement indicators.
- Attract global talents: Transform the Finnish early-stage startup ecosystem to support the infusion of
talent from the leading global talent. Laws, regulations and tax incentives should all be fixed to support this
goal.
- Fix government strategy: The government should shift it’s strategy from just helping Finnish people to
start their own business to supporting startups that have the capability to generate a multi-million business.
The vision should be driven to: generate more jobs, attract foreign investments, create global successful
companies and attract international talents.
- Fix culture and attitude challenges: The government should have a plan for a campaign to change the
anti entrepreneurial culture. Challenges such as “Money takes care of problems”, Risk vs Reward and Failure
vs Success, this mentality should be changed through educating the young generation and through some
awareness campaigns.
- Fix incubators structure: Currently most incubators are owned by the government. Incubators should
optimally be owned by 4 shareholders: a local VC, a global VC, the government and a local university. Also
the manager of the incubator should be either a serial entrepreneur or from a VC background. The incubator
manager should also have direct or indirect share in the companies being accepted in the program.
Moreover, the incubator should not accept more than 20 companies per year.
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