Männistö And Tikka Spark Conversation On Finnish Startup Ecosystem
Lasse Männistö and Taneli Tikka came out yesterday with a three point suggestion to renew the governmental work regarding startups and growth companies. The timing is intentional and perfect, later tonight Aalto Entrepreneurship Society will host a panel discussion with some of the most renown business men and women Finland has. Taneli Tikka is one of the more acknowledged Finnish serial entrepreneurs and Lasse Männistö, a member of the Helsinki City Council, is a candidate running for Finnish Parliament.
The recommendations can be read on Lasse Männistö's website, for example, but we'll summarise the points and other discussion it has sparked. Like we've written before, Finland will see its parliamentary elections in April and many startup entrepreneurs would like to see the topic included among the other important discussion items. Many, rightly so, believe focus on startups is one of the key ways to improve the economy in the long term.
The three points Männistö and Tikka argue are: 1) the current innovation and r&d-financing must shift from direct financial support to tax incentives, 2) policies and investments from the government have to become market driven and 3) the whole infrastructure around support for startups must undergo a large reform to become more simple and straight forward. The points immediately sparked off discussion in Facebook and blogs covering the recommendations.
While this may seem very Finland-centric, we believe this is an interesting and critical issue to be covered and shared from a political view point as well. It will be interesting to see over the coming weeks how MP candidates touch on this during the run up to the elections. Essentially, it's a light weight analysis to how well all the efforts by entrepreneurs and others are able to influence future decision making.
Serial entrepreneur and investor, Petteri Koponen also added his viewpoints to the issue in his blog. He was mostly in support of the points Männistö and Tikka raised, but also stated that most of the people commenting the issue are missing the core of the question; we need to found and fund more startups. According to Koponen, this is the key to creating a truly working startup culture.
The major shift I'd personally like to see on a governmental level in Finland would be the acknowledgement of startups and growth companies as an important economical driver for the future. This would in turn differentiate them from the rest of the companies and entrepreneurs, enabling them to be viewed and legislated differently.
The whole ecosystem must become simpler and more market driven. The duty of the government is to create an infrastructure that supports market driven activities to help grow and create more startups - nothing more. This means that bureaucracy must be cut down dramatically and most, if not all, government financial support to startups should be decided by private investors (their investments should be multiplied by the government). And finally, let's not try to limit the use of the money for the entrepreneur. They know best how to use the money.
Tax incentives are also needed, but mostly they might be more useful for the private investors investing in startups. Again, the government must create a certain environment where it motivates private people to invest into companies.
Universities and the whole education system is in key role as well. However, it's going to be tough ship to turn around, like Petteri Koponen states in his blog post. Acknowledgement and respect towards startups must be increased at all levels of the government.
The task is not simple. There are numerous methods to go about this. Then again, it's far from being impossible. Finland is agile and small, meaning it should be able to dramatically improve the chances of startups succeeding from a governmental view point relatively quickly. The most important thing is to vote those candidates to the Finnish parliament who have the motivation and will to actually do something about the issue.
Otherwise, we'll be in the same situation in four years time before the next elections and all we would have achieved is a great amount of discussion without any concrete results.
This is a great start for the discussion. Thanks Taneli and Lasse!
A question:
I am sure that the government can speed up us all building a vivid start-up ecosystem in Finland, and play a key role in it, but can someone name a startup company who (a) is or has been successful and (b) in whose development these subsidies have had a pivotal role.
I have few examples the other way around.
(Taneli here);
Yeah that's a fair point. I do have at least one example, perhaps more than one. However stating them publicly is another thing all together; would any company admit such a thing? =)
In general I can say that one of the success stories of Tekes in my view is the games industry in general: Lots of support for gaming companies and various actions to boost them. Perhaps the role of the support hasn't been pivotal; but at least they have been able to identify an actual area that has become successful. That's more than usual if you look at the broad spectrum of support given out =)
Timo, that's a great point.
However, it's a bit like stating that "will a rise in interest rates stop you from buying an apartment?" Not many would say yes, but they always affect on a macro economical level.
Not the best comparison, but hopefully you get the point :)
What I'm trying to say is that while these don't seem to affect startups on an individual level, changing legislation in support of startups will have effects on a larger scale. This in turn will help us create more startups and fund them (if indeed the changes are done the right way).
Antti -
You are totally on the ball here, and I agree with you. What I am hesitant to say is that these subsidies - no matter how they will be organized - will "save us" (don't remember who said that in this lively discussion). There is a lot that government can do for a better environment for start-ups.
What Finland seriously needs to grow is new talent and money from elsewhere - the first one is the largest gap we have, and the latter one is needed for our nationalistic growth goals for the politicians - meaning money that is imported into the Finnish system, not re-allocated from someplace else from the system.
Before we have masses of our own experienced VCs and entrepreneurs, to fasten the development, we need to bring those capabilities from elsewhere. The very good thing is that we are on the way of having our own: for the first time we now start to have real serial entrepreneurs with international stamina in this country.
Anything that the government can do to attract new people, new money and new talent to take the Finnish system forward is good.
(I know this only is again a partial solution for this multi-dimensional problem. But it is good that we are talking.)
From my own experience I can say that running after government subsidies can really ruin your focus. I'm not sure it's a good start in any position to think that you 'deserve' free money, which is an attitude I have heard a lot.
I've done this mistake twice.
I went to see a tekes/tuli representative at our university, but it didn't move forward at all, my focus was too specific for him. So I went on wondering how to get some money to hire a developer.
Actually, I should just have sat down and developed it myself. Or got someone I knew to make a real investment, or made more effort to find a team, or change my idea to something that it was easier to find a team for. I kept seeing the money as a "threshold" and it kept me from seeing other possibilities.
The other time I actually got some money. However, I should have been focusing on making the company fundable by real investors or figuring out what exactly could be sold. I spent a lot of time filling out forms and creating business plans like a school exercise, while my co-founder, a developer, was developing towards his "vision". Because we could get free money, we had the freedom of having a completely utopian vision without really knowing what it would take to sell it. Money would still be coming in. The vision sounded great for a non-developer and it was an "easy sell" to most business people.
I'm not sure other people have to learn as much as me, but I think these are quite easy traps to fall into. It's just more comfortable to fill in forms and drink coffee than to go and pitch to a real investor or cold call a client.
Starting your company is so hard that if you can't find a team in the first place, you can't get it to a "fundable" state, and you can't sell it, maybe you just have to work harder, not get free money.
The government already funds research in universities, and that's probably the right place for those funds. We might need more investors to commercialize that though. But I don't think the right thing to do is to make the inventor create a company and give him a bunch of cash.
My personal opinion is that we need are more people creating serious startups and government funding to companies is not an important part of that puzzle. It's more about role models and places like the Aalto Venture Garage and events like this one (900 students, that's at least 300 teams...)
Aaltoes really has come far from its start! Amazing event! Congratulations!