Growth Companies Accounted For Half Of Employment Effect In Finland Between 2006-2009
As our partnership with Nexit Ventures is coming to an end, so are the items we'll be covering. In the second last item we're covering - we'll focus on the importance of startups in an ecosystem, such as Finland in this case with recently published data. The importance of growth companies to an ecosystem is mostly known by the entrepreneurs running these companies. They see the potential that so many others fail to see. The data in this post should strike as interesting to many, to say the least.
First of all, if we look at the growth company ecosystem in Finland - we can see that there are 6 attributes that define them best:
- Younger - over half of the companies are less than 10 years old and less than one tenth is over 25 years old.
- Smaller - close to 60% of growth companies are usually less than 20 employees strong.
- ICT intensive - the concentration of growth companies is the highest in the ICT sector.
- Knowledge intensive - employees usually are very highly educated educated.
- Targets of venture capital - growth companies have received venture capital financing more often than their colleagues.
On the downside, there are very few growth companies in Finland. Between 2006 and 2009 of all the companies, only 5% were growth companies. However, despite their few numbers - they are extremely important to an economy.
On average, each of the 691 growth companies in Finland grew by 74 people on average during the three years. Together, these 691 companies generated over 51 000 new jobs. This is almost half of the new jobs created in Finland during this time period.
Stop to think for a moment. A mere 691 companies, that aren't really enjoying the spotlight of the national politics generated nearly half of the new jobs in the country.
In 2009 Finland's "technology and innovation politics" division received some 643 million euros in financing from the government. In the same year 671 million euros was invested into other forms of "labour politics" by the government. I'd be almost certain that the 671 million euros were unable to create one fifth of the real, market oriented jobs, the 643 million euros was able to create through technology and innovation politics.
So how does Finland compare to other countries, for example Norway and Israel in terms of growth ambitions? There are double in Norway and triple in Israel, the amount of companies that intend to employ at least 20 people in 5 years time in comparison to Finland. Therefore, the level of ambition among companies is dramatically lower in Finland compared to Norway and Israel.
Statistics like these should cast the message we, the supporters of growth companies have been shouting for years - they're an extremely important part of the economy and through that, the source of welfare in many ways.
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This post is part of a series of posts supported by Nexit Ventures.
Nexit Ventures is a mobile venture capital firm focused on wireless technologies and services. Leveraging its extensive network in the global mobile marketplace, Nexit invests primarily in Nordic and US-based earlystage companies with products and services for a global market. For Nordic mobile companies, Nexit provides a bridge to Silicon Valley markets and exit opportunities.
"Together, these 691 companies generated over 51 000 new jobs. This is almost half of the new jobs created in Finland during this time period."
Where did those people came from? From other companies?
http://mikkoketokivi.blogspot.com/2011/06/yrityksen-kasvu-ei-luo-tyopaikkoja.html
Yet this figure is over 90% in the US. There's a lot more to be done.
Lauri: Suomessa yli puolet työvoimasta on töissä valtiolla. Tämän lisäksi suuret pörssiyritykset siirtävät nettona toimintaansa jatkuvasti kehittyviin maihin. Siinä osittain vastaus kysymykseen, mistä nämä työntekijät tulevat. Toisaalta kasvuyrityksen ainoa kansantaloudellinen vaikutus ei ole työllisyys, vaan esim. BKT-osuus ja vienti ulkomaille ovat huomattavasti tärkeämmässä roolissa.
Mutta ilman uusia, kasvavia yrityksiä, valtion osuuden korkeakoulutetuista työntekijöistä voitaisiin olettaa kasvavan pitkällä aikavälillä, samoin ulkomaille siirtyvien ja työttömien osuuksien.
Pitäisi olla tutkittua tietoa asiasta. Ilman sellaista on pakko olettaa, että start-upseita ei ole mitään työllisyyshyötyjä, mikä sinänsä tietenkin on sekundääristä.
Voidaan hihasta heittää, että start-up saa työntekijänsä toisista alan firmoista. Ja tuosta taas seuraa, että palkat pyrkivät nousemaan kun kilpaillaan parhaista työntekijöistä.
Dystopia olisi siis, että start-upit eivät lisää työllisyyttä, vaan nostavat alan palkkoja ja heikentävät siis alan kilpailukykyä.
Olennainen kysymys on, missä määrin start-upeilla on todella uusia avauksia merkittävät uuden bisneksen suuntaan. Tutkittua tietoa tästä?
Guys, please keep the conversation in English.
Regarding the blog post Lauri linked at the top. The author itself writes hypothetically that "as these employees have higher degrees in education, they're most likely recruited from other companies". That itself is not backed up with any data - therefore making the counter statement equally questionable as my initial claim.
However, the good thing I see in this whole equation is that these companies were able to create market oriented jobs that are greatly supported by the markets (of course each company will enjoy some form of governmental support - if you want, you can take this claim down to the fact that the society pays for people's education and thus each employee is bringing advantage to the company paid with tax money).
Right Antti. But your title also should have a question mark.
There just might be just the blockhead's quilt effect (hölmöläisen peitto).
Lauri highlighted an important issue by linking Mikko Ketokivi's blog. In a number of ways, I agree with Ketokivi's ideas. It is important to understand how companies grow in order to determine their net effect on employment.
At the same time however, Antti's insight from the TEM-study is perfectly valid. The overall increase in employment is counted in gross employment, not net employment. Therefore benchmarking that data against the gross employment effect of startups is perfectly valid.
As Ketokivi states, it would be better to measure net employment to have a better understanding of whether or not jobs were actually created or not. But that same would go for the economy as a whole, not just start-ups.
One interesting aspect about the TEM-study, if you happened to notice was the claim that growth companies are "less international" than others, based on the % of companies conducting export. Great to see such a wide understanding of the word international from TEM.