Finland – Low spirits undermine high potential?

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Tomi Riihiranta

Middle Office Manager

The headline is an international expert’s first impression of Finland. I found it in the presentation material published by Tekes in September 2016; the material brings out key observations from the study Growth factors and bottlenecks for business start-ups. The study compared the situation of Finnish start-ups to several comparable countries. It discovered that, despite the technological talent characteristic to Finland, factors related to the culture and attitudes continue to put significant limitations on growth entrepreneurship compared to other countries. They are:

– Fear of entrepreneurial failure
– Ability to tolerate uncertainty related to entrepreneurship
– Challenges in recognizing market opportunities
– Company management has no real desire to grow
– Lack of enthusiasm and passion

Fortunately, significant strides have been made in the start-up culture over the past decade or so, driven in part by young and open-minded students, the examples of success-achieving entrepreneurs and angel investors, and the major shifts encountered by the Finnish technology sector. This has led to an increasing number of growth companies becoming venture capital-worthy also in the international arena. According to the research company PitchBook, a record-number (17) of equity-based venture funding rounds in excess of 5 million euros were raised for Finnish-originated growth companies in 2016. International investors took part in virtually all of these larger funding rounds, clearly an indication of their confidence in the potential of the Finnish companies. Ideally, in addition to that international investors bring funding, networks and expertise to the entrepreneur team, they also bring mental support from a culturally more diverse perspective.

Could this kind of purposeful international cross-pollination work also for Finnish SMEs on a broader scale – beyond just the VC investing frame of reference? For example, active recruiting efforts to find international key individuals for positions ranging from experts to board members could bring the impetus to accelerate changes to drive the thinking, attitudes and emotional levels of Finnish organizations towards a more positive and opportunity-perceptive direction.

Respectively, should those entrepreneur teams seeking added strength for the growth and risk-taking ability of their companies through collaboration with investors be more emotionally invested in the selection of partners? Finnish entrepreneurs could increase the positive image-related thinking alongside traditional rational analysis when assessing suitable funding solutions – taking into consideration the individual and brand level chemistry of the VC/PE investors in terms of the future of their companies. The relationship between entrepreneurs and investors, whether business angels or institutional investor teams, typically lasts 4-8 years. The company’s operative development through growth and profitability almost always has more impact on the overall success of this relationship than the content of the agreement terms of the first stage of investment.

I wish success for all entrepreneurs – Dare to Dream!