Venture Capital Market in Finland
Finland
Finland is turning to venture capital financing as it searches for ways to jolt the economy out of a recession without jeopardizing its AAA rating. While Finland has weathered the crisis better than southern Europe, its economy contracted for a second time in four years in 2012, stretching government finances as the nation faces a fifth consecutive year of budget deficits. Finland has some success stories but they are overshadowed by the less colorful stories of “the ones that got away”. Venture capitalist experts, like Efraim Landa, measure the success of an investment on its “exit” That is the only relevant measure of success for VC’s. Exit strategies are exactly where Finland has dropped the ball. Unfortunately, this problem has pushed funding away. In the past, there have been a number of small but profitable exits (by international standards) that have given venture capitalists a good pay back but there have not been any block buster deals in the last few years. There has only been 1 significant VC investment since 2009.
Venture Capital Infusion
Funding sources for startups come from various sources and they are all welcome sights for those seeking funds. It’s a combination of private, government and venture capital that facilitate the best chance for a startup to reach success. Venture capital is the most influential part of the funding equation. VC’s are focused on one goal….and that is getting a large ROI (Return on Investment). To get the big payday, venture capitalists enter into a market that is definitely not risk adverse and therefore want “hands on” capabilities. Entrepreneurs and startups must juggle the fine line of financing and development to keep the lights on. With an ambitious and dedicated approach, it’s possible.
Perceived Value of the Venture Capitalist
Venture capitalists in Finnish biotechnology companies were found to be rather active hands-on investors, especially in terms of frequent contacts with others outside of their investment. The VCs provide value-added indirectly through screening and signaling and directly through monitoring and providing non-financial support in variety of business areas. For example, in strategic planning and in obtaining additional financing.
The VCs in Finland were found to being more involved than just being vested with the board of directors. Finland’s VC’s were found rather often to be in contact with their investee companies outside the board meetings. The perceived value-added component of a venture capitalist was found to be greater when the relationship between the CEO and the lead VC was close and there were no tensions inside the investee company resulting from the involvement of VC.
The Future
Finland has spent a great deal of time and effort in building a favorable ecosystem and operating environment for start-ups and young innovative growth companies. Investments in technology, innovation as well as in research and development are among the highest in the world. Another important contributor is the education system, which has been evaluated as one of the most advanced in the world. It provides Finnish technology companies with high quality engineers, designers and business developers to build successful growth businesses. Also the beneficial socio-economic environment in Finland together with stable social order provides entrepreneurs with favorable circumstances to grow their businesses. The Finnish government has taken steps to promote growth to support innovative and technological advancements. This has attracted international venture capitalists to Finland during the last three years and there have been a number of investments in Finnish technology firms. Finland’s own venture capital industry is also well established and the venture capital market there is currently ranked as one of the most active ones in Northern Europe
Venture Capital Infusion
Funding sources for startups come from various sources and they are all welcome sights for those seeking funds. It’s a combination of private, government and venture capital that facilitate the best chance for a startup to reach success. Venture capital is the most influential part of the funding equation. VC’s are focused on one goal….and that is getting a large ROI (Return on Investment). To get the big payday, venture capitalists enter into a market that is definitely not risk adverse and therefore want “hands on” capabilities. Entrepreneurs and startups must juggle the fine line of financing and development to keep the lights on. With an ambitious and dedicated approach, it’s possible.
Perceived Value of the Venture Capitalist
Venture capitalists in Finnish biotechnology companies were found to be rather active hands-on investors, especially in terms of frequent contacts with others outside of their investment. The VCs provide value-added indirectly through screening and signaling and directly through monitoring and providing non-financial support in variety of business areas. For example, in strategic planning and in obtaining additional financing.
The VCs in Finland were found to being more involved than just being vested with the board of directors. Finland’s VC’s were found rather often to be in contact with their investee companies outside the board meetings. The perceived value-added component of a venture capitalist was found to be greater when the relationship between the CEO and the lead VC was close and there were no tensions inside the investee company resulting from the involvement of VC.
The Future
Finland has spent a great deal of time and effort in building a favorable ecosystem and operating environment for start-ups and young innovative growth companies. Investments in technology, innovation as well as in research and development are among the highest in the world. Another important contributor is the education system, which has been evaluated as one of the most advanced in the world. It provides Finnish technology companies with high quality engineers, designers and business developers to build successful growth businesses. Also the beneficial socio-economic environment in Finland together with stable social order provides entrepreneurs with favorable circumstances to grow their businesses. The Finnish government has taken steps to promote growth to support innovative and technological advancements. This has attracted international venture capitalists to Finland during the last three years and there have been a number of investments in Finnish technology firms. Finland’s own venture capital industry is also well established and the venture capital market there is currently ranked as one of the most active ones in Northern Europe