Supporting entrpreneurs and innovators in Finland Timo Kekkonen Director, Confederation of Finnish...

Supporting entrpreneurs and innovators in Finland

Timo KekkonenDirector, Confederation of Finnish Industries, EK

25.04.2007 Timo Kekkonen

2

Supporting entrepreneurs and innovators …

• Why support ?

• Who supports ?

• Some basic features in Finland

• Financing & venture capital in Finland

• Finnish funding agency for technology and innovation, Tekes– an example


3

Renewing businessstructures

AffluenceRegional vitalityEmploymentEnvironment and

healthSecurity and safetySocial well-being

Investments Results Direct effects Impact onnational economy and society

DM 218475 09-2006 Copyright © Tekes

Innovation is a profitable investment for the future

R&D investments

CompetenceNew knowledgeNew business

modelsNetworkingInnovations:

products and services,methods and processes, organisationalinnovations

Start-ups, newbusiness areasand services

Growth andglobalisationof companies

Productivity


4

New economic growth model – sources of economic growth

DM 36095 and 218475 09-2006 Copyright © Tekes

Labour

Research

Education

Technology

Capital

Know-How

Knowledge

Innovation

Pro

du

cti

vit

y g

row

th

Economic growth

Increase inexports

Improvement in employment

Regionaldevelopment

Growth inwell-being

According to the new growth model, economic growthis rooted in education, research and technology.


5

New technology companies

• New technology companies are important for thenational economy; they

– are quick in adapting new technologies– grow and employ quickly

• Finlands’ strategic goal is to increase the numberof new technology companies and to speed uptheir growth and internationalisation

– industry & service sector

• Early stage financing and business know-how is a considerable problem when establishing new technology companies

– new incentives, tax credits for private capital etc.

DM 9061404-2004 Copyright © Tekes


6

Tekes

Sitra

Key actors of the Finnish innovation environment

Finnish IndustryInvestment Ltd

Business AngelsInvestors

Companies

Research institutes

Universities

Academy of Finland

Science andTechnology Policy

Council

Ministry of Education

Associations

Inventions

Private investmentsin innovation

Technology Centres

Centres of Expertise

Polytechnics

Regional TE-Centres

Regional Councils

Finnvera

FinproEU structural fundsfor innovation

Ministry of Trade and IndustryOther ministries

Investments in different sectorslike environment, health and traffic

National public investment ininnovation and know-how


Key actorsof the Finnishinnovation environment

Key actorsof the Finnishinnovation environment

Invest in Finland

National Board of Patentsand Registrations of Finland


7


Innovation environment in FinlandResources and funding

Pri

vat

e

Basic research Applied research Business R&D

Business developmentMarketingInternationalisation

R&Dat companies

3,880

BusinessAngels

approx. 380*

Pu

blic

Finnvera406 (40)

Universities1,040 (454)*

Academyof Finland219 (219)

Ministries,TE-Centres,

sectorial research312 (221)*

Tekes430 (430)

VTT225 (78)

From abroad169*

Innofin6 (5)

Finpro32 (20)

Venture capitalists:Private 268**

Finnish Industry Investment:direct 13, venture capital funds 42,

seed funding 11Sitra 29


8

Number of new companies and growth companies in Finland

Companiesestablishedca. 20,000

New activecompanies ca. 10,000

Companieslaunching newbusinessca. 6,500

1-5% of new companies are growth companies New growth companiesca. 100-500

Microcompaniesca. 6,100

Time

DM 90614 and 218475 09-2006 Copyright © Tekes


9

Source: Statistics FinlandDM 36100

10-2006 Copyright © Tekes

Innovating companies

Percent

0

10

20

30

40

50

60

70

80

90

100

1-49 50-99 100-249 250-499 500- CompaniesTotal

IndustryTotal

ServicesTotal

Number of employees

2002-2004


10

SMEs participating in innovation cooperation

%

DM 58774, 36054, 36109 and 21847509-2006 Copyright © Tekes

0 5 10 15 20 25

SpainItaly

GreecePortugal

EUGreat Britain

AustriaGermany

FranceNetherlands

BelgiumEstoniaIcelandNorwaySweden

DenmarkFinland

Source: European Innovation Scoreboard 2004


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SMEs' share of corporate R&D

%

DM 36109 and 3605408-2005 Copyright © TekesSource: EU Key Figures 2005 on Science, Technology and Innovation

0 10 20 30 40 50 60 70 80

Japan 2)

Sweden 2)

France 1)

USA 3)

Germany 1)

Great Britain 2)

Austria 5)

EU 25

Hungary 1)

Finland 1)

Netherlands 1)

Portugal 2)

Poland 2)

Spain 1)

Slovakia 1)

Denmark 4)

Ireland 2)

Italy 2)

Estonia 1)

1) 20022) 20013) 20004) 19995) 1998


12

Services sector's share of corporate R&D

Source: EU Key Figures 2005 on Science, Technology and InnovationDM 36109 and 36054


0 10 20 30 40 50 60

Japan 2)

Germany 2)

Sweden 3)

France 2)

Finland 3)

EU 25 2)

Poland 3)

Netherlands 2)

Hungary 3)

Great Britain 2)

Italy 3)

Spain 2)

Ireland 1)

USA 2)

Denmark 3)

Estonia 2)

Portugal 1)

Slovakia 3)

%

1) 20012) 20023) 2003


13

High-expectation entrepreneurship – there is a Finnish interest to act!

0

0,2

0,4

0,6

0,8

1

1,2

1,4

1,6

1,8

USA Iceland World Denmark UK Germany Norw ay EU Sw eden Finland

GEM 20+ activity by region Amount of activity targeting to over 20 jobs

Perc

enta

ge o

f adu

lt-ag

e po

pula

tion

parti

cipat

ing

in h

igh-

expe

ctat

ion

entre

pren

euria

l act

ivity

Source: Erkko Autio, GEM Finland 2005; Artturi Tarjanne


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Some conclusions based on the national ”scene” …

• There is significant innovation potential in SME’s

• SME’s in Finland are active in innovative networks

• The Finnish corporate R&D scene is still dominated by large companies

• The service sector is an excellent growth area for entrpreneurship and innovations

• Finland lacks ”entrpreneurial spirit” – could this be changed by edu


15

Venture capital investments in Finland

Source: Finnish Venture Capital Association.Covers investments made by members of the association.

0

50

100

150

200

250

300

350

400

450

Million euros Number

DM 36104 and 3806503-2006 Copyright © Tekes

0

50

100

150

200

250

300

350

400

450

95 96 97 98 99 00 01 02 03 04 05*0

50

100

150

200

250

300

350

400

450

* Prel


16

0,0 0,1 0,2 0,3 0,4 0,5 0,6 0,7 0,8 0,9 1,0

ItalyPolandGreece

SpainAustria

GermanyIrelandEU 25EU 15

PortugalNetherlands

BelgiumFrance

NorwayGreat BritainSwitzerland

IcelandDenmark

FinlandUSA

Sweden

Source: European Innovation Scoreboard 2004

Venture capital investments in seed and start-upphases

0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0


Average 2002-2003

Per thousand of GDP


17

0,0 0,1 0,2 0,3 0,4 0,5

JapanAustria

SwitzerlandPortugalGermany

IrelandBelgium

FranceNorway

DenmarkSpainEU 15

FinlandNetherlandsGreat Britain

SwedenOECDKorea

CanadaUSA

Iceland

Venture capital investmentsAverage 2000-2003

Source: OECD, Science, Technology and Industry Scoreboard 2005DM 36104 and 36054


Percent of GDP

0.0 0.1 0.2 0.3 0.4 0.5

Expansion phaseEarly phase


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Some conclusions based on the national ”scene” …

• The Venture Capital Market is small and national – the number of companies and the total investments are declining

• Start-up and seed phases are well represented in VC investments

• Early-phase and growth pahese well balanced – but not sufficiently resourced

• Increase required both in early phase and growth phase investments into knowledge-based companies


19

Finnish funding agency for technology and innovation, Tekes – an example


Academyof

Finland

Universities

Ministry ofTrade andIndustry

SitraFinnvera plc

FinproFinnishIndustry

Investment Ltd

PARLIAMENT

GOVERNMENT

VTT

Tekes

Science andTechnology

PolicyCouncil

RegionalTE-Centres

Otherministriesand theirinstitutes

Ministryof

Education


20

Competitiveness,profitability and

growth

New businesses,start-ups

Impact of Tekes activities

Societal and environmental

impacts

Research institutesand universities

Enterprises

Projects and programmesInternational cooperation

Tekes


provides expert servicesand R&D funding

coordinates programmes

Renewal of trade and industry, economic growth, good employment and societal well-being.


21

Risk funding for R&D encourages companies

Tekes’ R&D funding contributes to– starting new R&D projects– speed up the utilisation of project results in business– enhancing and widening cooperation and networking– utilising international cooperation

The risk funding is aimed at – R&D activities in various phases of innovation process– promoting the birth of new companies and

strengthening the growth of starting companies– companies and corporations operating in Finland,

foreign ownership of a company does not prevent funding

Tekes’ R&D funding also contributes to the developmentand well-being of society and to the growth of thenational economy



22

Funding criteria for company R&D projects


Tekes’ experts evaluate the project, the business,resources and the company from a holistic viewpoint

The key issues of the evaluation are– Business activity to be pursued– Technology, innovation, competence

and know-how to be developed– Resources available for the project– Cooperation to be developed and

utilised– Direct affect on social, environmental

and welfare aspects– Impact of Tekes’ funding and expert work

on project implementation


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Funding depends on the project’s degreeof challenge, novelty and time to market


Time to marketincreases

R&D loan or capital loan for R&D

Loan-weighted combined funding

R&D grant orcombined funding

R&D grantInternationaltop level

Product development Research

Demandingnationallevel

Demandinginternationallevel

Nationaltop level

Degree of challengeand novelty increases

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