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

2. 25.04.2007Timo 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. 25.04.2007Timo Kekkonen 3 Renewing business structures Affluence Regional vitality Employment Environment and health Security and safety Social well-being InvestmentsResultsDirect effectsImpact on national economy and society DM 218475 09-2006 Copyright © Tekes Innovation is a profitable investment for the future R&D investments Competence New knowledge New business models Networking Innovations: products and services, methods and processes, organisational innovations Start-ups, new business areas and services Growth and globalisation of companies Productivity

4. 25.04.2007Timo Kekkonen 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 Productivity growth Economic growth Increase in exports Improvement in employment Regional development Growth in well-being According to the new growth model, economic growth is rooted in education, research and technology.

5. 25.04.2007Timo Kekkonen 5 New technology companies New technology companies are important for the national economy; they –are quick in adapting new technologies –grow and employ quickly Finlands’ strategic goal is to increase the number of new technology companies and to speed up their 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 90614 04-2004 Copyright © Tekes

6. 25.04.2007Timo Kekkonen 6 Tekes Sitra Key actors of the Finnish innovation environment Finnish Industry Investment Ltd Business Angels Investors Companies Research institutes Universities Academy of Finland Science and Technology Policy Council Ministry of Education Associations Inventions Private investments in innovation Technology Centres Centres of Expertise Polytechnics Regional TE-Centres Regional Councils Finnvera Finpro EU structural funds for innovation Ministry of Trade and IndustryOther ministries Investments in different sectors like environment, health and traffic National public investment in innovation and know-how DM 36100 01-2006 Copyright © Tekes Key actors of the Finnish innovation environment Invest in Finland National Board of Patents and Registrations of Finland

7. 25.04.2007Timo Kekkonen 7 DM 36100 12-2006 Copyright © Tekes Innovation environment in Finland Resources and funding Private Basic researchApplied researchBusiness R&D Business development Marketing Internationalisation R&D at companies 3,880 Business Angels approx. 380* Public Finnvera 406 (40) Universities 1,040 (454)* Academy of Finland 219 (219) Ministries, TE-Centres, sectorial research 312 (221)* Tekes 430 (430) VTT 225 (78) From abroad 169* Innofin 6 (5) Finpro 32 (20) Venture capitalists: Private 268** Finnish Industry Investment: direct 13, venture capital funds 42, seed funding 11 Sitra 29

8. 25.04.2007Timo Kekkonen 8 Number of new companies and growth companies in Finland Companies established ca. 20,000 New active companies ca. 10,000 Companies launching new business ca. 6,500 1-5% of new companies are growth companiesNew growth companies ca. 100-500 Micro companies ca. 6,100 Time DM 90614 and 218475 09-2006 Copyright © Tekes

9. 25.04.2007Timo Kekkonen 9 Source: Statistics Finland DM 36100 10-2006 Copyright © Tekes Innovating companies Percent Number of employees 2002-2004

10. 25.04.2007Timo Kekkonen 10 SMEs participating in innovation cooperation % DM 58774, 36054, 36109 and 218475 09-2006 Copyright © Tekes Source: European Innovation Scoreboard 2004

11. 25.04.2007Timo Kekkonen 11 SMEs' share of corporate R&D % DM 36109 and 36054 08-2005 Copyright © Tekes Source: EU Key Figures 2005 on Science, Technology and Innovation 1)2002 2)2001 3)2000 4)1999 5)1998

12. 25.04.2007Timo Kekkonen 12 Services sector's share of corporate R&D Source: EU Key Figures 2005 on Science, Technology and Innovation DM 36109 and 36054 03-2006 Copyright © Tekes % 1)2001 2)2002 3)2003

13. 25.04.2007Timo Kekkonen 13 High-expectation entrepreneurship – there is a Finnish interest to act! GEM 20+ activity by region Amount of activity targeting to over 20 jobs Percentage of adult-age population participatingin high-expectation entrepreneurial activity Source: Erkko Autio, GEM Finland 2005; Artturi Tarjanne

14. 25.04.2007Timo Kekkonen 14 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. 25.04.2007Timo Kekkonen 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 38065 03-2006 Copyright © Tekes 0 50 100 150 200 250 300 350 400 450 * Prel

16. 25.04.2007Timo Kekkonen 16 Source: European Innovation Scoreboard 2004 Venture capital investments in seed and start-up phases 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 DM 36104 and 36054 03-2005 Copyright © Tekes Average 2002-2003 Per thousand of GDP

17. 25.04.2007Timo Kekkonen 17 Venture capital investments Average 2000-2003 Source: OECD, Science, Technology and Industry Scoreboard 2005 DM 36104 and 36054 03-2006 Copyright © Tekes Percent of GDP 0.0 0.1 0.2 0.3 0.4 0.5 Expansion phaseEarly phase

18. 25.04.2007Timo Kekkonen 18 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. 25.04.2007Timo Kekkonen 19 Finnish funding agency for technology and innovation, Tekes – an example DM 36100 01-2006 Copyright © Tekes Academy of Finland Universities Ministry of Trade and Industry Sitra Finnvera plc Finpro Finnish Industry Investment Ltd PARLIAMENT GOVERNMENT VTT Tekes Science and Technology Policy Council Regional TE-Centres Other ministries and their institutes Ministry of Education

20. 25.04.2007Timo Kekkonen 20 Competitiveness, profitability and growth New businesses, start-ups Impact of Tekes activities Societal and environmental impacts Research institutes and universities Enterprises Projects and programmes International cooperation Tekes DM 35890 11-2006 Copyright © Tekes provides expert services and R&D funding coordinates programmes Renewal of trade and industry, economic growth, good employment and societal well-being.

21. 25.04.2007Timo Kekkonen 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 development and well-being of society and to the growth of the national economy DM 42097 04-2004 Copyright © Tekes

22. 25.04.2007Timo Kekkonen 22 Funding criteria for company R&D projects DM 42097 04-2003 Copyright © Tekes 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

23. 25.04.2007Timo Kekkonen 23 Funding depends on the project’s degree of challenge, novelty and time to market DM 42097 and 218475 09-2006 Copyright © Tekes Time to market increases R&D loan or capital loan for R&D Loan-weighted combined funding R&D grant or combined funding R&D grant International top level Product developmentResearch Demanding national level Demanding international level National top level Degree of challenge and novelty increases