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

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

Timo 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 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

Timo Kekkonen 4 New economic growth model – sources of economic growth DM and 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.

Timo 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 Copyright © Tekes

Timo 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 Copyright © Tekes Key actors of the Finnish innovation environment Invest in Finland National Board of Patents and Registrations of Finland

Timo Kekkonen 7 DM 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

Timo 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, % of new companies are growth companiesNew growth companies ca Micro companies ca. 6,100 Time DM and Copyright © Tekes

Timo Kekkonen 9 Source: Statistics Finland DM Copyright © Tekes Innovating companies Percent Number of employees

Timo Kekkonen 10 SMEs participating in innovation cooperation % DM 58774, 36054, and Copyright © Tekes Source: European Innovation Scoreboard 2004

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

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

Timo 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

Timo 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

Timo Kekkonen 15 Venture capital investments in Finland Source: Finnish Venture Capital Association. Covers investments made by members of the association Million euros Number DM and Copyright © Tekes * Prel

Timo Kekkonen 16 Source: European Innovation Scoreboard 2004 Venture capital investments in seed and start-up phases DM and Copyright © Tekes Average Per thousand of GDP

Timo Kekkonen 17 Venture capital investments Average Source: OECD, Science, Technology and Industry Scoreboard 2005 DM and Copyright © Tekes Percent of GDP Expansion phaseEarly phase

Timo 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

Timo Kekkonen 19 Finnish funding agency for technology and innovation, Tekes – an example DM 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

Timo 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 Copyright © Tekes provides expert services and R&D funding coordinates programmes Renewal of trade and industry, economic growth, good employment and societal well-being.

Timo 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 Copyright © Tekes

Timo Kekkonen 22 Funding criteria for company R&D projects DM 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

Timo Kekkonen 23 Funding depends on the project’s degree of challenge, novelty and time to market DM and 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