supporting entrpreneurs and innovators in finland timo kekkonen director, confederation of finnish...
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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
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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
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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.
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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
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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
DM 3610001-2006 Copyright © Tekes
Key actorsof the Finnishinnovation environment
Key actorsof the Finnishinnovation environment
Invest in Finland
National Board of Patentsand Registrations of Finland
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DM 3610012-2006 Copyright © Tekes
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
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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
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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
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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
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Services sector's share of corporate R&D
Source: EU Key Figures 2005 on Science, Technology and InnovationDM 36109 and 36054
03-2006 Copyright © Tekes
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
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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
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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
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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
DM 36104 and 3605403-2005 Copyright © Tekes
Average 2002-2003
Per thousand of GDP
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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
03-2006 Copyright © Tekes
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
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Finnish funding agency for technology and innovation, Tekes – an example
DM 36100 01-2006 Copyright © Tekes
Academyof
Finland
Universities
Ministry ofTrade andIndustry
SitraFinnvera plc
FinproFinnishIndustry
Investment Ltd
PARLIAMENT
GOVERNMENT
VTT
Tekes
Science andTechnology
PolicyCouncil
RegionalTE-Centres
Otherministriesand theirinstitutes
Ministryof
Education
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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
DM 3589011-2006 Copyright © Tekes
provides expert servicesand R&D funding
coordinates programmes
Renewal of trade and industry, economic growth, good employment and societal well-being.
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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
DM 42097 04-2004 Copyright © Tekes
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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
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Funding depends on the project’s degreeof challenge, novelty and time to market
DM 42097 and 21847509-2006 Copyright © Tekes
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