The President of Finland, Mr. Sauli Niinistö, showed great example by making a business angel investment shortly after his election.
Present at the meeting with the President of Finland: Jaakko Salminen, Juha Kurkinen, Riku Asikainen, Jan D. Oker-Blom, Claes Mikko Nilsen, Ari Hyppönen, Bea Brunfeldt, President Sauli Niinistö, and his special advisor Mikko Kortelainen.
Startup companies in Finland create over half of all new jobs in Finland. One of the main resources supporting early-stage growth are private investors offering capital knowledge and networks. The President of Finland, Mr. Sauli Niinistö, showed great example by making a business angel investment shortly after his election.
FiBAN’s board and administration had the great pleasure to meet President Niinistö and discuss some of the main themes and current challenges concerning how to support Finnish startup investing.
Current business angel situation in Finland
President Niinistö showed great deal of interest in the current situation of startup investing and the role of private investors supporting growth. The Finnish business angel activity is at the movement relatively strong and fulfills actively the financial gap and knowledge gap for early-stage potential high-growth companies. During 2013 approximately 1/3 of the almost 400 FiBAN members reported making individual investments in 154 companies, worth over €11M. The goal is to increase the visible business angel market to 1000 registered members.
Private startup investors’ network supporting growth
FiBAN is a privately funded network, working with the finding private capital for privately founded and owned startups. The network actively cooperates with Finnish public sector institutes supporting the growth of early-stage companies in different stages (Tekes (R&D stage), Finnvera (early growth), Finnish Industry Investment Fund (later growth) and regional ELY centres)). President Niinistö found the role of the public institutes very import to the startup ecosystem but encouraged to develop and increase the private investors’ activity and cooperation.
The main challenge is not the lack of capital
FiBAN also shared the experience that the need for early-stage companies is not only capital but rather the request for skills and networks, which should be transported from experienced persons to the grass roots level. It is currently not certain that persons with crucial experience find their way to benefit early-stage companies. Therefore more examples like President Niinistö’s own investment should be brought up to inspire new potential investors. One very effective way is to share the best practices of experienced investors and increase the attractiveness of startup sector investing through different incentives.
The role of taxation for startup investing
Private startup investors face a very high-risk market with half of all investments failing. Still one out of ten investments succeed greatly and even the less successful companies support the development of the business industry. To inspire new private investors to attend the startup market the government implemented a tax incentive allowing private investors to make a 50% tax deduction. This is relatively similar to tax incentives found in for example Turkey (75% deduction ), Great-Britain (40%) and France (50%).
Unfortunately the Finnish tax incentive is relatively complicated and has not inspired new investors as expected. President Niinistö was informed about the challenges and the need for development of incentives to increase investment interest in this very challenging market.
Future goals - Increase the visibility and activeness of early-stage investors
President Niinistö was told that one of the largest and most active business angel networks in the world is FiBAN, which continues to grow and increase this activity. As the public institutes like Finnvera and Tekes are changing their early-stage investing role there is an increasing demand for a strong and well linked investor network to continue inspiring private investments. Finland will also receive larger visibility when startup investors gather in Helsinki for the EBAN Helsinki 2014 – European Business Angels Conferenceheld in cooperation with Slush, Europe’s leading startup event. FiBAN was happy to receive interest from President Niinistö concerning the conference.
FiBAN urges more key persons in the Finnish public administration to take active role in supporting startup companies to receive the necessary growth resources. Startup investing today should be a national duty.
FiBAN's news about startup investing.