THE YEAR FOR FINNISH BUSINESS ANGELS - The decline of Finnish public startup investing support and the ending of the angel tax deduction.
The less positive economic times in Europe also affects the Finnish startup investing economy. The year 2016 will include two major elements Finnish business angels to consider affecting Finnish startup investing. The decline in Finnish public sector startup investing activity and secondly, the ending of the angel tax deduction model.
Decline in Finnish public sector startup investning activity
There will further on be less public institutional support for business angels. Finnvera, which previously made direct investments and built up a portfolio worth around 140 M€ will not do any more investments. Finnvera’s activity was moved over to Tekes VC which is a new “fund of funds”, meaning they only invest in funds that in turn make investments in startups. So far Tekes VC has made two investments and is expected to activate its effort to spend the 20 M€ annual budget in the end of 2016. Also the Finnish Innovation Fund Sitra has a new strategy focused on “sustainable development themes” which doesn’t include major direct startup investments. The Finnish Industry Investment Ltd (Tesi) is focusing on larger growth companies as well as funds and is thus not a major support for private angels early-stage investments.
Finnish public institutions supporting startup development and their expected activity in 2016.
Loans, entrepreneur loans and guarantees.
No new startup investments. Previously yearly startup investments of €10M.
Loans and grants for innovation, technology and growth. Co-investing through funds.
Startup investment budget declines. In 2015 Tekes invested €140M in 702 startups.
New investments as a minority investor in startup VC funds.
Two fund investment made, expected to make more investments late 2016. Yearly investment budget is 20 M€
Industry, SME, later stage than startups. Direct investing and through funds.
Invests in later stage growth companies. Previously yearly investments in later stage growth companies >50 M€.
CleanTech, wellbeing and social. Co-investing, SIB’s and funds.
The ending of the Finnish angel tax deduction model
The second challenge is that the tax deduction model for business angels in Finland ended 31st of December 2015. It is still unclear if there will be any similar models launched by the new government. The previous deduction model was also relatively challenging to use with several limitations, but was important as a symbolic tool to show the Finnish government’s support and interest towards private startup investments.
A test for Finnish angel investning ecosystem
This year will be a real test for Finnish angels with less public sector support and no tax incentive inspiring statup investning. Luckily Finland has one of the largest and most active business angel networks in the world and the environment towards startup investing is very positive, supported by events like Slush, Arctic15 and many others. This activity plays an increasingly important role from this year on, continuing to support the development of the Finnish startup ecosystem.
Claes Mikko Nilsen
Network Manager, FiBAN
claes.mikko (at) fiban.org
FiBAN's news about startup investing.