Growth-minded entrepreneurs, a diverse talent pool, and innovations form the building blocks for growth. When these foundations have been laid, sustainable growth can be achieved.
In the spring of 2021, two expert working groups on sustainable growth and domestic ownership published their reports, which state that economic growth can be sped up by channelling so-called smart capital – venture capital and private equity investments – to the market. In addition, the regulatory environment must be well-functioning. We also agree with these recommendations.
Effective regulation for companies and funders of growth
The regulative environment has to support company growth and internationalization. It’s important that growth- and entrepreneur-minded politics are pursued over governmental terms. The regulatory and taxation environments have to be predictable and consistent. Whenever regulations or taxation is changed, the effects of the changes on companies’ growth, financing and employment opportunities has to be assessed. This helps to ensure that Finland remains a compelling place for entrepreneurs, experts and investers.
More professional capital, i.e. private equity investments for startups
In order to strengthen domestic ownership, our finance ecosystem must grow to an international level. This means that barriers between domestic and foreign fundraising for private equity funds have to be removed and the funds must have competitive opportunities to attract growth capital to Finland.
Did you know that we are behind the rest of Europe in attracting growth capital? For example, Swedish funds consist of more than 80 % foreign capital whereas Finnish funds have only about 30 %. Venture capital funds investing in startups are also relatively small in Finland: The average size in Europe is already over 100 million euros, in Finland it is about half of that.
Domestic investors must also be able to freely invest in Finnish private equity funds. For example, Finnish foundations can’t directly invest in Finnish private equity funds in a way that is tax neutral. It’s financially more profitable to invest in foreign funds due to a Finnish regulatory loophole.
