Proposals for enhancing the business environment for startups and growth companies.
Finland has to be an attractive country for domestic and foreign companies, investors and experts
As knowledgeable, growth-oriented and calculated risk-takers, Venture Capital (VC) and Private Equity (PE) investors are a dynamic asset that should be utilized more intensively in Finland by enhancing the operating environment of startups, growth companies and private equity industry.
Collaboration between the private equity industry and companies enables achieving a broader range of leading companies, bringing growth, employment and tax revenues to Finland.
The VC and PE industry is a significant part of the financing and growth path of the most growth-oriented Finnish companies. In addition to financing, private equity offers their business expertise, experience and extensive networks to support the growth of their target companies. Private equity investors bring their target companies, among other things, risk appetite, board expertise and courage to grow.
· Private equity mainly manages the funds of institutional fund investors. Approximately one-third of the investments in private equity funds are made by Finnish pension funds. Foreign fund investors account for approximately 30% of the fundraising
· Currently, the investment portfolios of private equity funds include approximately 500 domestic unlisted companies
· The revenues of the target companies reach to EUR 22 billion, equivalent to approximately five per cent of the revenues of all Finnish companies
· The target companies employ approximately 77,000 people, accounting for approximately five per cent of the total private sector personnel
· According to a new industry report published on September 28th 2020, companies owned by private equity investors have outgrown their peers 9 times faster in revenues and 5 times faster in the number of personnel
The private equity industry brings solutions to the most significant growth obstacles at the company level. Traditionally, the challenge of Finnish growth has been a culture of risk-aversion and weak internationality, and therefore a small amount of truly global companies. The economic importance of private equity is in uncovering the growth potential of companies, boosting growth, and in commercialising innovations and modernising traditional industries. With the help of private equity, globally successful startups, and strong domestic and international SMEs will emerge in Finland.
Chairman of the Board Sami Lampinen
1. Ensuring a consistent and predictable regulation and taxation. When making changes to regulation and taxation, the impact on the growth and employment opportunities and the attractiveness of Finland from the perspective of domestic and foreign companies, investors and experts must be assessed in particular. De-regulation has to be continued and EU-regulation must be influenced to give sufficient importance to the competitiveness, growth and employment of companies.
2. Continuing the attraction of skilled workforce to Finland by making the taxation on key personnel remuneration competitive. In addition, the barrier for experts and their families to relocate to Finland has to be lowered. Knowledge needs to be further developed through high-quality education and continuous learning opportunities, while taking into account the needs for renewal in traditional industries.
3. Investing in research to create a foundation for innovations in startups and growth companies. Ensuring a high-quality university and research institute research to promote innovation, and targeting state R&D support, especially for fundamental research.
4. Creating an internationalisation strategy for Finland, covering the internationalisation of the best Finnish startups and growth companies, and actions improving the attractiveness of Finland for foreign companies, experts and investors.
1. Promoting fund investor diversity. Channel more skilled capital to companies.
1a. Improving the possibilities of domestic and foreign investors to invest in Finnish private equity funds. For example, giving Finnish grant foundations the possibility to invest tax neutrally in domestic private equity funds, in relation to other investment alternatives
1b. Assigning continuous development and internationalisation of fund investor networks to Tesi and BFVC. Ensuring the effectiveness and synergy exploitation of public actors.
1c. Examining new investment instruments or means to expand the investor networks of private equity funds. Supporting, for example, the renewal of Solvency II and AIFMD regulation to enable broader investment in private equity funds.
2. Repairing market imperfections by investing into the development of domestic private equity funds
2a. Recording to the government programme a mandate to Tesi to collect KRR funds-of-funds IV and V. Setting a target to attract international investors to the funds in addition to domestic investors.
2b. Continuing the venture capital programme for early stage private equity funds. Investing into the development of new investment teams. Supporting the internationalisation of funds by, among others, mitigating the domestic requirement of target companies.