/ ITriedToWriteAboutPitchingButThisCameOut

Cargo Cultism of Finnish Venture Funding

The way venture capital works in Finland is dissimilar to any other country in the world. It used to be handled by the state, mostly, and the government still is by far the most important investor in early stage startups.

The process of getting government investment has been modernized during the last few years. The old bureaucratic process where been gradually replaced with a market driven system. In the old system government officials tried to evaluate the feasibility of a business plans.

Tekes, the Finnish Funding Agency for Innovation, bases a big part of its own investment decisions on those of certain private accelerators & seed funds.

For decades the government invested only in traditional businesses: factories, shipping yards, heavy machinery, etc. Elaborate business plans with 5+ year cash flow estimates were a requirement. The customer was usually either the Soviet Union,the Finnish government or one the big traditional industrial companies.

In the 90s the startup landscape in Finland started to change. New companies weren't building concrete things anymore. Somewhere along the way the bureaucrats started to understand that the requirements were silly. Decisions weren't based only on the current realities but also the potential of the companies. But the bureaucracy still persisted. Rigorious business plans were a requirement for all startups. Even years after everybody had deemed them meaningless. Even years after everyone had stopped reading them.

The tought that the success of a startup could be based more on the skills & character of the individuals running the company rather than the content of their plan ran counter to many of the core ideals of the welfare state where every man is equal. And at the same time the possibility of creating huge fortunes out of thin air in just few years or even months weren't in alignment with values of a throughly protestant country. (While all Nordic countries are more secular day by day, the protestant )

The government acted like banks, angel investors & venture capitalists do in countries with longer history of private investment because of the chronic lack of private capital available for Finnish companies. The situation has changed for the better just during the last few years - possibly because of the few magical shooting stars (Rovio & Supercell). Foreign investors might also have notices that the Finnish government is picking up 50% of the tab.

The long history of bureaucracy still haunts the angel investment & venture capital decision-making. VCs frequently complain about missing minutiae on 3-minute pitches instead of concentrating on the validity of the core idea.

Marching in the correct fashion seems more important to some than the intended destination. This means that many good ideas fall through the cracks for lack of understanding of the process, but at the same time securing funding for those who understand the process well can be distrubingly easy despite how bad the idea.

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