The Finnish Startup Community proposes four reforms for the government’s mid-term policy review that would strengthen economic growth, increase investment and improve the conditions for startup growth in Finland. The proposals are modest from the perspective of public finances, but their impact on Finland’s long-term growth could be significant.
The Finnish economy needs new sources of growth. Startup companies are already an increasingly important part of Finland’s economy. They develop new technologies, attract investment, create jobs and generate new export revenue for Finland.
The need for new growth measures is also reflected in the latest Startup Barometer. At the beginning of 2026, startups’ assessments of their own financial situation fell to the lowest level in the history of the survey. Expectations for the coming months also weakened, recruitment outlooks declined and views of the wider economic situation deteriorated again.
The Barometer results show that companies now need better conditions in which to grow during a difficult economic period. Growth can be accelerated by focusing decisions on the issues that are currently holding startups back: access to finance, attracting international talent, employee incentives, and support for research and development.
“People talk a great deal about the need for growth in Finland, but far too rarely about the concrete decisions needed to make that growth possible. In the government’s mid-term policy review, it would be possible to make a few carefully targeted decisions that are fiscally modest for the state, but which could, over time, bring significantly more growth, investment and jobs to Finland,” says Riikka Pakarinen.
More domestic capital for growth companies
The Finnish Startup Community proposes creating a tax incentive in Finland that would encourage returns from investments to be reinvested in unlisted growth companies.
Under the model, an angel investor, venture capital fund or institutional investor, for example, could receive a tax incentive when profits from an investment are reinvested in a new growth company.
At the same time, pension assets should be channelled more effectively into unlisted growth companies.
In the United States, the equivalent Qualified Small Business Stock scheme has increased the number of new companies and encouraged capital to circulate into growth companies.
“There is capital in Finland, but too little of it ends up helping to build new growth companies. We need a model that encourages people to reinvest their gains in new Finnish growth companies. This would be a relatively small change to the tax system for the state, but it could have a major impact on how much capital remains in Finland to build the next generation of success stories,” Pakarinen says.
A two-week service guarantee for top international talent
The Finnish Startup Community proposes that Finland introduce a two-week service guarantee for international specialists and their families.
Within two weeks, a specialist should be able to obtain a work permit, personal identity code, bank account, access to official and banking authentication services, and a school or day care place for their children.
At present, the services related to moving to Finland are fragmented and the process can take months. This weakens Finland’s competitiveness in the international race for talent.
“Finland is competing for the same top talent as other countries. If starting work and building a life in Finland is slow and uncertain, people will choose another country. A two-week service guarantee would be a concrete way to make Finland a more attractive destination for international talent,” Pakarinen says.
Tax employee stock options only when the employee receives the return
Startup companies often use employee stock options to attract and retain talent. At present, stock options are often taxed when they are converted into shares, even though the employee has not yet received any actual income from them.
The Finnish Startup Community proposes that employee stock options should instead be taxed only when the shares are sold and the employee receives the actual return.
“The current model is unfair to employees. They may have to pay tax before it is even known whether the shares will ever generate any return. Taxation should be based on real income, not on an assumed future value,” Pakarinen says.
According to the Finnish Startup Community, the change would make it easier for growth companies to recruit and retain talent, while also strengthening domestic ownership and Finland’s competitiveness.
R&D tax incentives should also apply to startups that are not yet profitable
In Finland, the current tax incentive for research and development expenditure in practice benefits only profitable companies. Most startup companies are still loss-making in their early years and therefore gain little from the current model.
The Finnish Startup Community proposes that the R&D tax incentive should also work for loss-making startups. In practice, this could be implemented by allowing companies to receive the equivalent tax benefit as a direct cash refund.
“Finland needs more investment in research and development. The current tax incentive works well for companies that are already making a profit, but many of the most innovative startups are left outside it. The support should therefore reach companies when the research and development work is being done, not years later,” Pakarinen says.
According to the Finnish Startup Community, this would be a limited reform from the perspective of public finances and could be targeted particularly at early-stage and research-intensive companies.
“Finland now needs growth more than new general subsidies or broad tax cuts. These four targeted measures would improve precisely those conditions on which new growth companies are founded and grow in Finland,” Pakarinen says.