According to the latest Startup Barometer (Q1/2025), lack of funding remains the most significant barrier to the growth of Finnish startups. In the first quarter of 2025, over half of the respondents reported that funding constraints are limiting their business growth.
The option to report lack of funding as a specific growth barrier was first introduced in the Q3/2023 Barometer. Since then, the share of startups identifying funding as a barrier has increased by approximately 10 percentage points, highlighting growing concerns about access to financing.
While funding remains a critical issue, the demand for skilled labor has become a smaller concern, dropping sharply from 48 percent in Q2-2022 to just 20 percent in Q1-2025, a decrease of nearly 60 percent. However, the Finnish Startup Community (FSC) argues that this decline does not reflect an improved talent supply but rather a slowdown in startup hiring, as evidenced by rising unemployment rates in Finland.
Looking ahead, the current softening in labor demand may mask a deeper structural challenge. When economic conditions inevitably recover, Finland risks quickly returning to a tight labor market. Without proactive investment in developing the talent pool, the shortage of skilled workers could quietly become one of the biggest threats to Finland’s ability to produce its next unicorn.
FSC is concerned about Europe’s and Finland’s ability to compete with China and the United States in providing growth opportunities for startups. Venture capital (VC) is critical for scaling startups, offering not just funding but also strategic support, expertise, and global networks. However, the world’s largest VC investors are concentrated in major hubs like London and Silicon Valley.
VC investing is also strongly influenced by local bias: investors tend to prefer startups located near their own offices. This geographic concentration puts startups in smaller markets, such as Finland, at a disadvantage when it comes to raising large funding rounds.
In the global race for innovation, the absolute amount of capital raised matters more than funding relative to GDP. Many promising startups relocate to major hubs like the U.S. to access larger and deeper VC ecosystems.
Without stronger local VC, Finland risks losing its most promising startups and the future high-value jobs they could create. To compete globally, Finland must foster larger VC funds that can scale world-class technology companies from within Finland.
Youssef Zad
Chief Economist
Finnish Startup Community
Appendix 1: Barriers to Business Growth in Finnish Startups
Figure 1. Most pressing growth barriers faced by Finnish startups in Q1/2025 — percentage share of respondents who identified each factor as a growth barrier.
Figure 2. Most pressing growth barriers faced by Finnish startups Q2/2022-Q1/2025 — percentage share of respondents who identified each factor as a growth barrier.
