The success of innovation policy defines Finland’s fate

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We are publishing articles on our website from the “Vision 2040 – When Things in Finland Were Done Boldly and Without Prejudice” essay collection. Venture capitalist Timo Ahopelto believes that the future’s new and fast-growing technology companies can emerge from Finland if we handle things correctly.

My vision is that Finland will be among the winners of the 21st-century wave of new technology, just as it was among the winners of the 20th-century industrialization. In the future, Finland will be the birthplace and home of the world’s new leading technology companies, as well as a hub for high-level product development of major corporations. The prosperity created through this will be distributed across society, from infants to the elderly. Our society will focus on building rather than arguing. We understand technological change, which represents both a threat and an opportunity for us as a nation.

The negative scenario is the opposite. The competition for the best talent, companies, and resources is fierce. In the future, Finland must compete not only for international experts but also to retain Finnish talent within the country. If we fail in this, Finland will be a buyer of technology, not a seller. The key innovations will be developed elsewhere, while we merely finance them. I cannot think of a single rational reason why the future’s new and fast-growing technology companies should not emerge from Finland—provided we handle things correctly.

Finland has a huge opportunity to solve problems with technology, from energy production to efficient logistics. In particular, we currently have special expertise in solutions for combating climate change, along with a sufficiently small and agile test market—if we are willing to create it through new regulations and the introduction of new operating models. Finland is now facing a new “Nokia moment.”

I am a venture capitalist, working across nearly all industries, from gaming to biotechnology. In venture capital, American investors are entering Europe because there are great companies here. Hopefully, Finnish institutional investors will boldly participate in the best companies so that the returns from entrepreneurship remain in Finland. In my view, we need more capital courage.

My vision became reality because, as a society, we knew how to make the right decisions. Innovation policy extending beyond electoral cycles, prioritizing investment thinking over cost thinking, and a realistic understanding of international competition—these are the keys to winning. Policy actions are simple, and they have been listed in numerous reports over the years. It may sound like bland jargon, but we need bold and open-minded moves. The attitude must be one where we systematically remove all barriers to the growth of technology companies. If we do not remove them, the next industrial revolution will happen elsewhere. The problem in Finnish politics is often a zero-sum mindset: we see resources within our national borders as static assets to be distributed. No single action alone will make Finland a global hub for growth companies, but there are many critical issues that need fixing—such as taxation on employee stock options, increasing the number of English-language school classes, correcting deficiencies in employee share offerings, removing friction from talent immigration processes, directing business subsidies toward new value creation, reforming R&D funding policies, and updating universities’ innovation policies.

In my view, the success of innovation policy ultimately determines Finland’s fate. Unfortunately, promoting it garners fewer votes than, for example, allowing wine sales in grocery stores. No one in politics is actively pushing this agenda. We are at a political deadlock, and we need to turn back. I feel that our system is incapable of addressing Finland’s existential challenges because we do not even fully grasp the key issues that need solving. Finland must be among the winners in the current technological transformation. The building blocks of the global economy are being reshuffled. We won in the previous wave of industrialization, but I am unsure how we will fare in this new era.

Winning requires policies that genuinely remove obstacles to the growth of technology companies. As I write this, seven of the world’s ten most valuable companies are relatively young technology firms. Not a single Finnish company is among Europe’s 50 most valuable firms. The British Prime Minister personally meets with international growth entrepreneurs to pitch London as the best location for investment. President Macron regularly hosts the CEOs of the world’s largest technology companies to convince them that France is the best place for high-level R&D. These are facts that force us to think about our role in the future. The current status quo must be broken.

Timo Ahopelto, Lifeline Ventures