Being the NHL of startups, Silicon Valley has affected hugely on some of the most successful Finnish startup entrepreneurs' mindsets to build companies. Many young, smart, and promising founders might never reach their fullest potential if they don't have the access to Silicon Valley’s dynamic culture. In this blog post, I’m going deeper on why we should try to systemize this effect among the Finnish startup ecosystem.
Finland has a vibrant ecosystem, but we lack the ambition and know-how to build globally successful companies
The Finnish startup ecosystem is teeming with intelligent, ambitious individuals tirelessly working on their ventures. However, in comparison to their Silicon Valley counterparts, these young founders often exhibit relatively lower levels of capability and ambition when it comes to creating globally successful companies. This harsh reality of the level gap has been affirmed by my personal experiences and by numerous successful Finnish startup entrepreneurs.
Beyond individual anecdotes, Silicon Valley's exceptionalism can also be substantiated by data. According to data from Crunchbase compiled by Eric Ver Ploeg, startups based in San Francisco secure more substantial seed rounds and are over 1.7 times more likely to secure an A round than their peers elsewhere in the rest of the USA. What's even more critical to me is that startups in San Francisco are 2.5 times more likely to secure an A round from top-tier VCs.
At least two primary factors contribute to this difference between Finland and the Bay Area: 1) a lack of global top-tier network and 2) the relative youth of the ecosystem.
One of the biggest missing pieces is the lack of the global top-tier network in Finland. Despite Finland's reputation as a pioneer in various fields, the unvarnished truth remains that the Bay Area attracts some of the most influential global networks across various industries. To elevate Finnish founders to the same level as their global peers, we must play on the same field.
Furthermore, due to the relatively young age of the Finnish startup ecosystem, it remains relatively small and less mature. We have yet to establish enough benchmark companies for the new generation to learn from and gain perspective. The immature infrastructure fails to offer people sufficient opportunities for learning, pushing them to focus on the wrong aspects when building their companies.
Overall, these facts underline the huge problem that we miss a lot of potential when the Finnish founders start slowly when they should be already running to get a yes from a potential customer. Many founders struggle to understand the level of execution required, and at the same time they lack the know-how to reach that level. This is due to not having access to see e.g. how fast their SF peers are moving, who they got to talk to, and where they are aiming for.
Direct opportunities are useless alone
There are both direct and indirect opportunities in the Bay Area. Both are equally important, although many tend to overestimate the value of the direct opportunities such as capital resources and direct market opportunities. The fact is that those direct business opportunities do not help a single entrepreneur if they don’t possess the perspective and know-how to build companies.Silicon Valley possesses three distinct direct advantages;
1. Capital resources: Besides the Valley is known for its shorter average time to raise capital, also the global best VCs are located there which makes them more accessible. Some might argue that the world is connected through the internet today and everyone can be connected no matter the location, but the truth is that it’s hard to have constant meetings with a 10 hour time difference.
2. Market opportunities: The Bay Area is a good place to access the U.S. markets. Being there increases the chances to get close with large, globally credible companies and close deals with them. Despite fierce competition, major corporations in the area recognize the potential of startups and are early adopters of startup products.
3. Talent pool: When it comes to sourcing talent and seeking co-founders, Silicon Valley ranks among the best places. This is due to the area's attractiveness to startup-oriented individuals, the presence of top tech companies, and prestigious universities.
The success is about the greatest learning curve
The greatest indirect opportunities are related to learning and utilizing networks. Here are some of the most influential indirect benefits that the Bay Area has to offer:
1. Network Effect: The network effect describes a phenomenon where the value for members of a network increases as the network grows larger. In Silicon Valley, this effect is exceptionally powerful, given its close-knit community of highly talented individuals from around the world. Establishing your network there not only connects you with influential figures in your venture but also helps you build an international network within your industry.
2. Perspective and Know-how: The Bay Area is full of benchmark cases, from where founders can gain perspective and take learnings by seeing what has worked and what hasn’t worked for their peers. Seeing other top-level people executing increases founders’ level of vision and ambition.
The area’s people also possess a lot of useful knowledge and many best practices, and an early-stage founder must maximize his/her learning curve. Spending time in the Bay Area will give a founder a better understanding of e.g. the required iterating speed and where they should be focusing on.
3. International credibility: By closing some of the world’s top clients or investors a founder can also remarkably improve his/her credibility in the eyes of the media, other investors and clients, and other organizations.
Objective to enable this transforming experience for many more founders
SILTA is an initiative to systemize the Silicon Valley effect among Finnish startup founders. We offer a facilitated three-month program in the Bay Area, practically cost-free for founders. In this timeframe, participants will 1) focus on building their companies with the area’s resources and 2) immerse themselves in the Bay Area's cultural strengths. After the program we expect our alumni to be closer to the global top of their peers. Our objective is for companies founded by our alumni to generate €1 billion in revenue and create 10,000 jobs in Finland by 2030.
To ensure the continuity of such opportunities for Finnish founders, we believe that the government of Finland should be putting more effort to support and incubate global businesses. SILTA’s political objective is to establish a governmental financing instrument supporting international incubation and accelerator programs that empower startup founders to build global businesses from the outset.
In conclusion, by going to the San Francisco Bay Area founders reach the same level with the global best and access the enormous resources of the area. By enabling the globalization of Finnish businesses to the SF Bay Area, we believe that we can be a part of creating the next unicorns for Finland.