Finnish Startup Community's goals for the next governmental program
The Finnish Startup Community was founded in the autumn of 2021 to advance the interests of Finland as a whole. The community's founding members felt that Finland needed a new kind of force to drive positive changes in our society.
The goals of the community’s government program have their origins directly in our member companies. We have listened to and asked Finnish startup entrepreneurs at different stages about what we could do better in Finland to support their growth journeys.
Our top goal is to make Finland the best place in the world for the best talent – and that Finland is more attractive than Silicon Valley to start and grow a startup company. In this way, the Finnish startup sector can grow into a new central pillar to support the Finnish economy, bringing it jobs and tax revenue. We believe that by 2030, Finnish startups and growth companies will become the country's new economic backbone - alongside the forest and metal industries - also in exports and relation to GDP, making it one of Finland's most important economic sectors.
In the Finnish Startup Community, we believe that technology and entrepreneurship are at the heart of the next industrial revolution and sustainable development. About half of the world's largest companies have been established relatively recently.
1. Finland is the best target country in the world for labor migration
The competition for skilled folks has become global. “Just good” is not enough anymore. Finland must be the best place in the world to relocate to for work.
A two-week service promise should be provided and secured for foreign talent and their families.
The realization of this should be measured systematically from the moment the applicant submits their application to the system.
This easy and smooth process should include identification, obtaining a work permit, and all other practical steps from opening a bank account to a personal social security code.
In addition, the identification process of a foreign specialist must be developed further and a digital identity project implemented.
Finally, service paths need to be streamlined and English-language school student slots need to be added for families of international talent.
We encourage cities to increase English-language schooling and streamline school placements. In the future, the school student slots must also be available – without any problems –in the middle of the school year. The government should investigate the possibility of creating a statutory obligation for English language studies in primary school alongside Finnish and Swedish languages.
The need for work-related immigration has become increasingly important, especially because the current Finnish labor is not sufficient enough to meet the labor needs of local companies.
2. Competence and RDI
Expenditure on research and development must be raised to 4% of Finland's GDP, as proposed by the parliamentary RDI policy group.
In order to achieve this goal, in addition to public funds, the focus must be on activating private R&D investments.
Increasing private R&D investment means that both Finnish and foreign companies will focus their R&D operations in Finland. The other proposals of the working group must be implemented as soon as possible.
In Finland, the amount and scope of education that meets the needs of modern working life must be raised to be the best in the world. Students from abroad must be employed in Finland faster – we need to attract them to stay even better than before. Coding and entrepreneurship should be added as optional subjects for all from primary school onwards. We also need to add more technology students’ admission slots to universities and colleges.
More needs to be invested in top researchers. Teams have to be built around them – they are capable of solving the most difficult problems in their respective fields. Top research and the best partners and collaborators in the world go hand in hand.
As a small nation, we must focus on top-level research in order to get the best possible results.
3. Startups are a solution to climate crisis and health technology challenges
Startups that solve climate change challenges play an important role in Finland's positioning as a pioneer in sustainable development. There are many Finnish startups in the areas of plastic recycling and new energy, for example.
We believe that startups and the technologies developed in these companies will play a crucial role in solving the global climate crisis.
Climate technology and green materials technology companies will be the next area of massive growth in the startup scene. Finland already excels in this: our strenghts lie in companies, universities and research institutes, such as VTT Technical Research Centre of Finland Ltd. The field will be significant for Finland, as long as we take effective and concrete steps toward it.
By investing in environmental technology, methods of economic production can be developed so that we do not have to choose between economic growth and environmental sustainability.
Being at the forefront of environmental technology means significant financial gains to those who are the first to develop the best innovations. A significant cluster of top environmental experts is already cumulating in Finland. This development must also be supported more systematically through public investment and international cooperation.
The definition of plastic in the SUP Directive needs to be corrected in line with the views of the scientific community. For sustainable materials that can be recycled mechanically and chemically, PPWD must ensure a recycling path in the same way as traditional plastics.
The development of health technology companies requires innovative procurement and a new kind of collaboration between startups and public healthcare.
4. The Platform Economy needs clearer rules of play
We need to create legislation in Finland that both supports new forms of work and defines the area in a sustainable way.
Startups, and especially companies in the platform economy, are bringing new ways and models to the economy. Business policy and regulation should enable and encourage the reform of operating methods, taking into account social and ecological conditions. The Finnish regulation in the telecommunications sector, which was implemented before its peak time, is an excellent example of this.
In particular, labour law and social security systems should take into account the changes in work and working life. New forms of work should not be banned or forced into frames that are not suitable for them. Instead, safety nets and laws need to be reformed so that new forms of work are accepted and covered by fair conditions and social security.
5. Tax incentives
Finland needs to study tax incentives to attract international companies and experts.
We do not encourage tax competition. However, Finland needs to look at models that attract companies to establish themselves in our competitor countries. The reality is that unless Finland gets competitive, jobs will be created elsewhere and the Finnish economy gets nothing.
Taxation must be seen as a tool that, among other things:
- equalize income disparities
- guarantees the financial position of the public sector and
- steers economic activity towards sustainable solutions and solving the climate crisis
The Finnish government should review the fiscal policy decisions of rival countries to support the creation of high-productivity jobs. In the startup field, it is important that the domestic market has time to create a critical mass of companies and jobs that work together under the same ecosystem. In order for this critical mass of companies and jobs to be created in the domestic market, fiscal policy decisions are needed to support growth.
Montreal, for example, has managed to grow a significant gaming and machine learning cluster with the help of, among other things, tax incentives. At least similar incentives should be tried more widely in Finland as well.
6. Review and interpretation of the legislation on blockchains and cryptocurrencies
Legislation is needed on blockchain and virtual currencies to both support startups operating in these sectors and enable them to settle in Finland.
Blockchain technologies are part of the Internet of the future. They are important to the gaming industry, which is a significant player in Finland. Regulation in the sector is taking shape, while companies in the sector are already growing at a rapid pace. Countries that are now able to seize regulation of the sector have the opportunity to create benefits for their country similar to the first revolution in the telecommunications sector in the 1990s – which was e.g. the origin of Nokia’s success story.
The interpretation of the current law needs to be clarified so that these blockchain companies can establish themselves in Finland and grow. In particular, it must be ensured that Finnish companies are able to create a virtual currency that is used as a service of that company and that is not interpreted as securities or compensation. An exception should be allowed in the regulation for small-scale experiments.
7. Flexible share exchange arrangements should also be possible with the EFTA countries and the United States.
In mergers and acquisitions where the purchase price is made in a share transaction with a company located outside the EU, the tax sanction should only take effect when the shares received in return are sold.
Under current Finnish legislation, in tax transactions with a company located in the EU, the tax sanction does not take effect until the shares received are sold.
Finnish tax legislation should be amended so that the regulations applicable to EU regions also apply to the EFTA countries and the United States.
In connection with share arrangements made outside the EU, the current Finnish legislation obliges the owners of the acquired company to pay taxes at the time of the transaction. In practice, this is not possible in most situations and thus the current situation prevents the development of many companies through a share exchange arrangement. In these situations, the company's development is jeopardized and slowed down, causing tax revenue losses to Finland in the longer term.
In practice, Finnish growth companies are currently unable to take full advantage of the financing opportunities offered by separate SPAC companies established outside the EU.