Growth funding needs more private capital and increasingly diverse financial instruments
In many respects the Finnish growth funding market works well, but there are still blind spots related to access to funding. In particular, small and innovative growth companies and large financing rounds in the scale-up and investment phase require more diverse funding solutions. This is the conclusion of the new situational picture of growth funding compiled by the Ministry of Economic Affairs and Employment.
Companies need more diverse funding alternatives in the different phases of their growth. It is important to strengthen private and equity financing and reduce dependence on bank-centric debt financing.
Finland’s business funding system is stable and efficient, but it is highly bank centric. This is why the funding path for growth companies must be strengthened from seed funding to global scale-up and industrial investments. Growth requires higher risk-taking capacity in financing, smart capital, and alternative forms of financing from venture capital investments to venture debt financing, private credit solutions and FinTech-based financing.
“Finland’s growth funding will become stronger when the companies know the funding options better and the financers assume a more active role. Public funding complements the market and boosts the efforts to leverage private capital,” Minister of Economic Affairs Sakari Puisto says.
According to the report, the domestic private equity funds should grow as well. The current situation increases the dependence on foreign capital in the growth phases. For the funds to grow, domestic and foreign capital is needed, the structure of the funds must be investor-friendly and the practical obstacles must be removed.
The funding and services of the business financers in the administrative branch of the Ministry of Economic Affairs and Employment must be more systematically targeted to strategic growth themes. The report stresses Finnvera’s role in funding growth, Tesi’s actions to strengthen the equity market and domestic ownership, and more active use of EU funding.
Besides the analysis, the report presents articles written by stakeholders in the sector concerning the situational picture and the different phases of growth funding. Guest writers Jyri Engeström, Lasse Vuola, Minna Vanhala-Harmanen and Anu Honkalinna discuss ways to attract capital, diverse business financing, family office financing and research-driven growth of companies.
Inquiries:
Henri Tuominen, Chief Specialist, Ministry of Economic Affairs and Employment, tel. +358 295 047 320