- Govt-entity TEKES was big motivator to Scandinavian world’s success account
- Malaysia on proper record, won’t take as long as Finland did to reach maturity
When my British university professor gave me a copy of” The Google Story,” twenty years ago, I began my entrepreneurial journey in Helsinki, Finland’s capital. I finished it in one sitting because I was thus captivated by it. I even wanted to own such a business. But people kept telling me:” You are not in Silicon Valley”.
They were correct when they said that Finland hardly had any private money to do high-risk, innovative businesses after the dot com bubbles burst a few years before. Additionally, there was the added problem of looking to global markets from day one because the Finnish business was so small ( only 5 million people ).
20 years after, Finland is now in the lead in terms of personal money in terms of GDP. We have seen rainbows such as Supercell, and Wolt, as well as a good network of Soonicorns quite as Iceye, Swappie. I’m pleased to discover Finland doing well, but since I’m now setting up my business in Malaysia, I can’t help but notice significant similarities between the business ecosystem there that is still developing and the one I saw 20 years earlier.
Looking back, if I was to point out a major catalyst to Finland’s success story of the last 20 years, I would not find any better example than a government-entity called TEKES ( now rebranded to Business Finland ) which would be akin to a modern day Khazanah, although not exactly a sovereign wealth fund.
TEKES, which was funded by Finnish taxpayers periodically, has previously had a significant impact on the development of the business ecosystem in Finland, contributing to a number of positive outcomes that might not have been realized without its existence.
What are some of the main efforts and effects?
1. Kickstarting the Scandinavian business ecology
Initial funding gaps filled: In the early 2000s, Finland lacked adequate private venture capital and angel funding for early-stage companies. TEKES provided critical offers, money, and purchases, enabling businesses to survive and grow.
Encouraging risk taking: By de-risking early-stage development through cash, TEKES encouraged companies to do ambitious jobs, fostering a culture of development and risk taking. Additionally, since 2010, Finland has annually observed the” National Day of Failure” on October 13 to honor the achievements of failed businesses and end the stigma that surrounds entrepreneurs who have previously failed. On this day, you’ll frequently see both recently failed and most successful groups converge on the level and treated to equal respect.
2. Enabling world victory reports
Startups like Rovio and Supercell: Companies such as Rovio ( Angry Birds ) and Supercell ( Clash of Clans ) received support from TEKES during their formative years. Without this money and assistance, their world success stories might not have been feasible.
Greater impact on industries: TEKES-supported startups helped placement Finland as a gateway for gambling and wireless technology innovation.
3. fostering a culture of innovation and individual capital
Support for education: Through funding initiatives like Aalto Entrepreneurship Society, which afterwards founded Slush, TEKES created a new era of tech-savvy business owners.
Innovative mindset: It encouraged Estonian citizens to view entrepreneurship as a practical and prominent career path when formerly working for a huge multinational was the preferred career path.
4. Development of supporting buildings
Startup Sauna and other accelerators and incubators: TEKES provided funding for the establishment of accelerators and incubators, which afterwards became crucial for connecting Scandinavian startups to international networks.
Ecosystem Growth: TEKES ‘ investments in local innovation ecosystems have had a direct and indirect impact on efforts like Slush, one of the largest startup activities ever held worldwide.
5. Attracting international funding
International attention: By nurturing companies with high-growth possible, TEKES made Finland attractive to foreign investors, bringing much-needed walk funds into the ecosystem.
Scaling internationally: TEKES’ programs like the Young Innovative Companies ( NIY ) helped Finnish startups expand globally, making Finland a recognized innovation hub.
Fun truth: my first business, Muxlim, was a member of the TEKES Young Innovative Businesses program, which eventually won the President of Finland’s nomination for internationalization. It enabled us to consider international from first on and lift our ambition , to , the , potential.
6. societal impact and sustainability
Green technology command: TEKES invested considerably in green technologies, making Finland a chief in areas like bioeconomy and solar energy solutions. Malaysia needs to find the strengths-matching niches and work with them until they are powerful worldwide.
Advances with social effect: By supporting education and health technologies, TEKES promoted enhancements that improved the quality of life in Finland and worldwide. Akin to Khazanah’s Dana Impak.
There were so many beneficial outcomes that might not have been possible without TEKES.
Allow me list four of them.
Avoidance of Brain Drain: Without financing and habitat support, Scandinavian talent does had moved abroad in search of better opportunities. Our guest speaker there introduced his talk by saying,” I’m assuming you are all looking to relocate to Singapore eventually,” during a recent trip there with other Malaysian startups.
Gaming Industry Boom: TEKES ‘ funding provided a foundation for Finland’s thriving gaming sector.
Technology Transfer: Without TEKES ‘ assistance, collaborations between academia and industry might not have been as successful.
Innovation Culture: Finland’s transformation into an innovation-driven economy owes much to TEKES ‘ ability to fund high-risk, high-reward projects.
The strategic investments made by TEKES helped to cement Finland’s position as a leader in global innovation, demonstrating its worth as a pillar of the country’s entrepreneurial ecosystem.
Meanwhile, in Malaysia…
Looking back over the past few weeks in Malaysia, I believe there is a missing message in the national conversation. No one is discussing why every country needs to get ready for an innovation-driven future. The job market is about to be drastically disrupted by the advent of AI, automation, and robotics. There will be unheard challenges for people all over the world, not the least of which is the shrinking job market, combined with the overburdened public sector in many nations around the world and the threats of climate change.
Entrepreneurship is key to creating jobs and sustaining in the face of job insecurity, climate displacement, geopolitical tensions, and technological disruption.
Of course, private capital is the ideal driver for innovation. But, based on Securities Comission Malaysia data, early-stage investing has retreated in Malaysia between 2011-2021, while in Finland it grew from US$ 112 million in 2011 to US$ 1.2 billion by 2021.
Sometimes, private capital is too risk-averse, so the government or government linked investment funds need to fill the gap until the ecosystem is stabilized. Nascent ecosystems don’t play by the same rules as developed ecosystems, hence initiatives like Khazanah Dana Impak, Khazanah’s Jelawang Capital venture capital fund of funds initiatives as well as Kumpulan Wang Persaraan ( Diperbadankan ) ( KWAP )’s Dana Perintis ( RM500 million for venture capital funds and direct investments ) and Dana Pemacu ( RM6 billion for private equity ) are critical to provide badly needed growth funds for startups across various stages.
Yes, early-stage investing is risky, and there will be some failures. In light of the changes that our world and the world’s community are facing, the risk of not investing is even greater. So in times like this, we need to be armed with strong ambition, infectious positivity and resourceful execution. I can only say that I think Malaysia is on the right track and that it will take less time to mature than Finland.
Mohamed” Mo” Tarek El-Fatatry is the Soonicorn Collective’s founder, the host of the Soonicorn Nation Podcast, and the founder of ERTH.
Dr. V Sivapalan contributed to the article. He has a Ph. D in Venture Capital from University of Edinburgh, Scotland, is Co-Chairman of Soonicorn Collective and Adjunct Professor in the School of Science and Technology, Sunway University. He is the author of the book Supercharge Your Startup Valuation. Visit his website for more of his writings.