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From celebrating funding to celebrating having customers - via culture change
Many companies started by entrepreneurs who celebrate supporting entrepreneurship are corporates 2 layers below. The CEOs & Founders might not realize how their recently grown organizations with VPs & Directors etc are scared of doing decisions AND scared of buying from startups. Sure, startups should go abroad quickly and get customers from US etc. But why is Sweden doing so well? Partly because their internal ecosystem is better from this perspective. Companies buy more from startups, rather than scarily ask for GDPR-compliancy, SOC2 certificates, proof of having existed for 3y+ etc. A culture change is needed! If we want to get the ecosystem actually grow, let’s focus on providing opportunities for startups to help our scaleups and corporates. It starts from encouraging the decision makers: 1) Founders & C-level, 2) VPs, Directors and the “Corporate-people”, to buy from startups, give the right to use the logo, and prove their value. If the startup service is shit, so be it, make sure to have the right to cancel at any point! But many times it may be surprisingly good and actually solve problems at a fraction of the price of an established alternative. If we get 100 companies to try out services of 5 small startups each to solve their problems, we unleash the potential of 500 case studies that can easily lead to a total new customer count of 5000 for these small companies. Small way to contribute to a massive potential opportunity. No charity, pure business, win win win.
Shares and stock options as part of compensation package
Start-ups can rarely attract talent with high salaries so giving out shares and stock options as part of the compensation is vital. However, the taxation regulations for this are extremely complicated, and more importantly, they do not seem to accept that most start-ups fail and the shares and stock options are worth nothing. Even if there is a successful funding round with a valuation, that does not mean that the shares/options are really worth that amount as there is no market to sell them and the likelihood of their value ending up at zero is still high. These are facts that should be taken into consideration in taxation. Ideally, taxes should be payable only when the shares are sold, or at least when there is a reasonable certainty that the company will survive. In the set-up where shares/options are taxed as income, it should be at least possible to claim the paid taxes back if the company ends up going bankrupt. This is just common sense as the recipient has not benefited financially from these shares/options at all and they have still paid taxes for them.
Setting up options is funnily complex and expensive - it should be as easy as paying salaries
The bureaucracy related to setting up option programs and managing them, as well as paying taxes, is a massive blocker for companies to set up programs as well as getting world class talent. The requirements from Oy-perspective are crazy, and simply the setup and registration tends to require lawyer help. I don’t see any reason why this should be massively more complex than paying salaries. The reason of course lies in the share ownership challenges and treatment of those, but maybe that could be massively simplified. Also, the taxation of calling options is ludicrous at minimum. It’s fine to pay taxes once you get some money out of them, but paying for example 10k cash for option taxes while getting an imaginary benefit of 20k now is stupid. Getting that 20k in cash might take easily 5-10 years in the typical setup of growth company lifecycles, and even then it is massively uncertain. Proposals: simpler and thus easier setup and registration requirements for option programs separate taxation from calling the options link taxation only to actually receiving money from the options (or in the event of IPO, tie the tax result to that)
Tax-incentives for investing in startups
Startups require fuel for growth. One essential part of the fuel is private funding. Compared to US startups, their European counterparts raise much less funding. This means the startups in the EU and Finland are competing against better-funded competitors. We should look into tax incentives that increase the available capital for startups. The US has the QSBS system, and the UK has SEIS. Could this be implemented in the Finnish tax system?
Cutting Public Innovation Funding
It is concerning that in an already difficult economic environment, Finland is deciding to end or suspend instruments (like NIY) that were specifically designed to support growth and internationalization. In times like these, is this really where cuts should be made, from the tools that drive innovation and long-term economic growth? Perhaps this is an issue where the Finnish Startup Community could raise its voice even more strongly?
Biased selection processes
Few immigrants selected for volunteering leadership roles especially team leads, leadership paid positions, founders and grants like the startup foundation while many are applying like I did many times, especially Arabs which is raising a worry about islamophobic environments, could you please raise awareness about this topic?
Our employment market is too stagnant.
In Denmark, companies are very dynamic in hiring. Companies can hire for any need and see how the person performs, 6 months, 1 year, etc. Then if the relationship is not valuable anymore, company might have changed course, strategy changed, it’s easy to fire. Not having the flexibility to fire makes Finland a very stagnant country. It also leads to the problem that we have much fewer jobs open, so much fewer chances of making great employer - employee matches happen. Also for the employees, it’s much better to be in a place where they can make a valuable contribution rather than staying at a company just because it’s difficult to find a new job and because it’s difficult to fire them.
Business incubators
Why there are only few business incubator environments in Finland? There are many in Sweden.
Taxation
Hi, Thanks for such initiative. Finnish taxation system is difficult to understand for any foreigners. I do not understand, if we want to raise any profit, we need to give own tax and company tax. As an example, To raise 100 Euro, we need to give almost 60 euro. This means we will get 40 euro. I work 6 days , start 9.30 and come back home after 22.00, I am so tired with restaurant business. It do not bring profit, moreover big money goes to franchise fee. Finland is not small entrepreneur friendly. Need more support to understand the overall system.
Alone in the dark
Me and my friends had an idea for a company and were eager to start making the start-up. Where to begin? We turned to our local city. They had no network of entrepreneurs nor could guide us forward. We turned to state level information. No concrete information on how we could get started on. We had no connections, no public funding, nothing. So, we did what we could and burned over 2 years making the product on our free time. Not surprisingly, burnout came before we could launch our product. Worst of it all, we had found a market fit and had few customers happily using our beta-product. But after even two years we had no network and no support structure we could utilize to bring it home. Now, you might read this and wonder why didn’t we do X or ask help from Y? But the thing is, it is obvious for you. It isn’t obvious for new founders. I cannot imagine how many people would want to test waters but they have no idea on even how to do so. We do not offer any help in any level of government to start new business. We had our own OY and filled in tax forms to make properly our first years, which required a lot of learning and effort. This is to say, we ended up net negative on our start-up efforts to the country we tried to find a company for. Safe to say, everyone of us no more looks towards starting a company and are just comfortable in their day jobs
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