When Finland launches new policies, it is usually worth paying attention. This time the Finnish government focused their efforts on high growth entrepreneurship, and new research evaluating the impact of its policies indicates that yet again, policymakers in Helsinki had some very good ideas. They implemented a number of policies to support high impact entrepreneurs with the objective to mitigate the money and skills gaps among Finnish entrepreneurs, and help firms grow as a result.
Heikki Rannikko and Erkko Autio of Aalto University found that Finland’s pioneering efforts have paid off: the data indicates that supporting high growth entrepreneurship can help firms mobilize financial and managerial resources and achieve higher growth.
Based on the results of the NIY Program of Tekes and the VIGO Accelerator Program, the authors argue that three types of policy initiatives tend to have the best results:
- very selective policies with regards to a firm’s motivation to grow
- policies that link support to milestone achievements, and
- policies that solicit active private-public collaboration.
Overall, there are more scaleups and more willingness to invest in them since the introduction of measures to support high-growth entrepreneurship. The data indicates that companies participating in the above programs have successfully raised more equity funding; additionally, participating accelerators have proven helpful in helping their portfolio companies raise additional funding. And most importantly, over 60 percent of the participating companies perceived the two programs to have significant added value for them.
The above confirms the findings of David McKenzie’s study of Nigerian firms: once access to public funding for businesses is tied to careful vetting and milestone achievements, companies can grow at higher rates, creating jobs and wealth for their owners and employees.
Contributed by Lili Torok.