Growth-seeking entrepreneurship: The role of the support system

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A keynote speech at the award ceremony of the annual Icelandic Innovation Award, 10 April 2014, Grand Hotel Reykjavik

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  • Growth Track service, which aims to provide a one-stop-shop for companies seeking quickgrowth and internationalization. Tax incentives for R&D and angel investors
  • Growth-seeking entrepreneurship: The role of the support system

    1. 1. Growth-seeking entrepreneurship: The role of the support system Petri Rouvinen ETLA, The Research Institute of the Finnish Economy Nýsköpunarverðlaun Íslands Grand hótel Reykjavík April 10th, 2014
    2. 2. What I mean by…
    3. 3. Invention Innovation≠ $+
    4. 4. Innovation ≈ Seeking opportunities 1% spark – 99% sweat Needs (some) money Mostly not technical Mostly incremental Increasingly digital
    5. 5. Innovation Entrepreneurship≈ $+ $+ +
    6. 6. Entrepreneurship Self-employment Perceives economic opportunities and introduces them in the market Works but is not employed by others; may employ others but typically not Overlap under 10%
    7. 7. EU Innovation Scoreboard: Finland among leaders & Iceland among followers (above the EU average) Source: European Union, Innovation Union Scoreboard, 2014 0.684 0.593 Finland Iceland
    8. 8. 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 Economic effects Innovators Intellectual assets Links, entrepren. Firm investments Finance, support Research systems Human resources Economic effects: Finland Innovators: Iceland Intellectual assets: Finland Links, entrepreneurs: Iceland Firm investments: Finland Finance, support: Iceland Research systems: Iceland Human resources: Finland New PhDs, upper sec. ed. Int. co-publicat., non-EU grad stu. Pub-priv co-publ. Patents, trademarks protected designs Share of Innovative sales Dimensions of Innovation Union Scoreboard Source: European Union, Innovation Union Scoreboard, 2014 VC n/a
    9. 9. “Iceland is the only country for which innovation has not improved over the 2006–2013 period.” Innovation Union Scoreboard 2014, p. 71
    10. 10. Early-Stage Entrepreneurs: Iceland leads the advanced countries Source: Global Entrepreneurship Monitor, 2010 Global Report. Measure: Early-Stage Entrepreneurial Activity / Adult pop. 5.7 10.6 Finland Iceland
    11. 11. • History: Attitudes & culture hostile to growth companies … but since the crisis Finland to a global startup hotbed! • Why? – Aalto university – Encouraging examples – Challenges of incumbents – Digitalization & globalization – Several good policy measures Startup in Finland!?
    12. 12. A new Act in 2009 “privatized” universities and reformed management & decision-making 3 former university merged to form Aalto Univ. in 2010 Aalto’s faculty & students became cheerleaders for startups: Aalto Entrepreneurial Society, Aalto Centre for Entrepreneurship…
    13. 13. A brochure of Tekes and NeoGames by the same name. After 50 failures, Rovio hits the jackpot with Angry Birds Over 800 employees After just three years of operation, Supercell sold a 51% stake for €1.5bn 150 employees 250 900 2012 2013 Turnover Million € 1,800 pers. 2,200 pers.
    14. 14. 0.5 0.3 0.5 0.7 0.8 1.1 1.2 1.8 2.5 3.1 4.0 3.3 3.6 3.8 3.0 2.9 3.1 3.2 2.6 1.2 1.2 0.5 -0.1 0.5 1990 1994 1998 2002 2006 2010 Nokia’s Share of Finnish GDP, % Source: Ali-Yrkkö, ETLA est. Beyond corporate & public employment…
    15. 15. 1011 0101 1100 0010 3D IoT Cost of entry ↓ Market reach ↑
    16. 16. With outsourcing &offshoring: size & location matters less Ability to position oneself in global value chains
    17. 17. Vigo Accelerators Tekes: Shift in Emphasis 10 Vigos, public–private Tekes startup funding, m€ partnership business accelerators: €220mn private & €70mn public investment to 90 target firms in 2009–2013. Some public measures 45 40 42 61 58 74 88 102 127 134 2003 2006 2009 2012
    18. 18. Conclusions
    19. 19. Some observations regarding Finland • Seeking a list of (broad) growth industries inconsistent with global realities (cf. megatrends) – Businesses do grow, but across a range of industries & often in small increments • Too focused on “big hits” & the VC market? – A number of “nice growth” companies may jointly matter more for society
    20. 20. Humble questions regarding Iceland • Good scientific base... Applications??? • Icelanders with sufficient tools for thought? • Banks & family/friends finance 90% of new firms – But does not fulfill needs of growth-seeking startups – 5–10 rounds of startup finance before maturity: path? • Manifold innovation support in Finland... Iceland at its optimal level of public support?
    21. 21. Growth-seeking entrepreneurs (and similarly-minded corporate intrapreneurs) are a necessary link between ideas & their societal impacts… Is this link sufficient in Iceland?
    22. 22. For Iceland to do? • Lessons from Finland? – Vigo Accelerators? • A Norwegian-style tax incentive (≈Tekes)? • But: No silver bullets – this domain is systemic – A broad set of framework conditions needed for innovation & entrepreneurship (cf. Nordic Innovation: 20 categories)
    23. 23. Try a lot, fail fast and often, scale up or try again.
    24. 24. Thank You! fi.linkedin.com/in/petrirouvinen/ Petri.Rouvinen@ETLA.fi  +358–50–3673474

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