Author
Abstract
This paper evaluates entrepreneurship and entrepreneurial culture in Finland and describes the development of the Finnish venture capital market. Formulation of SME policy has been the major public effort in fostering entrepreneurship. Because of the severe recession during the early 1990s, the emphasis of the SME policy has been on job creation and self-employment. Indeed, not until the end of 1990s were more demands made for encouraging growth-oriented venturing. The development of the venture capital market has been used as an SME policy instrument. As a result, public funds have been dominating in the market. In the late 1990s privatisation of public funds has been increased and the basis of the market has developed in a more sound direction. In 1997 the amount of authorized capital in the Finnish venture capital market was about FIM 5.8 billion (about US$ 1.1 billion) showing an annual growth rate of over 80%. Annual investments were over FIM 0.8 billion and the total amount of investments in portfolio companies FIM 2.2 billion. These figures confirm that the venture capital market is emerging. The growth rate of the market could be even higher if the basic resource - entrepreneurs - were not so scarce. Informal venture capital and the role of business angels are also discussed. For seed and start-up stage ventures, business angels may be the best possible partner in financing since the amounts they offer are lower than those of institutional investors, they act regionally and are more "hands-on" in the everyday development. This paper is a revised and updated combination of two earlier papers [1].
Suggested Citation
Markku Virtanen, 2001.
"Entrepreneurship and venture capital market in Finland,"
International Journal of Entrepreneurship and Innovation Management, Inderscience Enterprises Ltd, vol. 1(2), pages 194-216.
Handle:
RePEc:ids:ijeima:v:1:y:2001:i:2:p:194-216
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