Finland will have its parliamentary elections this spring, and Estonia just had theirs. I’ve come across quite a few candidates and politicians who don’t fully understand the importance of early stage investments, call it angel investing or whatever you will, for the startup ecosystem and the economy itself. Some go even as far as stating, why should we give benefits to a certain group of business people and not everyone else? I’ve thought about this for a long time and I believe I’ve come across the most simple way to put the message across in a way that politicians would understand and respect the importance of it.
Politicians love talking about employment figures. I believe the importance of early stage investing for politicians can be explained through them. My statement is that a functional seed investment market will enable startups to twist the laws of economics in such a way that they’re able to employ people without any revenues. A functional early stage investment market will enable startups to hire more people for companies that don’t yet have revenues. Companies would be using private investors’ money to keep people off unemployment benefits.
It would be an interesting study to conduct; how many people are employed through venture capital in Silicon Valley in companies that wouldn’t be able to hire the people otherwise? My guess is that it’s quite many.
This is basically, if you put it this way, employment money from private investors to keep people at their jobs – without any tax payer money. It’s a bit of a twisted way to look at it and naturally this isn’t the end goal that the investments are for, but I believe it’s a great side product of investing into companies and helping them grow. Naturally, this won’t solve the whole unemployment crisis, but with little changes to the current policies we would be able to achieve a lot.
Early stage investments are of crucial importance to a functional startup ecosystem. It should be every political party’s goal to enable more of them through changes to policies regarding them. There’s certainly a need for change in this matter.
Image by doctor paradox.