Today’s big news in Finland is the launch of a new Startup Foundation (Startup-säätiö), by renowned Finnish serial entrepreneurs and investors, Startup Sauna and Aalto ES. The foundation looks to advance the state of startups in Finland and create Helsinki the centre of startups and technological innovation in Northern Europe. The foundation will fund and operate three different activities: 1) Startup Life, an internship program where students are sent abroad to work at the best startups globally, 2) Startup Sauna, the startup accelerator program as well as 3) run the Slush conference.

In addition to the above mentioned activities, the foundation will also financially support ecosystem activities elsewhere in Finland to help achieve its goal. Therefore other individual organisations can also apply for financial support.

The Startup foundation is looking to operate with a hefty budget. Its equity upon starting is about one million euros. €57 000 come from individual donors. Sitra, the Finnish Innovation Fund, has donated €300 000 to the newly minted foundation (news in Finnish). The rest of the money comes from the Finnish Ministry of Economy and Employment, Tekes and Confederation of Finnish Industries.

Miki Kuusi, a former president of AaltoES and also one of the people putting together the practicalities for the foundation, has commented in an article in Talouselämä, that the foundation will look to run with about a two million euro annual budget in the future. The negotiations are underway to raise this money from multiple sources.

While I personally applaud the concept and immense effort behind the initiative (and having followed some of the work really close, it’s been a long stretch to get it done), it concerns me that once again it is mostly the public that is paying for this. Many of the activities organised by Startup Sauna, especially the Slush conference could be run in a market oriented way as we do in the case of our events.

Startup Sauna, the accelerator program on the other hand is not taking any equity in the startups it coaches. This makes it a very attractive program, especially with the quality coaching, but it does raise the question: should it do so, especially now that the public is going to fund it this extensively in the future? With a few successful exits, the foundation could get a nice inflow of cash to help finance its activities instead of solely relying on the tax payers.

It’s a difficult topic, but to be honest I’m biased. On the other hand I’m extremely happy that startups get more tools to work with, but as a small business owner and a tax payer – I don’t like to see it come out from my pocket, especially when there are some overlaps where we compete with the offering of the foundation.

One of these offerings is our conference Arctic15, which is in some ways competing with Slush. With a bigger war chest, Slush is, for example, able to subsidise prices of its tickets lower than us who require to take into account a smaller ability to carry a financial risk. Naturally competition is good and I support all acts to increase it, but when the government gets into the game through a foundation like this it does make the competition a little unfair to say the least.

While ArcticStartup is a business, I also feel it helps the overall startup ecosystem in Northern Europe through publicity. We have built our business on revenue and it has been tough to do, but it has also taught us that we need to operate in such a way that clients are willing to pay for the value we create with their money. Rather than taking Tekes funding, we offer them sponsored articles at the market rate.

I realise to many of you this may come across as whiney, but what kind of an entrepreneur would I be if I didn’t raise discussion about unfair competition against my business by the government?

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