Tekes increased its funding for young, innovative growth companies

In accordance with its new strategy, Tekes increased its funding for young, innovative growth companies. The growth rates and successfulness of these businesses in various comparisons show that Tekes has been able to choose the right businesses and projects to be funded among the wide selection on offer.

The fastest growth was seen among some hundred companies under special funding for young, innovative growth companies. In four years, their cumulative turnover increased from€10 million Euros to 250 million Euros in 2010. During the same period, the personnel of the companies became six-fold, totalling over 1,200 employees.

In 2011, Tekes provided funding in the amount of 33 million Euros to young, innovative growth companies. Of this amount, approximately a third was directed at companies involved in the Vigo acceleration programme. For these special funding forms, 130 companies were selected that showed special promise. In total, Tekes funded young businesses less than six years old with 112 million Euros in 2011.

“The growth companies that we have funded place well in various comparisons, and this indicates that Tekes has been able to select funding targets that have the ability and will to grow. Of the most promising Finnish growth companies listed by Deloitte, business magazine Talouselämä and Red Herring, for example, most are Tekes customers. This is a good indication that we have been able to choose the right targets out of the wide selection of tests and applications available,” says Tekes’ Executive Director Ari Grönroos, in charge of the funding process.

The concrete results attained in the projects provide further evidence of the successfulness of the selections made. In the projects completed in 2011, 470 new or replacement products were created, along with 400 new or replacement services, 280 new or improved processes, 840 patent applications and 1,020 academic theses. In total, 1,550 projects were completed.

Growth company start-ups need public and private funding

“The Tekes strategy sets out to balance out for the market failure and fund a number of start-ups at their early stages with small investments. In these circumstances, public funding plays an especially crucial role in sharing the risk, as individual venture capitalists are not prepared to take major risks with companies that are at their incubator stage. At this phase, entrepreneurs have to gather the required self-financed share from their own assets, business angels or close ones,” says Tekes’ Director General Veli-Pekka Saarnivaara.

“After the initial phase, Tekes applies a lot more selectivity. When making funding decisions, we cooperate with private venture capitalists and Finnvera, the state-owned specialised financing company. Once the business is up and running, financing must operate on solid market terms,” says Saarnivaara.

“A distinct, positive change of attitudes has taken place in entrepreneurial enthusiasm, and this is visible in student communities, in particular. Tekes participates in the funding of their self-contained activities through Aalto Center for Entrepreneurship, or ACE”, says Saarnivaara.

High demand for funding continues

Tekes funding was still in high demand both among businesses and in terms of research activities in 2011. The funding applied by companies was almost double compared to Tekes’ funding potential, and even more as regards research organisations. 3,100 actual applications and over 1,400 funding tests by new customers were received.

In 2011, Tekes invested 203 million Euros in the projects of institutes of higher education and research institutions, 81 million Euros in the research programmes of the Strategic Centres for Science, Technology and Innovation, and 326 million Euros in projects initiated by enterprises. In all, Tekes invested 610 million Euros in R&D and innovation activities.

Of the funding provided to companies, nearly 60 per cent was directed at SMEs and almost 75 per cent to companies that employ less than 500 people.

Tekes funding has had an impact on 60 per cent of new innovations

In 2011, VTT Technical Research Centre of Finland used its Sfinno database to analyse the role of Tekes in the creation of approximately 5,000 innovations gathered in the database. According to the analysis, Tekes has four main roles: a funder, an activator, a networker and an investor.

According to the results, Tekes funding has had a significant impact on approx. 60 per cent of all new innovations. In terms of demanding projects requiring long-term development work, the respondents found that Tekes had held a major role in even more cases.

For more information

Director General Veli-Pekka Saarnivaara
tel. +358 1060 55700 and

Executive Director Ari Grönroos
tel. +358 50 5577 770