New incubator businesses increased by 40% in 2005

New competence-based companies are needed to replace jobs moving elsewhere

Media release 31.5.2006

Finland will quickly need new competence-based businesses as jobs created by more mature companies are transferred elsewhere. Sitra has devised models for Finnish technology incubators in collaboration with the Ministry of Trade and Industry, Tekes and other investors over the past three years. The first results show that the number of new competence-based businesses in seven localities increased last year by nearly 40%.

“The increase cannot be explained by the general increase in entrepreneurship alone. It is the result of focused development work, the set goals and the follow-up,” says Anu Nokso-Koivisto, who chairs the steering group for the project. Co-operation with the public sector and regional investors, local authorities and Regional Councils has paved the way for achieving substantial results.

Incubators accelerate the start-up

At the beginning of the project, the word ‘incubator’ was not necessarily associated with the dynamic operating environment of companies seeking international growth.
“Now we are proud to present our operative models. The project has seen the establishment of Europe’s largest technology incubator, Technopolis Ventures and its subsidiaries,” says Nokso-Koivisto.

The most notable changes in the Finnish technology incubator activity have been the shift in focus to finding new companies for start-up, identifying entrepreneurial ideas both for spin-offs and in the interface between companies and research institutes and universities. A special pre-incubator model has been developed for evaluating the commercial potential of entrepreneurial ideas. General increase in activity, improved services and mutual networking have also accelerated the emergence of new incubator businesses.

Research-based companies create new jobs

It has been a positive surprise that every year some thirty new research-oriented companies are started. These technology companies seem to create the most jobs, once they have reached a certain level of growth.

“As 85–90% of the incubator clients are still in business after five years, it can be estimated that in a ten-year time span, the best companies will have created 15,000 new jobs in their own field and the same amount of jobs in subcontracting and service enterprises,” says Martti Elsilä, Managing Director of Technopolis Ventures Oulutech Ltd.

The best regional innovation environments are a joint effort

Incubator co-operation is particularly fruitful when all local actors are interacting with each other and understand the significance of incubators in the development of new enterprises.

“Investors, such as the Employment and Economic Development Centre, Tekes, Finnvera, venture capitalists and banks, will then be able to trust the incubator’s capacity to secure the start-up of new enterprises and send their own clients to the incubator,” says Risto Mauno, head of the incubator activities of Lahti Science and Business Park. According to Mauno, the role of local authorities in the improvement of regional innovation environments is crucial.

Incubators need a wide competence base

Consultation services for entrepreneurs need to be of particularly wide scope, as their own competence is focused on the business idea and technology. Introducing business know-how into the company is vital.

“We are piloting, jointly with Sitra, a national training programme for incubation managers which is completely unique in the world and scheduled to be launched in the autumn. The programme’s working title is Yrke Academy and it will train professionals in a completely new niche,” says Juha Valtanen, Project Manager from the Small Business Institute of the Turku School of Economics and Business Administration.

Short-term funding creates a challenge

The funding of technology incubators is still of limited time span, although visible improvements towards simplifying the funding model have been achieved. Tekes and Employment end Economic Development Centres as well as several municipalities have commendably supported the project.

“We are positive that the Ministry of Trade and Industry and the organisations operating under it are committed to securing the continuation of the major development work that has taken place in twelve localities by providing a long-term funding model,” says Olli Mankonen, Department Manager for Turku Science Park.

Further information

Anu Nokso-Koivisto, Director, Sitra
Tel. +358-9-50 563 6997
firstname.lastname@sitra.fi