Migratory pathways for startups and innovative entrepreneurs in Tuukka Lampi Senior Adviser EMN Finland

Co-funded by EU AMIF The Finnish startup scene today

• Finnish economy still mostly ruled by big companies, but small enterprises are active and their share is growing • Approximately 4000-5000 startups per year founded, out of which 6- 7% (approx 300) of them annually show consistent growth • Notable startup fields: IT, digital services, Cryptocurrencies, software, hardware, AI, Blockchain, IoT, Gaming, AR/VR, Energy and Environment, Health, Education • Startup events important boosters: Slush • Public and private investor schemes/business angels: FIBAN, grants by Business Finland, Finnvera • Incubators: Universities play an important role (e.g. 's A-Grid) • National/Local-level services (cities as facilitators): co-working locations (for example Maria 01 in ) Context: Emergence of the start up ecosystem in Finland • Creative destruction: The fall of Nokia since 2012 from mobile tech sector provided an important boost – mushrooming of small businesses and startups by former employees • At the same time, one of the engines behind the growth of the Finnish startup scene has been the hugely successful gaming and software industry led by companies like Supercell and Rovio. • Coinciding with a global trend – startup friendly ecosystems emerging elsewhere (e.g. Estonia as a neighbouring example) – emergence of mobile international talent. Government policy on international startups • Supporting startup-entrepreneurship featured on all agendas since early 2000s but a proper ecosystem began to emerge after 2008.

• Talent boost (2017): 1. Make Finland more attractive to international talents; 2. Harness the expertise of international talents already in Finland to support growth, internationalization and innovation in Finnish companies; and 3. Make the Finnish labour market more open, responsive and attractive to international talents.

• Background in economic policy: – Concern over attracting international talent to Finland – Challenge of retaining international students after graduation – 2010s economic policy focused on boosting innovation for added value in economy: immigration seen as catalyst for creation of new enterprises, new jobs and economic growth. Government policy on international startups

"Migration and the mobility of international talents are increasingly important for Finland’s competitiveness. A number of reports have identified the availability of talents as one of the most important challenges facing companies as they are expanding and aiming to become more international. Finland competes with the rest of the world for the best talents.” Source: Ministry of Economic Affairs and Employment website

"Migrant students and workers have contributed significantly to the internationalisation of the growth company sector. To generate innovation and new business activities it is essential to identify and bring together relevant regional actors and development networks. The role of national actors here is to enable these activities. " Source: Migration policy in the innovation economy. International migration, immigrants and innovation policy (2017), Ministry of Employment and the Economy Immigration policy: the startup permit

• In April 2018 an amendment in the Finnish Aliens Act was passed that included startup entrepreneurs as a new residence permit category. • Finnish Immigration Service introduced the start up residence permit in cooperation with Business Finland – Meant for applicants from outside the EU who plan to establish a start-up company in Finland. For EU citizens, the process is simple because establishing a start-up in Finland does not require a residence permit, only a registration. • Rationale: Finnish government argued that the Finnish business scene has undergone a historical shift from a playing field dominated by few large companies to a dynamic business ecosystem dominated by several small enterprises. Most new jobs were now being created by small and mid-size enterprises, especially in technology- and innovation-based growth enterprises. • Need for a speedier application process. Before the startup permit: Application process as an entrepreneur slower and more bureaucratic. (More attachments, longer processing time) Start up permit: Application process

• Two-fold application process: Processed jointly by Business Finland and the Finnish Immigration Service. 1. Business Finland reviews the business plan and issues an eligibility statement (valid for 2 months) 2. Finnish Immigration Service issues the permit based on Business Finland's statement. The permit is usually granted for 2 years.

Business Finland's eligibility criteria:

• a startup team of not less than 2 founders with versatile expertise • an intention of founding a fast growth company in Finland • an innovative business plan • commitment to the business idea and eventually building the company • significant holding in the company (For example the team applying for the permit, has a holding of not less than 60% of the company.) • access to sufficient resources and funding for the company's early stage development • secure financial means for support Start up permit: Some figures

• Rising trend: In 2018 over 100 applications submitted, 34 given a positive statement from Business Finland and The Finnish Immigration service granted 23 startup permits. In 2019, by now, the Finnish Immigration service has already granted 49 startup permits. • Top 3 countries (2018): Russia (37), China (10) and Iran (9) • Top 3 countries (2019): Russian federation (29), China (11), Ukraine (10) • More than half of the businesses are in the field of digital services and software. Applications were also submitted by international researchers in Finland aiming to commercialize products of their research. Finland's push- and pull-factors for startu

• Advantages: – Organic growth of certain sectors a pull factor – Tech-friendly environment – Startup-friendly government policies (low red-tape) – High quality public services (healthcare, education) – Family-friendly

• Challenges: – Lack of knowledge about Finland (depends on distance) – Finding the right target market – high taxation/cost of living – Small domestic market (however, avenue to EU market) – Retention of foreign students in Finland after graduation difficult Policy: Challenges & Good Practices

Challenges to residence permit process: – Two-fold application process may be confusing to applicant – Visiting the Finnish embassy for submitting the permit application or for identity verification may pose a logistical challenge – Two person minimum staff requirement: Many applicants are one-person enterprises, which do not qualify. Hence, a high rejection rate. – Lacking tools to track applications and cooperate between authorities – Assessing the applicants' sufficiency of income

Good practices: – Multitude of available public and private funding schemes for different levels – Commonly agreed standards = quick granting of funding, because the business plan has already been pre-validated – Family members' residence permit grants right to work also ▪ Case in point: The Hidden Gems program by the city of – Cross-sectoral cooperation between authorities and other stakeholders Future steps

• After launching the startup permit, the Finnish government has focused on a) promoting Finland as a startup friendly country b) promoting the startup permit as a convenient migration channel for innovative entrepreneurs from third countries • Government plays a dual role a) enabling a thriving startup ecosystem and b) facilitating the attraction of international talent. • Private entities such as the startup event Slush function also as pull- factors. • Feedback-mechanisms: Success of individual startups attract further foreign talent. Thank you! / Merci!

4/15/18 Euroopan muuttoliikeverkosto 12