This article was originally published in Epic Owl Ltd's blog.
In this blog posting I’m writing about learnings in applying for public funding, what kind of money sources we have tapped into at Epic Owl and what surprises we have encountered.
This is an article I would have liked to read myself a few months ago; hopefully it will be helpful to some of you thinking about starting a business in Finland. Please, don’t take this as a set of instructions on how the processes work. I’m just writing about how the processes went in our particular case and pointing out some pitfalls and caveats. I’m not attempting to exhaustively describe how these instances generally work.
I would also like to debunk a myth that if you’re based in Helsinki, Finland, you only need to say you’re working on a mobile game and all investors start fighting over who can give you the most money. For most of us it’s not like that, we actually need to put in a lot of effort to get ourselves funded.
So here we go, enjoy!
Starttiraha (Startup grant)
Finnish government helps out fresh entrepreneurs with Starttiraha by TE-toimisto (Employment and Economic Development Office). Basically it’s a daily allowance for you to get started with your business before making any revenue. The most critical thing to remember is to contact TE-toimisto before you register your company and follow their instructions on how to proceed.
In our case, we applied for Starttiraha in advance as instructed, and after some moderate bureaucracy it was granted for all five of us for six months. Unfortunately, the decision didn’t stand.
After being granted Starttiraha, you need to re-apply for it to be paid on a monthly basis. Different people are handling the payments side than the ones who are handling the original applications. So, as it happened, even though we all were granted the grant originally, it was denied from two of us when the time for paying came. It apparently is not common for more than three people to get Starttiraha for the same company.
Obviously our mistake was to take all Starttirahas for granted after our application was first approved, without realising that it could be denied afterwards during payment phases. Three out of five Starttiraha grants is still good and it’s free money so even though we needed to adjust some of our plans, it’s definitely all on the plus side.
Tekes (Finnish Funding Agency for Innovation)
(Note: Tekes has changed at least some of the processes and terms since we handed in our application in January 2015 so some of this is likely to be outdated)
Tekes is a fantastic instance in Finland to provide funding for technology and innovation. It involves some bureaucracy but their funding can really make a difference. They have lots of different instruments for companies’ different needs; in our case we applied for funding for “Planning for Global Growth”.
The process as we went through it:
- Submit a preliminary application for Tekes for feedback
- Based on the prelimiary feedback, submit the real application
- Meet with the Tekes people, present your case and go through the details
After each phase we discussed with the Tekes experts and they helped to fine-tune our application to best meet our company needs.
The process was really straightforward and Tekes people were very helpful throughout it but again there were a couple of things we didn’t realise in advance.
1. Tekes grants are paid after the project is finished
In our case, Tekes agreed to fund 50% of our first project (pretty common percentage as I understand), against us spending the other 50% on Tekes-approved costs. What we didn’t realise in advance was that we basically need to spend 200% of all our existing funds on Tekes-approved costs to get the Tekes funding afterwards.
This is less of a problem as it originally looked like since there are also instances you can apply for a bridge loan against the Tekes funding approval.
2. Different kinds of public fundings do not go seamlessly together
Another thing we found out from Tekes was that there are complications for getting different types of public fundings for the same project. As you may recall from the beginning of this post, three of us were granted Starttiraha to cover some of our salary costs. This turned out to be problematic from Tekes’ point of view and the final decision was to not to count any salary costs for the Starttiraha-eligible people during the Starttiraha period as Tekes-fundable.
Another key learning experience with an obvious negative impact but then again, our application was approved and we can expect most of our project’s costs covered.
As the third and final grant we applied for the DigiDemo grant from AVEK – The Promotion Centre For Audiovisual Culture:
The DigiDemo grant is meant to fund the early demo phase of any audiovisual project so it applies well to the games industry. The applying process was also pretty light.
As we learned earlier with the Tekes and Starttiraha case, public grants for the same project do not go well together. After applying for the DigiDemo grant we learned that for any costs partially funded by a public instance (e.g. Tekes or AVEK), no other public funds can be used as the other part.
Since the cost types funded by Tekes’ grant and DigiDemo grant are mostly overlapping, it seems it will be difficult if not impossible to be able to use the DigiDemo grant in conjunction with the Tekes grant without violating any agreements. This remains to be seen.
The bottom line is that Finland is an amazing place to be a starting a business, with lots of funding possibilities and help available but there are also many things you take into account and need to be aware of. This brings us to the key learning, one that actually applies to almost everything, not just funding:
Be prepared! Always have your plan b, c and d ready.
In the specific case of funding: it’s not yours until it’s in your bank account. And sometimes not even then.
Thanks for reading this far, I hope you enjoyed. I would be very happy to get feedback, discuss your experiences and answer your questions if you have any so don’t hesitate to comment or contact me.