Public procurement should favor new businesses

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Capital de Risco

O meu amigo Risto Kalske, durante vários anos meu colega na Direcção da EBAN – Associação Europeia de Business Angels, escreveu um texto sobre a importância de uma adequada política de compras públicas como alavanca para as start-ups a exemplo do que a Agencia Americana SBA tem vindo a fazer há anos no competitivo mercado americano.

Mas pelos vistos na Finlândia, tal como em Portugal…, os jovens empreendedores ainda vão ter de esperar algum tempo até que possam beneficiar deste importante instrumento de apoio ao lançamento de start-ups, nomeadamente de carácter disruptivo!

Mas um dia esse facto vai ser uma realidade e nessa altura iremos perguntar: Mas porque demorou tanto tempo a implementar?

 

English version of the article published in the leading Finnish newspaper Helsingin Sanomat on March 28th.

 

Public procurement should favor new businesses

The public procurement of smaller RFQs among start-ups could provide a springboard for growth companies to address larger markets.

Ministerial delegations to foster export sales gain a lot of media visibility, but the results and impact of those travels are rarely discussed. Promoting exports by traveling is a long-term initiative.
Government ministers can, if they so wish, influence the competitiveness of small enterprises with public procurement practices. And then the results can be seen already during the electoral period.

The activities of the Finnish Funding Agency for Technology and Innovation (TEKES) have been praised for their long-term financing of technology companies, and productization of new inventions. However, as a nation we are too often at a loss when new technology companies do not find their way to the international markets and to success.
The small size of the Finnish market encourages companies to go international, but when you don’t have reference customers or proven experience from your home country, the company’s growth opportunities easily come to a stop.
Finland’s total annual public sector procurement accounts for some € 23 billion market, of which nearly 5 billion € consists of state purchases.

Some countries have used legislation to safeguard smaller procurements primarily to be subjected to competitive tendering within new enterprises. The U.S. government’s procurement practices targeting early-stage enterprises and minority-owned businesses are the most advanced.

The limit for small procurements may vary from a few hundred thousand up to a half million Euros. In example countries, the purchasing contracts targeted to smaller enterprises represent about 20 percent of all government procurements.
The winners would gain pilot customers to foster their export sales, and losers would learn to improve their business for the future. On offer would be a step forward without subsidies or other costs.

We welcome all the new technology companies which are established in Finland. But we have not yet woken up to the fact that it would be in the nation’s best interest to create a spearheading and open-minded domestic market for these products and services.

With state procurement we could ensure the pioneering companies to get the needed reference sales, and thus enable their access to international markets at the right time. References are a prerequisite for international success, and they cannot be bought by subsidies. They have to be gained in a competitive bidding environment.
We should more clearly assume a responsibility when we give birth to publicly funded new businesses. It is quite sad to follow, for instance, how the companies applying Finnish LED-technology try to journey toward the lighting market.

We have nearly 30 LED companies in Finland which have been born with TEKES support. These companies provide solutions to roadways, walkways or for interior lighting in buildings.
Public lighting will be experiencing a transformation in the next few years, because old lamps containing mercury will be removed soon to meet new regulations. In global markets it is taken for granted that LED offers the best replacement technology.

Finland has not provided a springboard for LED technology companies to address larger markets based on domestic procurement references. Without this kind of support, the creation and funding of any of those 30 companies has been in vain.
Public procurement practices are sensible when besides quality and price criteria also fostering the emergence of new industries is taken into account.
It is a question of a common desire and attitude: do we really want to foster the creation of new Finnish companies, and create jobs and prosperity.


Licenciado e Mestre em Gestão de Empresas. Presidente da Gesbanha, S.A., especialista em capital de risco e empreendedorismo, investidor particular ("business angels"). Director da EBAN e da WBAA

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