Finland is turning to venture capital financing as it searches for ways to jolt the economy out of a recession without jeopardizing its AAA rating.
The northernmost euro member wants to attract investors for a new 1 billion-euro ($1.28 billion) program and help startup companies without adding to its budget deficit. Finland is promising that investors who buy into the venture will take the lion’s share of potential profits. The program will also target growth companies.
“The debt crisis caused investors to retrench from this riskier startup funding,” Petri Peltonen, head of the enterprise and innovation department at Finland’s Economy Ministry, said in a telephone interview. “We’re now trying to attract private investors to take more risk that will help boost economic growth and create jobs.”
While Finland has weathered the crisis better than southern Europe, its economy contracted for a second time in four years in 2012, stretching government finances as the nation faces a fifth consecutive year of budget deficits. Finnish bonds with maturities longer than one year have lost 0.2 percent this year, compared with a 0.7 percent gain for euro-area government bonds, according to Bloomberg/EFFAS indexes.