What’s changed at Business Finland? Rethinking how Finns turn ideas into exports

Over the last year, Finland has made one of the biggest changes to its business-support ecosystem in some time, moving Business Finland’s overseas network into the Foreign Ministry while reinforcing the agency’s role as Finland’s prime innovation and research funder.

At first glance, this looks like a story of budget cuts, staff reductions and restructuring. Yet, while support for funding of some export promotion programs has been reduced, the amount of annual R&D funding has actually grown significantly to close to €1 billion. This is in line with Finland’s goal of raising R&D spending from around 3.2% to 4% of GDP by 2030.

What’s actually changed?

The most significant change has been the transfer of Business Finland’s overseas network and some related support staff to the Ministry for Foreign Affairs. Around 130 staff (approximately 15% of Business Finland’s workforce) moved at the beginning of the year, while the agency’s domestic operations remained under the Ministry of Economic Affairs and Employment. At home, Business Finland continues to oversee a broad portfolio, including innovation funding, investment promotion, talent attraction and tourism development.

For Business Finland Director General Lassi Noponen, the challenge now will be to ensure that ideas developed in Finland with Business Finland’s support continue to find their way into global markets.

“The idea behind Business Finland was that we have a seamless pathway on the government side from R&D to the markets,” Noponen says. While acknowledging the shift has so far gone relatively smoothly, he says that separating the overseas network could make the connection harder to maintain. “But we are working on it,” he says.

Juha Pyykkö, Deputy Director General who is overseeing the shift on the Foreign Ministry side, is focused more on the benefits of closer integration.

“Before the reform, embassies and Business Finland often worked side by side abroad, but with separate reporting lines, budgets, and even priorities,” Pyykkö says. “It was almost like there were two Finnish trade promotion shows going on all the time.”

Under the new model, ambassadors will have responsibility for all trade-promotion activities in their respective markets, combining the Foreign Ministry’s geopolitical expertise with specialized business promotion personnel under a single chain of command.

At home, Business Finland will continue to support export growth through its domestic operations, with increased focus on its core mission of innovation and research funding.

A political hot potato

Noponen notes that Business Finland’s funding has become something of a political hot potato — not because of disagreement over increasing R&D investment, but because different parts of the funding portfolio have been moving in opposite directions. He says that the agency will administer close to €900 million this year (up from around €800 million in 2025) in grants and loans specifically aimed at helping companies develop new products and technologies for markets abroad.

“Because Finland is a small economy, we’re giving R&D support basically only to companies that are aiming for export markets,” Noponen says.

Changes elsewhere in the funding portfolio have raised eyebrows. Several high visibility international marketing and commercialization programs have been reduced or eliminated altogether as the government shifted more resources towards research and development. In this context, companies that relied on support for trade fairs, internationalisation services, business consulting and market exploration are among those most likely to notice the change.

These shifting priorities also reflect changes in how Finland views innovation. In a more uncertain security environment following Russia’s invasion of Ukraine, and Finland’s subsequent NATO membership, Noponen says policymakers are increasingly looking at technologies that have both commercial and strategic value. He points to companies like ICEEYE and IQM Quantum Computers that develop the kind of dual-use technologies that can serve both civilian and defense markets.

So, what role should the overseas network play?

“Nowadays, geopolitics, trade and the economy are intertwined,” Pyykkö says.

By combining diplomatic expertise, market intelligence and business promotion under embassy leadership, the Finnish government hopes to create a more coherent system for companies to navigate everything from sanctions and tariffs to market access and geopolitical risks.

Meanwhile, the practical work of integrating the overseas network is entering its next phase. Pyykkö says the focus at the Foreign Ministry has already shifted from organisational questions to refining services for Finnish companies abroad.

One area under discussion is whether some specialist business services could eventually move toward a fee-based model, similar to approaches used elsewhere in the Nordic region.

“We are looking at what kind of value-added services companies might be willing to pay for,” Pyykkö says. The first fee-based services will be piloted this fall.

The exact model remains to be determined. Sweden, for example, operates some international business services through a separate limited-liability company, while Denmark’s approach more closely resembles Finland’s current structure.

“But it should not simply be about selling existing Finnish products,” Noponen insists. “The whole idea of Business Finland when it was set up was also about understanding what global markets will want next, then feeding that intelligence back into Finland’s innovation ecosystem.”

Noponen points to Finnish smart-lock company iLOQ as an example of why innovation should not happen in isolation. Working through the Business Finland network across multiple markets, iLOQ learned that people in different countries wanted to access buildings in surprisingly different ways — something that would have been difficult to discover from Finland alone.

“The challenge now is preserving that feedback loop across two different ministries,” Noponen says,

The debate may sound bureaucratic, but it ultimately comes down to a simple question: how does Finland turn a promising idea into a globally successful company?

Noponen sees the priority at the Ministry for Foreign Affairs as helping Finnish companies succeed in international markets, whereas for Business Finland, the focus is on ensuring that market intelligence flows back into Finland.

Pyykkö rejects the idea that the feedback loop might be lost. “The Foreign Ministry’s overseas network has long reported market demand back to Finland,” he says. “This integration should only strengthen that work.”

The Finnish engineer in the shed

So where do the future Finnish engineers go with their next big idea?

Finland’s business support landscape includes chambers of commerce, venture capital firms, angel investors, industry associations and international business networks, all playing various roles. Noponen says Business Finland remains a key entry point for development funding of new ideas.

He points to Business Finland’s new Sprint funding programme, designed to help entrepreneurs transform ideas into startups. Around 150 Sprint grants have been awarded in recent months alone to support the creation of new tech companies.

But funding alone will not be enough. The challenge for the new overseas operations will be how well they can connect  the first spark of an idea in a Finnish shed to customers and market opportunities around the world – and back again.