Startup companies have adapted their operations quickly as the surrounding economic situation changes. According to the report, the members of the Finnish Startup community cut their recruitment pace quickly last year. Based on the report for the first quarter of 2023, the key figure describing the number of personnel has leveled off and is still positive. In practice, this means that the number of personnel is estimated to continue to grow, but at a slower rate than before.
The slower growth in the number of personnel is intuitive due to changes in the economic situation. Startups must adapt to the new economic situation by using investors’ money more carefully.
Confidence in startups’ own financial situation is still slightly down compared to the last quarter of 2022, which is likely due to the fear that the availability of venture capital investments will weaken in the first half of 2023. It is important to note that also in 2022, Finnish startups raised a record amount of capital from investors, at least 1.8 billion euros. Funding remained strong even in the last quarter of 2022. However, there are still risks associated with the financial conditions of startup companies.
“Startups are still worried about how changes in the availability of funding will affect growth opportunities during 2023. It is good to remember that many startups make a lot of losses while growing and for example in product development. The surrounding economic situation has changed dramatically and overall less money is available, and it must be spent more efficiently. Because of this, startups have had to adapt their operations in Finland quickly,” sums up. Youssef ZadChief economist of the Finnish Startup community.
“The indicator describing the number of personnel has stopped decreasing and startup companies seem to have a more positive attitude towards hiring new personnel. I think this indicates that our members still have good growth prospects and need new employees.” continues Zad.
In the big picture, the members of the startup community are currently more pessimistic compared to 2022.
The barometer study also maps the most critical growth obstacles for startup companies every quarter. In 2022, the availability of skilled labor was by far the most significant obstacle to growth. However, the situation has changed in light of the latest information. Problems with the availability of skilled labor are no longer considered the most acute obstacle to growth at the moment, but have been replaced by funding and financial difficulties.
“I interpret the answers to mean that startups have reduced recruitment, while it is more difficult to collect funding. When companies recruit a little slower, the problems related to labor supply are smaller. Furthermore, according to the website layoffs.fyitechnology industry layoffs tracking technology companies have laid off as many as 335 thousand employees worldwide since the beginning of 2022, which is likely to increase the amount of available labor in those technology companies that need skilled workers.” says Youssef Zad.
CEO of the Finnish startup community Riikka Pakarinen: “The fact that the challenges related to the economic situation and financing have risen above the availability of labor as an obstacle to the growth of startup companies in this market situation does not dim the fact that the biggest bottleneck for long-term growth is the availability of skilled labor. We need top talent for our companies from Finland, but also from abroad. The competition is fierce and global, Finland cannot be “just good enough” in the competition. We have to be the best in the world.”
Source: Finnish startup community
Source: The Nordic Page