Interest in impact investing within technology startup industry is in-creasing. Regardless of the growing interest in impact investing, there is a significant deficiency in research considering practice of impact investing in the field of technology. Also, technology startup perspective on impact investing ecosystem research is novel research stream which and the existing research on topic is very limited. Ecosystem paradigm is widely adopted in economics and management research and adopting it in impact investing research could increase the comprehension of the phenomenon. Again, it may result in better business decisions among startup company management and foster impact investments allocated to startup industry. This case study explores Finnish impact investing ecosystem emphasizing on technology startups and aims to fill the gap between the current practice and the academic research. Study was conducted as a multiple case study, and the main data acquisition method was a semi-structured interview. Case study includes in total of ten organizations operating in different roles within the Finnish impact ecosystem. The main contribution of this study is to describe and review the main characteristics and actors of the Finnish impact investing ecosystem. The study identifies in total of 22 impact investing ecosystem actors particularly for startup companies and amplifies previous views of the impact investing ecosystem research. Further, findings indicate that public sector organizations are prominent actors within Finnish impact investing ecosystem, and that there are variety of collaborating public and private actors in the ecosystem.
Impact investing is an investing method that integrates social and environmental impacts into
financial return [
For a long time, startup companies have been characteristic in IT business, and they drive
innovations in several areas of societies [
Business ecosystem research is a substantial research line to characterize the main operators and
their relations within the defined economic environment [
The main contribution of this study is to narrow the gap in knowledge and provide future research streams for scholars by adopting current IIE and startup ecosystem paradigms to investigate the phenomenon. The study aims to define an IIE for impact startups by reviewing case organizations and main stakeholders related to ecosystem. Three RQ’ were set based on initial research and to fill the gap in knowledge: what are the main characteristics of IIE from a technology startup perspective (1), what are the main actors within the IIE and how they cooperate (2), and what are the main stakeholders of startup companies within IIE (3). The structure of the paper is as follows: next section discusses on existing research and main characteristics, actors of IIE and current startup ecosystem research, and third section presents research methodology. Findings are presented in section four and paper’s conclusions and discussion in the fifth section.
IIE research origins from traditional business ecosystem research and it has increased substantially
in recent years. Previously IIE has been studied in general [
Another important undertone in IIE research has been the relevance of locality. There are significant
regional differences between impact investing communities [
Further, there are two noteworthy characteristics which are essentially present in IIE’s. First, they
are usually diverse and hybrid in form. Impact investing encompasses a great amount of diversity as
investing targets and their sizes and maturity levels as well as scope varies greatly [
Logical ecosystems usually consist of functional and interconnected operands. IIE is often depicted
as a framework consisting of actors and domains in which actors operate. Several studies propose
actornetwork based theories or frameworks as an efficient paradigm to explicate business ecosystems
[22,38]. Acevedo and Wu [
Startup ecosystems have recently been under investigation by many scholars and prior research includes several interesting research branches. IT and information systems (IS) discourses have been concerned in several existing ecosystem research [31]. Tsujimoto et al [38] regard digital ecosystems as a major branch in the field of the management of technology and innovation. Sussan and Asc [34] have proposed the Digital Entrepreneurial Ecosystem framework consisting of four concepts which are digital infrastructure governance, digital user citizenship, digital entrepreneurship, and digital marketplace. Sztangret [35] has studied organizational units fostering organizational operations in the business ecosystems, and Razavi et al [28] have characterized the transition to digital business ecosystems. Motoyama and Knowlton [24] have examined the structure of startup ecosystems by using the social network approach in their case study. Tripathi and others [37] have analyzed startup ecosystems in their multi-vocal literature review. Further there are several studies examining the regional perspectives of startup ecosystems [24,30,19,32] in the fields of business and entrepreneurship.
Several startup ecosystem definitions have been proposed. Tripathi et al [37] state that startup ecosystems are networks focusing on certain regional areas in which entrepreneurs and support organizations act to foster existing startups and create opportunities for new startups. Sipola et al [33] conceptualize startup ecosystem as a structure consisting of actors and agencies which is conditioned by contextual, temporal and renewal factors, emphasizing the differences between public and private actors.
Research on IIE and startup ecosystems has accelerated in the past few years. Several research centralizes on defining different types of actors and their relations. Also, characteristics of such ecosystems have been studied previously. Existing re-search often aims to describe and explain the functioning of rather limited ecosystems as ecosystem structures varies according to the geographical and cultural areas.
This study is conducted as multiple-case study to increase comparability and generalizability of
results. Single case study includes several limitations such as challenges in generalizability and several
information-processing [
In research design the research methodology was decided based on the initial review of the literature related topic. This research contributes to narrowing obvious gap between the research and the practice of IIE research of technology startups. Ecosystem research has roots in defining actors, stakeholders, and connections within specific networks of operation. Hence, it is appropriate to describe the main actors and processes of the IIE within appointed discourse and review the relation and the cooperation of actors. For clarity, abbreviation of IIE refers to IIE of Finnish technology startups. 3.1.
Main data acquisition method of this study is semi-structured interview. Total of twelve interviews of ten organizations were conducted during 2020-2022. Interviews were conducted with corresponding informants from case organizations. Secondary data acquisition method included information from organizations’ public communication channels such as websites and reports. Unit of analysis in this study was IIE and interview questions were pointed to find out characteristics and actors within IIE. For case 2 and case 7 there were two informants, while for other cases there was one informant each. Informant titles varied from manager to CEO. Ten out of twelve interviews were conducted online using Zoom software, two interviews were conducted in the case organization's premises.
Interview data was transcribed after the interview and data coding was conducted using spreadsheets software. In coding phase relevant key words were identified and sentences including keywords were categorized into themes. Inductive thematic analysis was used to structure the data for further analysis. Structured interview’s themes were basic information of organization and interviewee, description of impact investing, IIE actors and main stakeholders, challenges related to IIE, characteristics and processes of impact investing, impact targets and industry sectors, technology solutions, and prospects of the field. Thematic analysis was followed by an iterative data coding process which was conducted to identify interesting observations using thematic analysis, and finally observations were analyzed with other data acquired from case organizations and compounded as results. 3.2.
It is important to determine and delimit the number of informants in the study to be able to keep the
focus of the research [
Private Startup company offering data- 2022 analytic services to health sector
This section covers finding of the study. We deliver the answers for the appointed RQ’s in this chapter. To summary our key findings we provide Primary Empirical Conclusions (PECs). 4.1.
This section provides answers for RQ1. Total of nine characteristics were distinguished from the interview data. Characteristics and their frequency are presented in Table 2.
Scale of investment size and time horizon varies greatly in IIE. Established public investors such as
pension funds and development financiers allocate hundreds of millions of euros to impact targets
annually while individual investment can span from one million to tens of millions of euros. Time
horizon is extending from one year to twenty years. Findings support existing research which indicates
variety in size and maturity level of investing targets [
Results indicate that there is an emphasis on ecosystem structure within IIE. Ecosystem paradigm is
especially discernible among public sector actors such as municipalities and business development
organizations which have constituted officials for ecosystem establishment and development. Informant
states: “We have a project of 170 million euros and ecosystem-centric way of working is at the very
core of it. When private and public actors come together, coordination must be used, starting with the
complete urban structure and planning, and then ending with the startup activity and its connection to
this concept.” Ecosystems are seen as corporation or partnership models which leverage emerging
business opportunities and social and environmental impact. This finding supports existing IIE research
results [
IIE actors operate in different roles which may overlap. We call this ensemble of distinct roles a hybrid nature of roles. For example, some actors contribute to the IIE in a role of investor, advisor, and business accelerator. Versatile roles enable agile operations and enhance cooperation between different actors but can also obscure the areas of responsibilities. Informant from private investment company stated: “We are different from many investors as we take an active role and do the work together with the entrepreneurs. Sometimes we talk about being a part of the team and doing the work, but we also have a little more money than the normal team member.”
In addition to hybrid roles, actors have adopted hybrid nature of sectors. Current startup business models are often based on services which use application of technology rather than offering deep technology solutions. Thus, the role of technology and the service sector is ambulatory by nature. Investing decisions are based on desire to solve specific problems rather than sector specific investment allocations. Informant expressed the following: “I think it’s very old-fashioned to look at investments from an industry perspective, we look at the world for problems that should be improved and then look at companies that could fix them.”
There are two roles which applies to public actors such as development and impact funds, municipalities, and government organizations. They provide capital to domestic and foreign markets and act as a customer to impact startups' products and services as well as promote impact investing in ecosystems. Municipalities form pilot projects which offer significant opportunities to companies to scale their products and services.
Social impact bond (SIB) is a form of fund and a performance-based contract between government
and private investors. SIB initiatives are more extensive than other impact investing ventures in terms
of intended impact and financial resources. SIBs considered as a part of social impact investing by
previous research [
Study reveals close connections between local startup sector, incubators, accelerators, business angel community, municipality, and local university. However, the impact on the IIE does not extend the local area of influence, more particularly the province borders. Targeted markets of companies are often local at first, and internationalization efforts come in the later phases of the life cycle. Regional limitations support the findings of prior research [29].
Legislation, processes, as well as cooperation between public sector and private sector within IIE is still immature and constantly in motion. Established processes, more effective management and common terminology are called by practitioners. Informant stated: “Challenge is that these models are still quite complicated. Buyers in the public sector still see these as really complicated and there are no common practices. Investment practices should be made more productized.”
Newly established businesses utilize sweat equity as a capital. Sweat equity refers to non-financial contributions by individuals. Sweat equity allows accession to ventures with a low threshold as no financial investment is required and hence it is one possible way for startup companies to gather intellectual capital among individuals who commit to shared impact targets.
• PEC1: Most important characteristics of IIE based on frequency are: (1) diversity in investment size and horizon, (2) importance of public actors. • PEC2: Where several characteristics of IIE apply also to traditional startup ecosystems, characteristics of immense diversity of investment size and time horizon, significance of SIB’s, pronounced influence of public sector, and immature practices and processes are particularly relevant only to IIE. 4.2.
This section provides answers for RQ2 and RQ3. We distinguish in total of 22 actors and eight actor types within IIE and identify main stakeholders of startup companies within IIE. Actors of IIE are depicted in Table 3.
Consultant organizations support startup companies in forms of counseling, mentorship, training and aim to connect companies with investors and other main stakeholders. Consultants such as incubators and accelerators offer comprehensive scale of advisory services for companies within IIE concentrating on local startup companies and they support the collaboration between public and private sector organizations. Practitioners include companies, which provide services and products, partners, and specialists. Partner companies and vendors provide supplementary services or products and enable company operations in the markets. Specialists are employees or consultants which contribute to impact investing markets. Partner companies and vendors are also part of the business models for companies through shared platforms or joined venture models. Consumer is an actor type utilizing services or products developed by companies and is also involved in producing the service. Educational institutions are related to IIE in three ways. First, they provide experts to impact investing markets. Secondly, educational institutions advance the research of IIE and impact investing. Third, they collaborate with private companies and public organizations to build new products and services and collaborate in research projects. Informants mentioned that local educational institutions produce research data on which public startups build their solutions. Government affects to IIE through government policies and regulation, and via government organizations. In addition, government funding of municipalities and government organizations affect the number of public investments made to private sector companies. Municipalities provide finance and act as supervisors to actors, direct the focus and emphasis within IIE through management and finance allocation decisions and act as clients for projects and services for example through SIB ventures.
Generality of investment companies and private banks in Finnish IIE are domestic operators, but there are also local business development organization openings and programs for international investors. Investment companies and private banks can also operate in the role of business advisor and business consultant and manage open impact funds. Portfolio managers of private banking services and funds allocate financial resources to chosen companies and industries, thereby significantly affecting available funding in the IIE. Aside from private investment services, there several public organizations which can be categorized as public investors. Pension funds are prominent investors in public and private markets having a long tradition in sustainable investing, and recently their emphasis on impact themes has also increased. Addition to organizational investments, there are individuals who invest to impact initiatives by allocating straight finance, investing through impact funds, utilizing financial advisors. Finally, international investors and advisors in target countries are important global impact investing partners for the case organization. Support organizations provide supplementary services such as net impact measuring services and promote impact investing practices. Public opinion influences attitudes towards impact investing and guides public and private sector organizations strategies. Nongovernmental organizations (NGO) have influence on public opinion and local policies thereby shaping the operational landscape of IIE actors.
• •
PEC3: IIE comprises in total of 22 actors and eight actor types
PEC4: Quantity of public actors disclose of the importance of the public sectors in IIE Based on findings the main stakeholders of companies are customers, consultants including advisors, accelerators, incubators, and business development organizations, investors, and educational institutions. Specialists are evidently an essential stakeholder group as they are the main leverage for companies to build services and products. Investors and especially private investing companies and individual investors have close relationship with companies. Educational institutions provide specialists and collaborate with companies in ventures and research projects. In addition, government actors have direct impact on the success of companies within IIE by regulation and legislation. Municipalities collaborate with companies through pilot projects and in a role of customer, and business development organizations offer consultant services. Informant described the main stakeholders of IIE ecosystems as follows: “I think that in this ecosystem there are public actors, financial actors, and actual startups, and then this specialist market, which must be in a good balance. Higher education also seems to wake up.” • PEC5: Main stakeholders of startup companies are customers, specialists, consult-ant actors, investors, educational institutions, and government actors
Study presents 9 characteristics and in total of 22 actors and eight actor types which contribute to
IIE as well as main stakeholders of startup companies in the field. Most important characteristics of IIE
are diversity of investment size and horizon, and importance of public actors (PEC1). We also
distinguish four characteristics which are especially representative to IIE (PEC2). Study identifies
several actors and proposes a novel categorization for actor types in the field (PEC3). Findings related
to actors also indicate importance of public actors in IEE (PEC4). Finally, study discusses the main
stakeholders of startup companies within IIE (PEC5). Results support existing research on
characteristics of diversity in scale and revenue [
This study has several practical implications. Findings indicate that public sector has prominent influence on Finnish IIE, and hence we argue that public domain have a significant effect on whether IIE’s and startup initiatives would prosper in Finland. Further, tendency of public incentives, legislation and acts could affect the velocity of green transition, social equality, and hence to viability of a startup sector. Impact investing is still minor phenomenon in Finland’s financial markets and its visibility and significance is expected to increase significantly in the next few years. Since impact investing markets are likely to accelerate, companies, investors and other stakeholders may benefit significantly from their early adoption of the impact investing markets by comprehending main characteristics and actors of the IIE. Regarding the limitations of the study, we emphasize that study was conducted in Finland which is a welfare state possessing comprehensive social security benefits and relatively high gross domestic product. These notions need to be considered when drawing the general conclusion from the research and when comparing results to studies from other countries.
This study reviews Finnish IIE related to IT startups. The purpose of this study is to make existing ecosystem structures visible and to increase the understanding of the actors and stakeholders of the Finnish IIE by assessing three research questions: what the main characteristics of IIE from a technology startup perspective are (RQ1), what are the main actors within the IIE and how they cooperate (RQ2), and what are the main stakeholders of startup companies within IIE (RQ3). Study was conducted as multiple-case study including in total of ten case organizations. Contribution of this study concerns main characteristics of IIE and review of the actors and their cooperation within IIE. Findings illustrate main characteristics and actors which are crucial for technology startups operating in IIE. Results of this study may aid practitioners to identify the main stakeholders and understand and provide several novel research avenues for scholars. For future research streams to explore, we propose the following topics which are still unclear or little researched: challenges within IIE, lifecycle models of IIE actors, startup co-operation within IIE’s, impact-oriented startup business models, and challenges of impact measure and reporting in technology startups.
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