Financing gap as constraint for growth of high tech SMEs:the case of start-ups in Oulu

High technology sector in Finland is currently in the middle of structural change. This change is also creating a lot of new high tech entrepreneurs. Many of these new companies are seeking fast growth and position in global markets. Especially interesting area is how the fast growth and internationalization of small high tech firms can be financed. What are the financial needs and options? Are there financing gaps? Are these gaps constraining the growth and internationalization of the companies? What is the role of public institutions? Target is to bring more clarity to these questions, because the success in this ongoing transformation is important for many professionals working in high tech sector, but also for the economy of Finland and local communities. The change in the industry is influencing Oulu region very hard. There is a lot of expertise and competences in technology industry on a global scale, but quite little resources to finance this industry. This setting makes Oulu region an interesting area for studying financing challenges of high tech companies. Empirical research is done as qualitative research by using case study research method. Semi-structured interviews are used to collect data from companies. The case companies are five young technology firms, which have been established in Oulu, Finland. All of these companies are utilizing strong local technology expertise and competences and targeting to grow fast to global players in their area of business. This study compares their financing challenges and solutions to the theoretical knowledge and earlier empirical studies in high tech financing area. Target is to find if their financing challenges differ from theory or the findings in earlier studies. The study is also seeking if there are any new solutions used to meet the financing challenges. This study finds high tech SMEs as important contributors to economic growth. However, information opacity is limiting the financing options and causing financing gap. Empirical research in Oulu finds that financing has very critical role in the growth of high tech start-ups. In the early phases public support is critical for survival. In later phases, more local business angel resources and local venture capital funds would be needed. This is important for the growth but also for getting access to international funds. The results can be generalized to the other technology concentrations far from the world financing centers. The results can be used to enhance financing environment and services in those areas