DEVELOPMENT COMPANY

What is a development company?

Development companies are municipality-owned non-profit organisations that work to increase the growth and competitiveness of a region’s enterprises and consequently boost the region’s vitality. The activities of a development company are based on knowledge of the region and its enterprises, long customer relationships, know-how and the mandate of municipal owners. Development companies implement undertakings that would not otherwise be started and that are significant for creating a better operating environment for the region’s enterprises.

Development companies’ main tasks are:

• Enterprise development: Development companies provide practical encouragement and stimulation for enterprises and raise new issues that need to be addressed. They do not compete with commercial operators. Instead, they broker the enterprise development and financing services of such operators, as well as those of public authorities, while at the same time guiding client enterprises in the procurement and use of various services.

• Development of the operating environment: A development company identifies broader themes or opportunities (such as infrastructure, the region’s special know-how, natural resources, geographical location, events, large projects, etc.) for developing the region and brings business groups, networks, collaboration and projects together around them. Its activities are directed more towards the community than to an individual enterprise, though in such a way that they facilitate a more competitive and attractive operating environment. There is no one else to perform this crucial early-stage work, after which commercial operators take responsibility for the execution.

• Promoting the region: Municipalities promote themselves as a good place to live and run a business, as well as an attractive tourist destination and location for investment. Marketing is carried out regionally and more and more often also in smaller areas. With marketing, development companies work in close cooperation with enterprises and national operators, such as VisitFinland and Invest In Finland.

The focus of these three tasks is determined according to the region’s characteristics, which brings differences, experiments and new initiatives to the activities. Experiments and new initiatives create good operations models which others can learn from and implement in their own regions according to their specific circumstances.

Ownership and financing

Development companies are often owned by the group of municipalities within the travel-to-work area. Organisation by regions brings significant advantages for the level of influence and operational organisation. The core funding is based on municipal financing, which averages €24 per resident.

Development companies’ average turnover in 2016 was MEUR 2.4, of which MEUR 1.1 was municipal financing. Project funding from various channels is crucial for development companies, especially for the development of the operating environment.