Why Finnish start-ups fail internationalization: an 
investor perspective 
 
 
 
 
 
International Business 
Master's thesis  
 
 
 
Author: 
Roni Lehmuskoski 
 
Supervisors: 
Ph.D. Eriikka Paavilainen-Mäntymäki 
Ph.D. cand. Elena Sivolapova 
 
25.6.2025 
Turku 
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The originality of this thesis has been checked in accordance with the University of Turku quality assurance 
system using the Turnitin Originality Check service.  
  
Master's thesis 
 
Subject: International Business 
Author: Roni Lehmuskoski 
Title: Why Finnish start-ups fail internationalization: an investor perspective 
Supervisors: Ph.D. Eriikka Paavilainen-Mäntymäki, Ph.D. cand. Elena Sivolapova 
Number of pages: 73 pages 
Date: 25.6.2025 
 
In small, open economies like Finland, early internationalization is often not a choice for start-ups, but a 
necessity due to limited domestic market potential. However, despite Finland’s strong ability to innovate and 
an ecosystem that supports entrepreneurship, many Finnish start-ups face substantial challenges in 
international expansion. This master’s thesis explores the reasons behind these failures from the perspective 
of investor, a perspective that remains underrepresented in existing academic literature. 
The study uses a qualitative research approach data was collected through structured questionnaires with ten 
investors who have direct experience in funding Finnish start-ups that are expanding to foreign markets. The 
findings reveal that Finnish start-ups are frequently underprepared for internationalization, with shortcomings 
in market knowledge, resource allocation and strategic planning. In addition, the dynamics between investor 
and start-up, such as distorted expectations and underutilisation of investor support often creates challenges to 
successful international expansion. 
The study contributes to the literature on international entrepreneurship by highlighting investors’ roles not 
only as financial providers but also as strategic enablers in the internationalization process. Practical 
recommendations are offered for both start-ups and investors, emphasizing the importance of early 
collaboration planning, closer cooperation and realistic planning. These insights are particularly valuable for 
decision makers seeking to improve the success rate of Finnish start-ups in international markets. 
 
Key words: Start-up internationalization, Finnish start-ups, investors, failure factors, international growth, 
strategic alignment.  
 Pro gradu -tutkielma 
 
Oppiaine: Kansainvälinen liiketoiminta 
Tekijä: Roni Lehmuskoski 
Otsikko: Miksi suomalaiset start-up yritykset epäonnistuvat kansainvälistymisessä: sijoittajan näkökulma 
Ohjaajat: KTT Eriikka Paavilainen-Mäntymäki, VKT Elena Sivolapova 
Sivumäärä: 73 pages 
Päivämäärä: 25.6.2025 
Pienissä ja avoimissa talouksissa, kuten Suomessa, kansainvälistyminen ei ole start-up yrityksille usein 
valinnainen mahdollisuus, vaan useimmiten elinehto rajallisten kotimarkkinoiden takia. Vaikka Suomessa on 
vahva innovaatio-osaaminen ja yrittäjyyttä tukeva ympäristö, moni suomalainen start-up yritys kohtaa 
huomattavia haasteita laajentuessaan ulkomaille. Tämä pro gradu -tutkielma tarkastelee kansainvälistymisen 
epäonnistumisen syitä sijoittajan näkökulmasta. Tämä on näkökulma, jota on käsitelty aiemmassa 
tutkimuksessa varsin vähän. 
Tutkimus toteutettiin laadullisena tutkimuksena, johon aineisto kerättiin strukturoiduilla haastatteluilla 
kymmeneltä sijoittajalta, joilla on kokemusta suomalaisten start-up yritysten rahoittamisesta kansainvälisen 
kasvun vaiheessa. Tulokset osoittavat, että pääsääntöisesti start-upit ovat puutteellisesti valmistautuneita 
kansainvälistymiseen, erityisesti markkinatuntemuksen, resurssien allokoinnin ja strategisen suunnittelun 
osalta. Lisäksi sijoittajan ja start-upin väliset jännitteet, kuten odotusten ristiriidat ja sijoittajien tarjoaman tuen 
kokonaisvaltainen hyödyntäminen, voivat estää onnistuneen kansainvälisen kasvun. 
Tutkielma tuo uutta näkökulmaa kansainvälisen yrittäjyyden tutkimukseen korostamalla sijoittajien roolia 
paitsi rahoittajana myös strategisina kumppaneina kansainvälistymisprosessissa. Käytännön suosituksia 
esitetään start-upeille kuin myös sijoittajille, erityisesti korostaen alkuvaiheen strategista yhteisymmärrystä, 
tiiviimpää yhteistyötä ja realistista suunnittelua. Nämä havainnot ovat erityisen arvokkaita niille toimijoille, 
jotka pyrkivät parantamaan suomalaisten start-up yritysten menestystä, sekä onnistumista kansainvälisillä 
markkinoilla 
Avainsanat: Start-up, kansainvälistyminen, suomalaiset start-upit, sijoittajat, epäonnistumisen syyt, 
strateginen yhteistyö  
 TABLE OF CONTENTS 
1 Introduction 8 
2 Finnish start-up internationalization 12 
2.1 Defining what start-ups are 12 
2.2 Finnish start-up internationalization 17 
2.2.1 What type of start-ups internationalize? 18 
2.2.2 Why start-ups internationalize? 20 
2.2.3 How start-ups internationalize 22 
2.2.4 What markets do start-ups target when internationalizing 24 
2.2.5 How start-up internationalization has changed over time? 25 
3 Investors in the start-up context 27 
3.1 Investors’ role in start-ups 27 
3.2 Different types of investors 28 
3.3 How can investors affect start-ups 29 
3.4 Investor’s role in start-up internationalization 31 
3.4.1 Critical challenges 31 
3.4.2 How do investors assess the readiness for internationalization 32 
4 Why start-up internationalization fails so often 34 
5 Methodology and data analysis 38 
5.1 Research approach 38 
5.2 Data collection 43 
5.3 Data and data analysis method 46 
5.4 Overview of respondents 47 
5.5 Descriptive statistics of the data 52 
5.6 Thematization of data 57 
5.7 Patterns and synthesis 59 
6 Findings 61 
7 Conclusion 64 
7.1 Theoretical contributions 64 
7.2 Managerial implications 65 
 7.3 Limitations of the study 65 
7.4 Suggestions for future research 66 
8 Summary 67 
References 68 
Appendix Questionnaire 76 
 
  
 LIST OF FIGURES 
FIGURE 1 OPERATIONALIZATION FRAMEWORK OF THE RESEARCH 11 
FIGURE 2 DISTRIBUTION OF INVESTOR ROLES 48 
FIGURE 3 DISTRIBUTION OF INVESTOR EXPERIENCE IN YEARS 49 
FIGURE 4 DISTRIBUTION OF INVESTORS’ INVOLVEMENT IN SUPPORTING INTERNATIONALIZATION 50 
FIGURE 5 INVESTORS’ ASSESMENT OF START-UP READINESS FOR INTERNATIONALIZATION 51 
FIGURE 6 INVESTORS’ INVOLVEMENT IN SHAPING START-UP INTERNATIONALIZATION STRATEGY 52 
FIGURE 7 INFLUENCE OF INVESTOR RISK TOLERANCE ON INTERNATIONALIZATION FUNDING DECISIONS. 53 
FIGURE 8 MOST COMMON CHALLENGES IDENTIFIED BY INVESTORS IN START-UP INTERNATIONALIZATION 54 
FIGURE 9 CRITERIA USED BY INVESTORS TO ASSESS START-UP READINESS FOR INTERNATIONALIZATION 55 
FIGURE 10 TYPES OF SUPPORT PROVIDED BY INVESTORS DURING START-UP INTERNATIONALIZATION 56 
FIGURE 11 KEY THEMES CONTRIBUTING TO THE FAILURE OF FINNISH START-UP INTERNATIONALIZATION. 59 
8 
 
1 Introduction 
Start-ups have been experiencing a change in their operations because of globalization, which has 
facilitated smoother international operations for start-ups early on (Schepis 2020). The business 
sector operates much faster what contributes to reaching targets faster and setting bigger goals than 
ever before. It is more expected than unusual for companies at any size to look outside the domestic 
market and grow across national borders. The change in the business environment has made it 
easier for small businesses, like start-ups, to internationalize and achieve the growth new markets 
offer. (Cote 2021.) In small open economies such as Finland this trend is not only visible but 
essential. Due to the small and limiting domestic market, Finnish start-ups are often forced to 
consider foreign markets at an early stage of their lifecycle. (Kuivalainen et al. 2007) Even though 
Finland has significant amount of innovation capacity and access to skilled labour, Finnish start-ups 
struggle to succeed among international competition (Gabrielsson & Gabrielsson 2013). 
To survive and thrive in this rapidly growing environment, companies need to search for new 
markets and opportunities constantly. Mistakes are unavoidable, but the circumstances encourage 
even the smallest companies to take remarkable risks in search for success. Even the smallest 
companies, also known as start-ups, are looking for opportunities outside their own familiar 
markets. This causes a lot of failures for companies in their early stages that often has significant 
effects to their future (Cavusgil & Knight 2015.) 
Start-ups internationalization from small economies like Finland, is more and more vital in the 
globalized business environment. Globalization has encouraged start-ups to search for growth 
abroad rather than domestic. Going abroad offers substantial growth opportunities for Finnish start-
ups, but it comes with a risk (Koskinen 2022). It is common for Finnish start-ups to face difficulties 
that can hamper or prevent successful expansion abroad. In this research I examine why such 
ventures struggle, bringing out the investor’s point of view. 
The small size of Finland’s market forces start-ups to seek other markets for growth and 
opportunities, that the local market does not offer. Though, many fail in this process, even when 
their potential and position for growth seem fine. Internationalization offers an avenue for scaling, 
but it also brings challenges like liability of foreignness, regulatory complexity and cultural barriers. 
(Zaheer 1995; Johanson & Vahlne 2009; Coviello & Munro 1997.) 
Finland’s domestic market is relatively small compared to the neighbouring markets. Because of 
this small domestic market, internationalization is vital for start-ups to increase market share and 
9 
 
improve competitiveness or even in some cases to become profitable. With internationalization 
companies can reach larger customer bases and diversify risks. Yet many Finnish start-ups fail at 
this stage when entering foreign markets. Internationalization’s importance is well-noticed and there 
is a great amount of research done regarding internationalization especially from operational or 
business perspective, meanwhile the investors perspective has gathered much less interest 
(Kuivalainen et al. 2012). Moreover, the investors perspective on challenges that Finnish start-ups 
face has limited prior research. Investors as key stakeholders have an important role in providing 
essential financial and strategic support for international growth. Understanding the reasons why 
investors tend to believe that these efforts fail is vital for improving success rates (Prohorovs 2020). 
This research is relevant because it investigates the challenges Finnish start-ups face in 
internationalization, that can help investors and entrepreneurs avoid common mistakes. Also, 
understanding the investor’s perspective of failure can guide more informed investment strategies 
and possibly contribute to more successful international projects. This research also aims to 
contribute to academic literature, by tackling the research gap regarding the investor’s role in start-
up internationalization. This thesis aims to address this research gap by analysing investors insights 
to better understand failure in Finnish start-up internationalization. By exploring difficulties and 
challenges from the investor’s perspective, this study contributes to both academic literature and 
practical understanding. 
The goal of this study is to understand Finnish start-ups' internationalization, having key focus on 
why Finnish start-ups often encounter challenges and failures during these operations. This research 
seeks to uncover investors’ perspectives regarding failures and identify similarities or patterns 
among the reasons behind such challenges. The study also aims to dig deeper into the investors’ 
role in Finnish start-up internationalization and examine how their insights and experience can be 
used to improve start-ups’ success rate. This research aims to answer these objectives through four 
research questions. The first and primary research question is: 
-  How do investors perceive the challenges faced by Finnish start-ups in their 
internationalization efforts? 
The sub research questions are: 
- What challenges do investors see as critical to the failure of Finnish start-ups 
internationalization and expansion? 
10 
 
- How can investors insights be used to improve the internationalization strategies of Finnish 
start-ups? 
Creating the base for understanding subjective interpretations of the challenges start-ups’ encounter, 
providing understanding of common features of failed internationalization efforts. When answering 
this question, the study aims to reveal the nature of these challenges and shed light to the 
collaboration between investors and start-ups during different phases of internationalization. The 
research also aims to enlighten the wider picture of the common difficulties start-ups face. The 
research also aims to enlighten the investors and start-ups collaboration and view the failures from 
the investor perspective. 
The second research question is: “What challenges do investors see as critical to the failure of 
Finnish start-ups internationalization and expansion”. This research question handles investors’ 
perspective on the factors that make internationalization especially challenging for start-ups. In this 
question the similarities in difficulties between start-ups will be handled. Helping understands the 
recurring themes in challenges start-ups face in internationalization. The research also handles how 
investors assess the readiness of a start-up to internationalize and common mistakes they look for in 
the strategies. Last research question is: “How can investors insights be used to improve the 
internationalization strategies of Finnish start-ups”. By answering this the study aims to gather 
insights to functional internationalization strategies form investors’ experiences. By analysing these 
perspectives, the research aims to find practical ideas for start-ups to enhance their 
internationalization efforts and better understand the investors’ desires. This part will also handle 
how investors observe their effect on the internationalization process. This part also examines how 
investors view their tolerance for risk and how it affects their decision making.  
The goal of the study is to deeper the understanding of challenges Finnish start-ups encounter when 
expanding outside domestic market from the investors point of view. By focusing on the reasons 
behind failure and factors that contribute to challenges, the study tries to uncover valuable insights 
into the collaboration between start-ups and their investors. By researching the investors’ 
perspectives this study aims to recognize critical challenges, repetitive patterns and examine 
investors’ impact and influence on the internationalization process. 
Figure 1 illustrates how the study on Finnish start-up internationalization from the investor’s 
perspective is structured and operationalized. It outlines the breakdown of the research objective 
into sub-question. the corresponding theoretical frameworks, themes guiding data collection and 
analysis and final contributions obtained from these analyses. 
11 
 
 
Figure 1 Operationalization framework of the research 
12 
 
2 Finnish start-up internationalization 
2.1 Defining what start-ups are 
Start-up is a term that almost everyone is familiar with, but in reality, it is difficult to define what is 
considered as start-up and what are start-ups characteristic features. People do not have clear 
definition of what it means or have beliefs that are inconsistent or other ways conflicting with 
themselves (Cockayne 2019). This ambiguity is due to the changing nature of the business worlds 
and the different contexts where the term is used. The term “start-up” was first used to describe a 
specific type of firm or a way of operating in the 1980s. Initially, the term was mainly associated 
with firms operating in technology sector and more specifically ones located in Silicon Valley. 
Those firms embodied exponential innovation and business models that represent high risk, high 
reward. (Blank 2013.) However, start-up as a term has since evolved to include firms across various 
sectors and industries (Cockayne 2019). 
In today’s world every year around 100 million start-ups are founded annually, and they impact 
heavily the economies they operate in (Ehsan 2021). While the term was originally incorporated 
with small technology firms, it is now broadly associated with firms in diverse business sectors and 
areas. This expansion reflects the increasing importance of innovation and entrepreneurial 
behaviour across different sectors, driven by technological advancements and globalization. (Ries 
2011.) The term “Start-up” goes far beyond just the technology sector and more often it is 
associated with firms in any area of business. Nowadays classification between what a start-up is 
and what it is not, comes down to several key factors. Considering the size of firm, duration of 
activity, level of informality, growth potential, absence of finished product and financing methods. 
These characteristics are usually considered together, forming a compound definition of a start-up. 
(Cockayne 2019.) Moreover, start-ups are often distinguished by their capability to adapt rapidly to 
market changes, a feature that is vital for survival in highly competitive markets (Spigel 2017).  
 The European start-up monitor gives three characteristics that in their opinion defines a start-up. 
They believe that start-ups should be less than 10 years old, utilize highly innovative technologies 
or business models and aim for exponential growth in either sales or workforce (ESM 2015). This 
definition aligns with the broader academic consensus that start-ups are naturally growth oriented 
and innovation driven firms (Aldrich & Ruef 2006). 
In the context of this study, a start-up is defined as a company that is less than 10 years old, utilizes 
novel technologies or business models and it is growth oriented (ESM 2015; Cockayne 2019; 
13 
 
Aldrich & Ruef 2006; Robehmed 2013). On a high level, start-ups operate like all the other 
companies. Employees work together to create a product that will be sold to customers. What 
distinguishes a start-up from others is the way start-up does it. Start-ups pursue new ways of doing 
or new things to offer. Start-ups rarely copy something that is done prior and mainly aim to create 
rather than copy (Baldridge 2024). This innovative approach often consists of remarkable levels of 
experimentation, where failure is a significant part of the learning process (Blank 2013). The 
criterion for a start-up helps distinguish start-ups from traditional small and medium sized 
enterprises, which may not prioritize rapid growth or innovation to the same extent. Small and 
medium sized firms often focus on stable, localized operations, while start-ups are typically 
characterized by their ambition to disrupt existing markets and expand quickly, often beyond home 
markets. (Robehmed 2013.) This global orientation, also known as “born global” phenomenon, is 
relevant in the Finnish start-up context, because limited domestic market size requires early 
internationalization (Knight & Cavusgil 2004). 
Firm size and duration of existence is most often considered as the key determinants of what is 
considered to be a start-up. The size of a firm can be considered from many perspectives, such as 
the number of people that are the employees of the firm, or it could be related to the revenue of the 
firm. There are not any specific terms what is considered a start-up, but universally start-ups are 
considered to be small and often young firms. (Cockayne 2019.) For example, firms that have less 
than 50 employees and annual revenues below 10 million euros are often categorized as start-ups 
under EU definitions for small enterprises (European Commission 2020). Firms can fall in the start-
up category for absence of a viable product or lack of customer base. Therefore, start-ups are often 
considered as firm that is still developing client and customer base or does not have a service or 
product to sell (Cockayne 2019). A defining characteristic of start-up is their focus on speed and 
growth. 
It distinguishes them from other companies, because they build on ideas quickly. They often 
improve the products or services through feedback and usage data, meaning they put their product 
or service to the market before it is finished. This is called iteration, it speeds up the process and 
offers the possibility to rapidly expand customer bases. Through this growth they gather larger 
market shares, which contributes to raising more money. This is all done for the greater goal known 
as exit, where the early investors have the opportunity to cash out and get their rewards (Baldridge 
2024). There are common reasons what makes a start-up stop being a start-up, it can be because of 
an acquisition by bigger company, revenue exceeding 20 million, growing number of offices, 
number of employees exceeding 80 or the founders have personally sold shares. Therefore, it can be 
14 
 
said that start-ups are most often start-ups for a relatively short time, but during this time their key 
ability is to grow. For a start-up the key factor is the ability to grow, and it is the focus of its 
operations. That is also how it differs from regular small businesses, start-ups are often not bound to 
a specific location but aim for growth unconstrained to a location (Robehmed 2013). Start-ups are 
typically considered to exist for a relatively short period, during which their primary focus in on 
achieving rapid growth. This growth focused approach is a key difference to traditional small 
businesses, that often prioritize safe, localized and long-lasting operations. Unlike traditional firms’ 
start-ups are not tied to specific location but pursue opportunities for international expansion from 
early stages. (Knight & Cavusgil 2004.) Scalability and adaptability make these firms uniquely 
positioned to succeed in highly competitive markets. 
Funding has also a role in defining a start-up and especially the type of funding that start-ups pursue 
(Cockayne 2019). Start-ups are commonly seen as firms that look for equity capital that will help 
them grow exponentially and finally achieve an exit (Bussgang 2010). Start-up funding generally 
consists of multiple rounds. These rounds are often tight to the growth of a start-up, because in 
different rounds the investors are different and look for different things. In the first round the money 
invested is often gathered from the founders themselves, their families and friends. If the start-ups 
have not failed at this point the next investment round is often gathered from angel investors, they 
are individuals with high net worth that invest in early-stage companies. If a firm keeps growing 
and shows potential the next rounds are often funded by venture capital firms, which invest much 
bigger amounts to the companies, often there are multiple rounds where firm will gather 
investments from venture capital firms. The last step for a start-up would be becoming a public 
company, at this point anyone can invest in the company (Baldridge 2024). Exit for a firm can mean 
many things, it can be for example an acquisition or initial public offering. The idea behind exit is 
to gather enough capital and grow the value of the firm (Cockayne 2019). The way start-ups are 
often financed ties it closely to the circumstances of failure, and multiple sources suggest that 
around 70% to 90% of start-up firms fail (CBInsights 2018). This is mainly because Venture funds 
work with high-risk firms in short-term. Therefore, only a small part of the firms they are invested 
with will reach significant growth and good returns. This type of funding and business environment 
is often connected to start-ups. When the firm starts to generate revenue and its level of growth can 
be considered healthy, it is not often anymore considered a start-up and rather a normal firm. This 
does not mean that all start-ups need or have this type of funding, but it is popularly connected with 
start-ups (Cockayne 2019). There can be drawn similarities considering funding inside Europe. The 
primary source for funding typically comes from the entrepreneur’s personal savings. Start-ups are 
15 
 
often considered to be significant financial commitments by the founders. Behind savings are the 
gathered investments from friends and family, what often plays a crucial role in providing initial 
capital. Thirdly start-ups rely on government funding and business angels, these offer assistance, 
guidance, capital and expertise to the start-ups. Together these funding sources form the foundation 
of capital for European start-ups (ESM 2015). 
Finland has set a remarkable goal to become one of the world’s best start-up and growth company 
ecosystems. Start-ups are very beneficial to the markets and to the business environment they 
operate. Start-ups boost the creation of innovations in the market and offer better probabilities to 
find more sustainable solutions and increase economic growth. International growth is key for start-
up firms especially in Finland, because of the small domestic market that limits the opportunities for 
significant expansion inside national borders. (Ilmari 2024.) Finland offers high level of education 
in technology, making it a natural place for start-up activity. The culture of innovation, great 
education and strong working ethic among employees provides a distinct competitive advantage for 
Finnish firms (Salonen 2007). Moreover, Finland has been considered one of the worlds 
competitive and business friendly economies globally, that has supporting systems for entrepreneurs 
and many innovative enterprises. Finland is considered as one of worlds innovative-driven 
economies in terms of its business climate and overall economic performance (Stenholm et al. 
2013.) 
The importance of new and growth-oriented start-ups for the renewal of business life in Finland is 
central. Start-ups have a remarkable role in creating employment opportunities and challenging 
older companies to renew and modernize their operations. The role of start-ups in promoting the 
competitiveness and innovativeness of the national economy is important and Finland is aiming to 
harness the potential start-ups offer. In Finland around 4 000 start-ups are founded annually, 
through only a small part of those generate real growth. Most of the Finland’s growing start-ups 
operate either in knowledge-intensive service sector or construction sector. Especially knowledge-
intensive sector offers great opportunities for internationalization and expansion to other markets. 
Also, among the Finnish start-ups the search for growth has increased considerably over the past 
years and they are eager to take bigger risks than before. (Kotiranta et al. 2016.) 
The concentration of start-ups in Finland has also shifted towards more innovative ventures, which 
has become one of the key points in their operations. This has caused Finnish start-ups to search for 
growth more often than before from international markets (Lahtinen et al. 2016). When considering 
worldwide, Europe is behind the global pace concerning the creation of new businesses. When 
16 
 
comparing the proportion of early-stage entrepreneurs to the number of working people, Asia and 
North America emerge as the clear leaders. To keep up with these economies it is crucial for Europe 
to foster innovative start-ups that are destined for growth and capable of competing in the global 
stage. (ESM 2015.) Furthermore, Finland’s start-up environment has benefited from government 
support, including different funding programs, easier taxing and assistance on expansion. Initiatives 
like Business Finland and Slush, what is one of the world’s largest start-up events, have had a 
remarkable role in positioning Finland as substantial start-up centre in Europe. (Business Finland 
2024; Slush 2024.) 
Start-ups affect the environment they operate in and their contributions to a thriving market can be 
remarkable. They have a direct impact on employment growth and new production. Start-ups 
contribute significantly to immigration, attracting talent from other areas, enhancing the domestic 
market with skilful professionals. Start-ups boost the innovation and growth in the market they 
operate in and especially in smaller markets their contribution to regional productivity can be 
significant (Wennekers & Thurik 1999; Carree & Thurik 2003; Fritsch & Mueller 2004). Start-ups 
also affect the companies already existing in the market. They cause incumbent companies to 
operate more efficiently, increase the competition in the market and boost the innovation. This 
dynamic fosters an environment where technological advancements and continuous improvements 
are necessary for success. Therefore, it is also favourable for governments and markets to foster 
good conditions for growth and creation of start-ups since it is closely tied to economic growth 
(Fritsch & Mueller 2004). It is important to have a common understanding of what a start-up is, so 
that governments and other influencers can in mutual understanding create a favourable 
environment for start-up firms (Ehsan Z. 2021). Coherent definitions and common goals improve 
the governments capability to implement initiatives necessary for start-ups success (Heinonen et al. 
2009). 
 The business environment for all markets is getting more and more international, and European 
start-ups are increasingly formulating internationalization plans. Start-ups that have already been 
internationalized are also all the time looking for new opportunities to enter new markets and grow 
their business. This trend reflects the growing importance of collaboration over national borders. 
(ESM 2015.) Furthermore, as start-up’s role in shaping economies grows, their influence broadens 
to social and cultural impacts. Start-ups have a remarkable role pushing innovation, contributing to 
sustainable development and creating new types of work environments. In this sense, favouring a 
stable start-up environment is not only an economic necessity but also a social one. Ensuring 
17 
 
benefits from innovation and growth are widely distributed in different groups of society. (Carree & 
Thurik 2010.) 
2.2 Finnish start-up internationalization 
Internationalization refers to the process through which firms progressively increase their preces 
and investments in international markets (Welch & Luostarinen 1988). This definition can be 
expanded to include operational adaptation to foreign markets. This means bringing in strategy, 
structure and resources in the international market (Calof & Beamish 1995). There is a great 
connection between internationalization and globalization, but they represent distinct concepts. 
While internationalization focuses on firm’s deliberate efforts to expand its operations and presence 
in foreign markets, globalization refers to a broader process of increasing interconnection and 
interdependence among different areas. It is driven by people, services, flow of goods, technology 
and information. Globalizations shape the environment where internationalization takes place 
(Knight 2003). Internationalization describes different pathways and strategic choices firms make 
when entering foreign markets. There are multiple ways to enhance commitment in new markets 
and all of them bring their own degree of risk, control and needed resources. Firms may enhance 
their commitment by engaging in exporting, joint ventures, licensing or wholly owned subsidiaries. 
Each of them offering different levels of potential returns and exposure. (Anderson & Gatignon 
1986.)  Firms adopt multiple approaches to decision making and risk management during 
internationalization, influenced by their readiness to take risks and seize opportunities. The outcome 
is that they adapt to evolving conditions and other differences that distinguish foreign market from 
their domestic one. (Johanson & Vahlne 1977.) 
For Finnish start-ups internationalization tends to be a necessity, because of small domestic market 
that limits growth potential. Therefore, early expansion to foreign markets is crucial for Finnish 
start-ups to achieve scale and competitiveness. (Kuivalainen et al. 2007.) This phenomenon is often 
incorporated with the concept of born global, firms that expand rapidly leveraging their innovative 
products and existing networks to compete in international setting (Knight & Cavusgil 2004). 
Internationalization practices are therefore the frameworks that each firm develops based on their 
level of commitment, acquired knowledge, experience and willingness to face risks and 
opportunities that they will encounter on international markets (Johanson & Wiedersheim-Paul 
1975; Schulz et al. 2009). The Uppsala model, for instance, considers that firms internationalization 
process is gradual. It starts with foreign markets that are culturally similar or geographically close, 
from there it gradually expands when knowledge and experience is gathered. (Johanson & Vahlne 
18 
 
2009.) However, Finnish start-ups especially in high technology sector often diverge from Uppsala 
model, choosing accelerated expansion strategies, because of technological advancements and need 
to access bigger markets rapidly (Oviatt & McDougall 1994). Moreover, the resource-based view 
from (Barney 1991) offers a valuable way to understand how Finnish start-ups leverage their unique 
resources and capabilities. Finnish start-ups unique resources and capabilities, like expertise in 
technology, skilled individuals and innovative products. Despite these, Finnish start-ups face 
difficulties related to regulatory barriers and cultural differences which tend to effect success in 
international markets. (Zaheer 1995.) 
2.2.1 What type of start-ups internationalize? 
Start-up internationalization is affected by many factors, these factors include the industry they 
operate in, what is their resource base and their strategic objectives. Finnish start-ups face the 
difficulty of small domestic market, this creates the necessity of expansion to foreign markets to 
find growth opportunities. Therefore, Finnish start-ups often consider internationalization on the 
early days of their lifecycle. (Gabrielsson et al. 2008.) 
One of the most popularly studied internationalization category of start-ups is born global, which 
are firms that expand to foreign markets in the early stages, often in the first years of their existence. 
For that reason, they do not tend to follow the gradual expansion model. (Oviatt & McDougall 
1994; Knight & Cavusgil 2004). Finnish start-ups often possess born global abilities, especially 
firms that operate in high-tech and knowledge intensive industries (Gabrielsson & Pelkonen 2008). 
Finland has a strong foundation in engineering and technology innovation that has affected the birth 
of many start-ups in industries like information technology and software development. Many of 
these firms are forced to expand outside Finland rapidly because their products are offered to a 
niche market that has a limited demand in domestic market. Multiple studies highlight how Finnish 
start-ups need to enter international markets in a fast pace to get competitive advantage. 
(Luostarinen & Gabrielsson 2006.) 
Finnish start-ups that expand internationally are often from specific high growth industries. From 
information technology and software industry there has been multiple start-ups from Finland that 
have achieved success with internationalization. Many successful Finnish start-ups have been able 
to scale in foreign markets with low physical presence in those markets. Because of Finland’s well-
developed digital knowledge and governments support for innovation, start-ups in this sector often 
enter new markets through partnerships, digital distribution and foreign investments. (Gabrielsson 
& Gabrielsson 2013; Autio et al. 2000; Luostarinen & Gabrielsson 2006.) Start-ups that operate in 
19 
 
the digital industries, especially gaming, have advantages in internationalization. When distribution 
can be done digitally it reduces barriers and costs that are normally faced when entering foreign 
markets. (Marchand & Hennig-Thurau 2013.) Unlike, in the traditional internationalization digital 
start-ups are not constrained as much to physical locations and can scale rapidly without certain 
localization requirements (Knight & Cavusgil 2004). Finnish gaming industry has demonstrated its 
capabilities for digital internationalization. Finnish firms have been expanding early and efficiently 
through digital distribution. The small domestic market forces digital start-ups to execute rapid 
internationalization operations, because the local demand is not sufficient for sustainable growth. 
The mobile and online characteristics of the gaming sector allow firms to reach a wide audience 
without the need for physical presence. (Neogames 2022.) 
Start-ups that are involved in digital health and medical technology often expand to new markets in 
the early stages of their life, because of the high level of regulation and economic structure affecting 
their market. Firms operating in medical or health related sectors often require access to larger 
markets to foster innovations. The health sector is capital intensive what encourages start-ups to 
expand to secure international investments. (Gabrielsson & Gabrielsson 2013; Laurell 2018.) Start-
ups that operate in sectors like cleantech and sustainability face environmental concerns and global 
regulation that influence internationalization opportunities. Firms that focus on renewable energy 
and battery technology often reach international markets 
because their innovations are applicable in other markets as well and there is often a demand for 
sustainable solutions. (EIB 2024.) Deep technology start-ups focusing on artificial intelligence and 
machine learning often expand into new markets because research collaboration is often done in 
global environment. Another remarkable reason for deep technology start-up internationalization is 
to secure funding from international investors. (Feicheng et al. 2022.) This type of firm often 
requires partnerships with multinational corporations or research institutions, creating international 
engagement an integral part of growth strategies (Gabrielsson et al. 2008).  
The industry that start-up operates on has a significant effect on determining what start-ups expand 
to new markets, but several other factors contribute to the readiness for internationalization 
(Gabrielsson et al. 2008). Start-ups that attract foreign and institutional investors are more likely to 
expand, because of investors’ expectations of scalability (Hitt et al. 2000). In addition to industry 
specific drivers, entrepreneurs and investors impact shape the expansion actions of start-ups. 
(Johanson & Vahlne 2009). Reaching international partners and venture capital speeds up the 
internationalization, when firms integrated into global networks offer market knowledge and 
20 
 
creditability (Hitt et al. 2000; Coviello 2006). Finland’s start-up ecosystem has grown into a 
globally substantial innovation centre, driven by the need for expansion due to small size of internal 
market. Start-ups and especially ones that operate in technology related industries are increasingly 
pursuing internationalization. Finland’s skilful workforce mixed with government support and 
investment encouraging environment are contributing to the rapid growth of Finnish start-ups 
expansion. (Pickering 2024.)  
2.2.2 Why start-ups internationalize? 
Evaluating the competition solely within the domestic market is no longer sufficient for start-ups. 
The competitive environment has evolved to a combination of local players and international rivals, 
which creates a dynamic of cross-border competition. (Cui & Liu, 2001.) Today’s business world is 
more globally connected through networks than ever before. For many start-ups early days 
internationalization has become a necessity, especially for firms that operate in technology-driven 
or other ways niche sectors that need to access bigger markets to maintain growth (Knight & 
Cavusgil, 2004; Gabrielsson & Gabrielsson, 2013.) The internet has also its part in creating an 
environment where it is impossible to fully avoid international competition. This makes small firms 
like start-ups vulnerable to competition guiding them deeper into the globalized world. In today’s 
global business environment, a competitive advantage can be attained through persistent innovation 
management, a crucial aspect inherent in start-ups (Dereli 2015; Schumpeter 2021). Operating in 
the international markets improves firm’s ability to handle competitive pressure, cultivate 
innovation and make use of knowledge spillovers from partners, competitors and other players in 
the market (Autio et al. 2000). Exposure to international markets enables start-ups to understand 
and be aware of upcoming trends and firms that operate in international markets often get their 
hands-on cutting-edge technology earlier than it would be available in domestic market. This makes 
it vital for Finnish start-ups to reach international markets, because of the relatively small domestic 
market and the need to scale globally to remain competitive. (Kuivalainen et al. 2012.) 
The key thing that internationalization offers for any size of company is growth and expansion 
opportunities (Gonzalez-Rozada & Yeyati 2008). Long-term survival for start-ups builds around 
growth and increasing global competition has made internationalization necessity for most of the 
start-ups. Passivity in expansion operations gives competitors an edge to expand to new markets. 
This creates a vulnerability for competitors to enter the domestic market, resulting in a decrease in 
market share. Therefore, being passive and not involved in international markets activities is seen 
more dangerous than internationalization (Roberts et al. 2015). As the economy has shifted more 
21 
 
towards digital, start-ups have started to offer products and services that are easily scaled 
internationally, making expanding to new markets a strategic must rather than a long-term goal 
(Oviatt & McDougall, 1994). 
Even though, competition is the key reason behind internationalization, more and more start-ups 
internationalize because of the influence from their networks (Johanson & Mattsson, 1988). The 
role of different type of strategic alliances, foreign investors and participating in programs meant 
for start-ups acceleration are recognized to facilitate rapid expansions in domestic markets, with the 
benefit of lowering costs and reducing uncertainty. Using networks as the way of 
internationalization is particularly useful for firms that do not have the sufficient resources to carry 
out extensive market research or are not able to invest remarkably in foreign market entry. (Coviello 
& Munro 1997.) For Finnish technology start-ups it is relatively common to enter new markets by 
establishing partnerships with international companies, investors or industry specific actors that 
offer guidance and funding (Lahtinen et al. 2016). 
Johanson and Vahlne (2009) expand the traditional Uppsala model of gradual internationalization 
by highlighting that firms do not struggle in international markets because they are foreign, but 
because they are not part of the correct business networks. Start-ups that utilize global networks 
tend to form strong positions in business ecosystems already from early stages, this grants them 
creditability and access to important market knowledge. The forming of global start-up ecosystems 
has accelerated the pace of internationalization for new firms by creating direct access to 
experienced investors and possible business partners. (Nummela et al. 2004.) 
Another crucial reason for start-up internationalization is to avoid the liability of foreignness and 
ensure the benefits of being first in emerging markets or markets with high growth (Zaheer 1995; 
Lieberman & Montgomery 1998). Delay in internationalization can compromise start-ups to new 
barriers, like high adaptations costs when entering a new market because competitors are already 
highly established in the market (Eiche et al. 2011). There are lot of benefits for entering a foreign 
market early, mainly because it allows relationship and recognition building with all important 
groups before competition intensifies. Accessing new markets early is more valuable and necessary 
in specific industries. For industries like high technology and digital services, early market 
penetrations have a remarkable effect on long term success. (Gabrielsson & Gabrielsson 2013.) In 
past years Finnish gaming start-ups have expanded rapidly to international markets and have 
established their place among global competitors and using their international user base to scale 
effectively (Neogames 2022). 
22 
 
The reason for start-up internationalization is not always profit maximization. Instead, many firms 
expand to new markets to secure long-term survival, recognizing that staying within the domestic 
market leaves them vulnerable for competitive disadvantages (Roberts et al. 2015). Finland’s 
limited customer base and intense competition forces start-ups to foreign markets in early days 
(Luostarinen & Gabrielsson 2006). Additionally, entering foreign markets makes it possible for 
star-ups to diversify revenue streams and decrease dependence on single market. Remarkably 
lowering the risks associated with economic hardships or harmful regulatory changes in the home 
market. (Coviello 2006.) In addition to revenue growth, expanding to new markets functions as a 
way to secure funding, especially for start-ups that need to demonstrate scalability to attract 
investors (Cumming et al. 2014). Investors often value start-ups that have prior evidence of growth 
potential in international markets, because it provides more predictability on the outcomes 
(Gabrielsson et al. 2008). As an outcome, start-ups that have conducted successful operations in 
external markets tend to attract higher rounds of funding in comparison to those that remain focused 
in domestic market (Cumming et al. 2014). 
Internationalization works as a important learning opportunity for start-ups, it helps them gather 
knowledge on the market and how to adapt in different business environments. Also, expanding to 
new markets allows start-ups to develop new capabilities and refine their business models. (Schulz 
et al. 2009.) Start-ups often make many changes based on the insights they gather from new 
markets. Gathered knowledge can lead to several changes in all areas of start-ups business. These 
opportunities to learn by internationalization contribute to the start-ups long term advantage (Welch 
& Luostarinen 1988). Reason behind start-up internationalization is a combination of multiple 
drivers, like competitive pressure, market positioning, financial inducements and concerns on long 
term survival. While internationalization includes risks, the benefits of expanding beyond local 
markets often outweigh the possible risks. Finnish start-ups specifically face pressure to 
internationalize in the early days, because of much larger markets abroad, compared to the small 
domestic one (Kuivalainen et al. 2012). 
2.2.3 How start-ups internationalize 
Finnish start-ups internationalization strategies often follow two approaches, one is the traditional 
gradual internationalization, and the other one is accelerated internationalization, what is also in 
some contexts called born global (Gabrielsson & Gabrielsson 2011; Knight & Cavusgil 2004; 
Oviatt & McDougall 1994). The traditional approach to internationalization is a popular theory in 
international business literature. It has served as the basis for numerous studies examining how 
23 
 
companies expand to foreign markets beyond their domestic market. This approach is often 
associated with the stage model of internationalization, also known as Uppsala model (Forsgren 
2016). The Uppsala model focuses on increasing knowledge of the market and how it is used in 
internationalization operations. Firm’s gather knowledge and increase their market presence or 
resources committed to external markets. When experience is low on foreign market, meaning the 
level of knowledge on the new market is low, risks appear greater than opportunities. As experience 
on the market grows it decreases the uncertainty on the market, resulting in higher commitment. 
The Uppsala model describes the internationalization process as growing meaning the start-up 
gradually grows commitment to foreign markets as their knowledge and experience grows. The 
Uppsala model highlights that further investments and resource commitments should be made 
gradually and incrementally (Johanson & Vahlne 1977). The Uppsala model has been updated since 
and it is known as the business model on the internationalization process, it introduces the concept 
of the liability of outsider ship. This suggests that uncertainty primarily grows from the position as 
outsider in a business network. In essence, firm is always operating within a network, and 
internationalization is the firm’s attempt to strengthen its position in the network (Johanson & 
Vahlne 2009) Initially the term start-up was closely associated with technology firms, but its 
definition has since expanded to include beyond the technology sector (Cockayne 2019). 
Start-ups operate differently than most other firms, from this was identified the phenomenon of 
accelerated internationalization approach, particularly dominating among high-tech start-ups. In 
accelerated internationalization approach start-ups expand quickly and with high commitment to 
multiple markets with fierce competition concurrently. The reason why start-ups prefer this type of 
internationalization occurs primarily because it offers advantages to start-ups rather than exposing 
them to significant risks. Start-ups expanding to new markets often aim for critical resources, while 
keeping costs low. Because of this, markets where needed resources are available turns into a 
strategy. Additionally, operating in dynamic markets rapid adaption to changing conditions it 
required to sustain performance (Oviatt & McDougall 1997). Finnish digital start-ups, like in the 
gaming industry are capable to scale internationally by using digital channels, what reduces the 
need for physically existing in the market. When market is more dynamic flexible strategies and 
quick adaptation to changes in customer needs are needed. (Neogames 2022; Gabrielsson & 
Gabrielsson 2011.) The first days of start-up internationalization are driven by entrepreneurial 
features and benefit the most by operating this way (Keupp & Gassmann 2009). It is not uncommon 
for start-ups to actively use multiple modes of internationalization consistently. This leads to the 
24 
 
conclusion that one mode does not precisely leave another out, but they can coexist to find the most 
benefits from new markets (Perks 2009). 
International entry mode usually refers to the method internationalizing firms adopt to conduct their 
operations in new markets (Rodriguez 2008). Entry mode has a heavy influence on the outcome of 
international operations for a firm. Firms often tend to favour the modes that offer the best returns 
on investment and include reasonable risks. High control modes, like wholly owned subsidiaries, 
provide fully kept control, but at the same time increases the exposure to the market risks. On the 
other hand, lower control modes, like licensing, reduces risks, but at the same time strategic 
flexibility and possible profits are lower. Internationalizing firms want to have a high level of 
control, meaning they want to maintain control of business operations and decisions in the new 
market. Maintaining high control leads to also having a high level of risk, because they are 
responsible for decision making, providing more resources and are also more exposed to a new 
market environment that they are not familiar with. For enduring higher risks better returns are 
expected and on the other hand lower control reduces the risks on the cost of lower returns 
(Anderson & Gatignon 1986). Finnish high technology start-ups often prefer direct exports, 
distributors familiar with the target market and partnerships, when planning to expand in early 
stages. Start-ups that have internationally experienced investors or founders involved and possess 
strong entrepreneurial orientation can decide to use more committed entry modes enduring higher 
levels of risks as well. Finland’s limited domestic market, investors risk tolerance and networks 
influence shape the internationalization of Finnish start-ups. The modification of traditional and 
accelerated internationalization modes shows how Finnish start-ups design their strategies to fit 
different markets they are expanding to. (Gabrielsson & Gabrielsson 2013; Gabrielsson & 
Luostarinen 2006; Nummela et al. 2004.) 
2.2.4 What markets do start-ups target when internationalizing 
Finnish start-ups first steps in the internationalization journey are often targeted to similar and 
familiar markets. First contributions to internationalization are made to markets that are 
geographically or culturally close, often being the safest and least financially demanding option. 
This is often followed by expansion into larger and more distant markets as they grow. (Luostarinen 
1994; Johanson & Vahlne 1977.) Initially, Finnish start-ups expand to other Nordic markets or 
nearby European markets, such as Sweden, Norway, Estonia, Germany and United Kingdom 
(Gabrielsson et al. 2008; Lahtinen et al 2016). These markets have many similarities with Finland’s 
domestic market, cultural and institutional similarities are important for easing the market entry 
25 
 
(Johanson & Vahlne 1977). The EU single market and regulatory alignment make it even easier to 
expand inside Europe (Gabrielsson & Luostarinen 2006). For digital and technology focused start-
ups expansions are often driven by demand and growth possibilities more than geographic nearness. 
Because of that, Finnish start-ups in gaming and digital sector often target North America and Asia 
already in the early stages of their internationalization. (Neogames 2022; Laurell 2018.) The United 
States has been notoriously attractive because of its large customer base, advanced technology 
environment and its remarkable access to venture capital (Coviello & Munro 1997). It is not 
unheard of for Finnish start-ups to expand to emerging markets, especially in Asia and Central 
Europe, to capitalize on their growing customer bases and arising opportunities (Feicheng et al 
2022; Kuivalainen et al. 2012; Gabrielsson et al. 2008). While the Nordic and Western Europe 
markets are often viewed as safe for early-stage internationalization, Finnish start-ups that bear 
knowledge and often international investors have a growing habit of entering distant markets more 
rapidly, sometimes not entering closest markets at all (Gabrielsson & Gabrielsson 2013). 
2.2.5 How start-up internationalization has changed over time? 
The internationalization of start-ups located in Finland has grown in popularity in recent years at the 
same time the necessity of finding new markets has increased. These actions have been driven by 
strategic development and structural changes in the global business environment. Early-stage 
expansion for firms operating in small economies like Finland’s has long been recognized as a vital 
factor for firms and start-ups. (Luostarinen & Gabrielsson 2006.) The pace and frequency of Finnish 
start-ups internationalization on the other hand has increased significantly. This can be seen 
especially in rise of born global ventures, whose goal is to go international in the first couple years 
after being established. (Knight & Cavusgil 2004; Gabrielsson et al. 2008.) 
There are multiple reasons behind growing popularity for internationalization among Finnish start-
ups. Technological advancements and digitalization have lowered the barriers for start-ups to enter 
new markets, one of the main reasons being the less needed resources for market entry. This has 
made it possible for resource constrained start-ups to reach wider audiences without high costs. 
(Oviatt & McDougall 1994; Gabrielsson & Gabrielsson 2013.) Especially, Finnish start-ups 
operating in gaming and software industry have successfully taken advantage of technology 
development to internationalize rapidly without forming a physical presence in new markets 
(Neogames 2022). Internationalization has also taken its part in strategic consideration. Investors 
and entrepreneurs have recognized and included internationalization as a core part of their growth 
strategies. Finnish start-ups are more internationally oriented than ever before, the views have 
26 
 
shifted from viewing internationalization as a long-term objective to seeing it as an existing 
opportunity and competitive necessity (Lahtinen et al. 2016; Kuivalainen et al. 2012.)  
Start-up ecosystem in Finland has evolved to endorse this trend. Government has taken initiatives to 
improve and develop the environment, an example of this are Business Finland’s different funding 
programs and widely known start-up event Slush. These contributions have created a great 
environment that encourages cross-border ambitions. (Business Finland 2024; Slush 2024.) In 
addition, incoming venture capital from outside Finland and different investor networks are pushing 
Finnish start-ups to grow globally to meet the expectations of growth (Pickering 2024; Gabrielsson 
et al. 2008). Kuivalainen et al. (2007) and more recently Koskinen (2022) show that Finnish start-
ups have adopted a way of operating where early and more frequent internationalization is more 
common than before. The number of start-ups that consider expansion as an essential part has risen, 
especially in sectors that are knowledge intensive (Gabrielsson & Gabrielsson 2013; EIB 2024). 
Internationalization has not only become a daily occurrence among Finnish start-ups, but it is also 
crowingly viewed as a stable part of Finnish start-ups business models and survival strategies 
(Gabrielsson & Gabrielsson 2013; Kuivalainen et al. 2012). Support from institutions, advances in 
technology and increased investors expectation has led to remarkable shift towards earlier and more 
extensive internationalization operations than before (Lahtinen et al. 2016; Business Finland 2024; 
Pickering 2024). 
27 
 
3 Investors in the start-up context 
Investors have a vital position in advancing and shaping the growth and success of start-ups. 
Investors’ role is not only to provide financial resources, but they also often provide strategic 
support, network and expertise that can be as valuable for success. Therefore, investors are 
increasingly recognized as strategic actors that shape the start-ups’ future with their expertise and 
networks. (Busenitz et al. 2017; Manigart et al. 1996.) Especially when expanding into new markets 
investor involvement can influence the ability to access, adapt and manage the challenges faced 
when entering and operating in a new market (Bertoni et al. 2011). 
3.1 Investors’ role in start-ups 
Investor’s role is widely recognized as significant for start-ups development and growth, especially 
in environments that require rapid growth and expansion to new markets is essential. Their 
contributions are much more comprehensive than just providing financial capital. Investors often 
take part in forming the strategy, provide access to international networks, offer creditability and 
expertise. (Busenitz et al. 2017; Manigrat et al 1996.) Start-ups that are located in small economies 
like Finland, where the domestic market is relatively small and does not offer significant growth 
opportunities, investors act as enablers of internationalization by minimizing risks and accelerating 
access to new markets (Gabrielsson & Gabrielsson 2013). 
Investors’ aim is often to enhance the start-ups competitiveness, they try to do this by influencing 
business models, changing market entry strategies and organizational capabilities. For example, 
venture capitalists are known to bring remarkable value by having active involvement in 
governance and decision making especially in the first steps of scaling. (Bertoni et al. 2011; 
Manigart et al. 2002.) This type of investor involvement is relevant for Finnish start-ups that 
operate in knowledge-intensive sectors, start-ups in this industry are often highly scalable, but at the 
same time require capital and face market uncertainty (Neogames 2022; EIB 2024). Prior research 
highlights how Finnish start-ups benefit from investor networks when entering and expanding to 
new markets, especially if the market possesses high risk or there is not enough knowledge of the 
market. Investors often possess the capability to connect the start-up with other companies to create 
international partnerships and have know-how on regulatory and legal difficulties. Investors’ role 
during internationalization can often be connecting potential customers to the expanding start-up or 
even finding the talented workforce from the market and connecting it with the start-up. 
(Gabrielsson et al 2008; Lahtinen et al. 2016.) The strategic resources that investors bring to the 
28 
 
start-up can be especially valuable for early-stage start-ups that do not possess prior global 
experience. Furthermore, investors and especially international investors are a sign of approval and 
increase the attractiveness of a start-up. (Cumming et al. 2014.) 
The amplitude of investor involvement differs very much between different investor types, and it 
also depends on the stage of the start-up. Angel investors are an investor type that can be involved 
at a very early stages, therefore they generally focus on mentoring and providing venture capital. A 
good comparison is venturing capital firms that often insist on structured governance and anticipate 
visible progress towards scaling and entering foreign markets. (Bussgang 2010.) Finnish market has 
also significant public actors like Business Finland that also operates as institutional investor. These 
actors often offer funding combined with mentoring and internationalization programs, highlighting 
the diverse nature of Finnish investment landscape. (Business Finland 2024.) 
3.2 Different types of investors 
Start-ups pursuing expansion to international markets almost always need external financing to 
support innovation, rapid growth and market entry (Gompers & Lerner 2001). The diversity of 
investor types reflects the different needs of start-ups at different stages of growth (Mason & 
Harrison 2008). Funding ability is not the only difference between investor types, strategic 
orientation, tolerance of risk and involvement rate on operations differs between investor types 
(Busenitz et al. 2017; Politis 2008). 
Angel investors are normally wealthy individuals that provide early-stage capital to start-ups and in 
return want equity. The motivation behind these types of investments is often the combination of 
financial return and investors’ personal interest. (Mason & Harrison 2008.) Angel investors often 
participate actively in the everyday operations of the start-ups they have invested in. Common ways 
to help the start-ups are mentoring, strategic advice and offering access to networks. (Politis 2008.) 
Angel investors are often the first external investors that start-up encounters, which makes their 
influence critical considering internationalization planning and overall strategy (Wiltbank et al. 
2009). 
Venture capital firms provide larger amounts of funding than angel investors, they also invest in 
start-ups that have some type of track record already, it can be some type of demonstration about 
scalability or strong result making ability. Venture capital firms expect to take an active role in 
governance, often requiring board seats and measurable achievements in exchange for the capital. 
(Gompers & Lerner 2001.) Venture capital firms look for start-ups that offer high growth that can 
29 
 
often be achieved quickly and offer exit opportunities. This makes venture capital firms essential 
for later stage internationalization (Bertoni et al. 2011). In Finland venture capital firms are often 
present in technology and knowledge-based sectors, where also early internationalization happens 
more often (Gabrielsson & Gabrielsson 2013). 
Institutional investors, which are generally perceived as pension funds and banks, are interested in 
start-ups at later rounds of funding because they favour lower-risk investments. Their involvement 
in start-up funding is relatively limited compared to other actors, they can invest through venture 
capital funds and public investment programs. Institutional investors’ role is often a passive one and 
their focus is on financial return. (Busenitz et al. 2017.) Government funded investors have a 
remarkable role in Finnish start-up scheme. A good example of this type of active operator is 
Business Finland. Their goal is not financial returns alone but encourage and foster innovation and 
international competitiveness. One of their primary objectives is also fostering the employment in 
Finland and increase these opportunities with investments. To stand behind these goals government 
funded investors in addition to funding they also offer mentorship and programs that support 
internationalization objectives. These operators have a significant role in Finnish innovation, they 
help start-ups get funding at points where other investors would not be interested in and reduce the 
risk for other investors as well. (Business Finland, 2024.) 
There are also smaller investor categories, like family offices and crowdfunding platforms. Family 
offices have an influential role in Finnish start-up ecosystem, even though their total investment 
volume is limited. They often offer strategic value to start-ups and are helpful for 
internationalization because of their networks. (Block et al 2019; Billing 2025.) 
Different types of investors create an environment that offers diverse types of capital and 
possibilities. Different investor types are suitable for different types of start-ups, the stage of start-
up, industry it operates on, and many other factors affect what investors are suitable for it. Angel 
investors have a significant role for Finnish start-up ecosystem and especially early-stage funding, 
often meaning they are also the most involved supporters during internationalization. (Gabrielsson 
& Gabrielsson 2013.) 
3.3 How can investors affect start-ups 
Investors’ role is easy to realize only as financial capital providers, but their influence extends from 
decision-making of the start-up to market positioning. This means investors participate in the 
30 
 
management of start-ups. (Busenitz et al. 2017; Bertoni et al. 2011.) Investors impact to start-ups 
will be observed next with three primary dimensions: financial, strategic and relational. 
The most basic role of investing is investing financial resources that are needed to achieve growth 
and reach international markets. The capital gathered from investors enables the start-up to improve 
their operations by focusing more capital on areas they could not afford earlier. These areas could 
include hiring new talent, conducting market research, the main point being improving the start-
ups’ growth plans. Especially, at the early stages of internationalization external funding can be the 
deciding factor whether a start-up can exploit opportunities in new markets. (Gompers & Lerner 
2001.) For Finnish start-ups external funding is essential because of the limited resources offered in 
the domestic market compared to expensive international markets (Gabrielsson & Gabrielsson 
2013). 
Different investors participate with different extents in the development and modification of 
strategy. Especially angel investors and venture capitalists want to take part in the strategic 
development of the start-up, their main interest is often on the growth strategy and different ways to 
achieve it. Therefore, investors often take board seats or take a role as advisors. Investors 
participation makes sure that start-up maintains a growing and scalable model as well as aligns 
actions and operations to the demands of global competition. (Manigart et al. 2002; Wiltbank et al. 
2009). Investors knowledge of foreign markets is highly important for Finnish start-ups because 
their own knowledge level is often limited to local market insights, investors fill this gap by 
offering knowledge and experience on foreign markets (Gabrielsson et al. 2008).  
Another important factor that investors offer to start-ups is access to various networks. These 
networks can mean access to different advisors, partners, customers, financiers and investors. These 
networks can be beneficiary already in the domestic market, but their role in accelerating 
internationalization has been recognized to be significant. Connections and relationships gained 
through these networks can help start-ups to integrate into foreign markets and reduce the liability 
of foreignness as well as improve the acceptance of local stakeholders. (Zaheer 1995; Coviello & 
Munro 1997.) These networks are especially vital for Finnish start-ups because they often do not 
possess prior relationships or contacts outside domestic market (Lahtinen et al. 2016). 
Investors have many ways to shape the development of the start-up. Investors often offer different 
types of mentorships and participate in team building that shapes the firm. Investors are also often 
capable of attracting talented employees and often take part in talent acquisition. Investors often 
improve the human capital of start-ups by coaching and courage hiring international employees to 
31 
 
ensure that start-ups have needed human capital for successful internationalization. (Politis 2008; 
Busenitz et al. 2017). Investors participation also works as a way to establish trust and interest 
among possible partners and new investors (Cumming et al. 2014). 
Investors’ influence on start-up varies from one investor type to another and depends on the start-
ups level of development and strategy. Angel investors tend to offer mentorship while venture 
capitalists are interested in growth and governance, on the other hand institutional investors provide 
support for internationalization. Overall, investors participate in ways other than capital, as 
mentioned before by shaping strategy, offering access to networks and reducing risks of 
internationalization. 
3.4 Investor’s role in start-up internationalization 
Start-up internationalization is a critical and often necessary move for firms that are from small 
domestic markets, like Finland. Investor’s role is remarkable in facilitating and affecting 
internationalization efforts. The ways investors can affect start-ups are extensive and not limited to 
capital. (Gabrielsson & Gabrielsson 2013; Bertoni et al. 2011). 
3.4.1 Critical challenges 
Internationalization possesses several challenges for Finnish start-ups, that investors are often 
familiar with. These risks are not always the same and there are many factors that influence the 
challenges start-ups will have to face during internationalization. One of the hardest challenges 
Finnish start-ups faces during internationalization is a combination of unfamiliarity with the market, 
complex regulation in the new market and cultural barriers. Investors have recognized that it is 
common for start-ups to enter a new market without possessing real deep insights into the specific 
characteristics of the market. Entering a new market while having a limited understanding of 
customer behaviours, competitive dynamics in the new environment and local business practices, 
weakens start-ups capability to effectively position their product or offering in the new market. 
(Knight & Cavusgil 2004; Gabrielsson et al. 2008.) Another common challenge that start-ups tend 
to not prepare well enough for is the legal and regulatory requirements that guide business 
operations in foreign countries. Also, differences in standards and licensing pose a major risk to 
start-ups if they are not properly anticipated and handled. (Coviello & Munro 1997.) Cultural 
differences can also present challenges for start-ups, these challenges are often more discreet but 
equally critical challenges. Differences in basic communication and behaviour can damage the 
32 
 
relationship creation with customers, partners and even employees, that will limit the ability to 
integrate into new environments and markets. (Zaheer 1995.) 
Financial constraints affect international growth significantly. It is not unheard of that a start-up has 
underestimated the financial resources needed for internationalization and tries to scale prematurely. 
(Cumming et al. 2014.) Financial limitations are not the only obstacle to international expansion, 
weak business networks in the target market often prevent successful entry and operation in new 
markets (Coviello & Munro 1997). The liability of foreignness is also a significant challenge in 
internationalization, because start-ups struggle to create legitimacy and trust among foreign 
stakeholders (Zaheer 1995). In addition to other challenges, start-ups must also face operational 
difficulties during internationalization. One common difficulty faced during expansion into new 
markets is recruiting and keeping a talented workforce from the target market. Investors have 
recognized that forming an international team is significant for successful internationalization, 
however start-ups often do not have experience or knowledge of building international teams or 
even of its basics. (Laurell 2018.) Lastly, strategic mistake where the start-ups expansion strategy is 
unreal or unrealistic, is generally recognized as a critical problem leading to failure (Johanson & 
Vahlne 2009). 
3.4.2 How do investors assess the readiness for internationalization 
Investors invest a lot of time and effort to have an accurate and comprehensive image of start-ups 
readiness for internationalization. Investors often look for a clear and feasible internationalization 
strategy that is backed with reliable information and possibly collected data. Investors expect and 
look to find evidence that the start-up has conducted thorough market research on the target market 
and has created a realistic deep understanding of target customers and their needs. Start-ups also 
need to be up to date on the level of competition in the target market and have identified 
competitive advantages they possess compared to the market. (Gabrielsson & Gabrielsson 2011; 
Coviello 2006.) 
Financial readiness is another major factor, start-ups need to demonstrate that they possess or have 
access to sufficient financial resources to sustain the costs and risks associated with expanding to 
new markets (Gompers & Lerner 2001). It is generally expected that a start-up has a scalable 
business model and proven market demand in the domestic market before internationalization is 
even considered (Knight & Cavusgil 2004). Start-up management that possesses prior international 
experience and capabilities is something that investors value and may influence their investment 
decision and its scope. Investors also often examine other investors that are onboard to strengthen 
33 
 
their own opinion. It has been also recognized that founders or management that display strong 
strategic thinking and adaptability are favoured by investors. (Busenitz et al. 2017.) Additionally, 
start-ups that have established networks to the target markets are often perceived as better 
positioned for success than others without an existing connection to the market (Johanson & 
Mattsson 1998). Investors do not assess the readiness solely based on hard metrics but take into 
consideration other factors as well. Investors can value for example start-ups culture and resilience 
that may not be as easily recognized but can turn out to be significant for efficient market entry and 
successful internationalization overall. Start-ups approach to internationalization has also 
substantial impact on investors opinions and decisions. Start-ups that approach internationalization 
from a long-term, expanding operations perspective rather than treating it as a rapid short term 
profit goal, are often valued higher in investors’ eyes. (Manigart et al 2002; Wiltbank et al. 2009.) 
34 
 
4 Why start-up internationalization fails so often 
In the context of start-ups, failure typically refers to the inability of the venture to achieve its 
intended goals, sustain operations or generate sufficient returns for its founders and investors. 
Unlike established firms, start-up failure often occurs at early stages and is not always due to 
depletion of capital. Common reasons include the inability to achieve product-market fit, difficulties 
in scaling operations or failure to secure additional funding (CBInsights, 2024). Start-up failure can 
manifest in various ways, such as winding down operations, selling the business at a loss or ceasing 
activities related to growth (Blank 2013). Studies suggest that approximately 90% of start-ups 
ultimately fail, with many failing before their fifth year due to internal challenges such as 
dysfunctional business models, lack of market demand or relationship issues inside the team 
(Marmer et al. 2011; Start-up Genome 2025). 
In the context of start-ups internationalization failure does not necessarily mean a final or absolute 
collapse in international markets but may instead reflect temporary setbacks or strategic exit. Rather 
than following a linear success or failure path start-ups often engage in experimentation, testing of 
the markets and withdrawal before committing fully to international expansion (McDougall & 
Oviatt 2000; Autio 2015.) Failure in this context can include incapability to achieve intended 
growth in the new market, early withdrawal from the market or facing uncontrollable financial or 
operational challenges abroad. For start-ups such outcomes can be a result of limited market 
insights, poor timing, weak strategic positioning or failure to adapt with the demand in the foreign 
market (Gabrielsson et al. 2008; Knight & Cavusgil 2004.) 
The internationalization of start-ups is widely recognized in academic literature as a process that 
includes significant number of risks, especially for firms that originate from small economies like 
Finland (Knight & Cavusgil 2004; Gabrielsson et al. 2008). Even though expanding into new 
markets provides considerable opportunities for growth, it concurrently unveils start-ups to number 
of complex challenges that many are not prepared to manage. Understanding the underlying reason 
behind these challenges is essential to improving internationalization outcomes, especially when 
viewed through the perspective of investors experiences and insights. 
One fundamental difficulty for internationalizing start-ups is their liability of newness and 
smallness, that arise from limited resources, lack of legitimacy in foreign markets and poorly 
established routines (Stinchcombe 1965; Rugman & Verbeke 2011). In addition, the concept of 
liability of foreignness (Zaheer 1995), although originally developed in the context of multinational 
35 
 
enterprises, can still be useful in understanding the difficulties start-ups face when entering 
unfamiliar international environments. These difficulties include lack of local regulatory 
knowledge, underestimating cultural differences or overestimated networks. It is common for start-
ups to face difficulties in building trust and credibility with local partners and customers that are 
crucial for successful market entry and survival (Johanson & Vahlne 2009). However, international 
entrepreneurship literature also recognizes that some start-ups may intentionally pursue distant 
markets early on, the driver behind this being existing international networks or the chase of great 
opportunities (Mainela et al. 2014). 
Another significant cause of failure in start-up internationalization is insufficient market knowledge 
and preparation. Prior research points out that many start-ups internationalize without conducting 
adequate and accurate market research or neglects adapting their business models to fit the market 
conditions. (Coviello & Munro 1997; Gabrielsson et al. 2008.) However, international 
entrepreneurship research also shows that some start-ups enter foreign markets early through 
network connections or by recognizing opportunities, even without formal preparation, which 
reflects strategic experimentation rather than mere negligence (Coviello 2006). Lack of preparation 
will often appear as poor product-market fit, mistargeted strategies for marketing and inefficient 
operations. Investors have stressed the shortcomings in market research as a recurring mistake 
among start-ups expanding to new markets for the first time. (Coviello & Munro 1997; Knight & 
Cavusgil 2004.) 
Limited amount of capital is often considered to be a major reason for unsuccessful 
internationalization. Expanding to new markets consumes remarkable amounts of resources for 
establishing physical activities in the new location as well as fulfilling requirements of the new 
market. These could be hiring local talent, navigating legal requirements and building distribution 
channels. Many start-ups do not allocate enough capital required to fulfil the costs and are not 
financially backed enough to sustain prolonged entry phase, leading to premature withdrawal or 
failure. (Cumming et al. 2014; Gompers & Lerner 2001; Gabrielsson et al. 2008.) However, 
international entrepreneurship literature also emphasizes that some start-ups are constrained by 
resources and therefore often use alternative strategies such as establishing partnerships, joining 
accelerators or participate in a phased and low-commitment market entry in attempting to reduce 
the risk and capital requirements (Autio et al. 2000; Cavusgil & Knight 2015).  
Furthermore, organizational readiness has a remarkable role for start-ups survival in foreign 
markets as well as for attracting investors. However, from a dynamic capabilities perspective, 
36 
 
readiness may also evolve during the early stages of internationalization as start-ups adapt, learn 
and configure again their operations (Sapienza et al. 2006; Hitt et al. 2000). Investors often consider 
the readiness through scalability of the business model, leaders’ competence and operational 
flexibility. Investors value these things in assessing start-ups readiness, because internationalizing 
without scalable structure or without leaders that have experience managing cross border operations 
have a remarkably higher risk of failure in internationalization. (Gabrielsson & Gabrielsson 2011; 
Busenitz et al. 2017.) Building on international entrepreneurship research, start-ups tend to rely on 
informal or emergent networks to overcome early disadvantages in foreign markets (Chetty & 
Stangl 2010). Without creditability and local connections obtained through networks, start-ups may 
face prolonged entry period, weaker competitive position and more significant operational risks. 
Although some start-ups enter foreign markets through opportunistic or through chance events this 
approach can also reflect founder-led opportunity identification rather than poor strategy (Oviatt & 
McDougall 2005; Mainela et al. 2014.) 
Cultural challenges bring another complicated layer to internationalization. Cultural barriers 
influence negotiation, communication, customer expectations and leadership style. (Zaheer 1995.) 
Finnish start-ups are often equipped with strong technical expertise but struggle adapting 
communication and practices to culturally distant markets. Limiting their ability to cultivate 
committed customer relationships and establishing local partnerships. (Gabrielsson et al. 2008.) 
However, international entrepreneurship research also highlights that culturally distant markets may 
hold opportunities, such as underserved niches or early adopters, especially for innovative or market 
niche-oriented start-ups (Freeman et al. 2006). Some born global firms use partnership, sequencing 
or founder networks to enter such markets despite cultural challenges (Cavusgil & Knight 2015; 
Chetty & Stangl 2010). Furthermore, regulatory and legal obstacles in foreign markets produce 
significant risks. Often Finnish start-ups are not prepared well enough to face the complexity of 
foreign regulatory environments, causing compliance difficulties, prolonged market entries or even 
forced exits. (Coviello & Munro 1997; Laurell 2018). This is especially important in specific 
sectors where regulatory standards can be highly variable and complex across countries, for 
example healthcare (EIB 2024; Laurell 2018). However, international entrepreneurship literature 
also shows that regulatory competence can develop over time as entrepreneurs learn through market 
interaction, often adapting their models or engaging with local partners to navigate legal 
complexities (Autio et al. 2000). 
Misalignment between start-up founders and investors can turn catastrophic when facing challenges 
during internationalization. These two groups can have differences in risk tolerance leading to 
37 
 
opposing opinions. As well their strategic visions may vary and when both groups push for their 
own vision conflicts are easily ahead, also time horizon can create tensions that affect negatively the 
internationalization process. (Wittbank et al. 2009; Busenitz et al. 2017). Start-up 
internationalization failure is rarely caused by a one single issue. It is often a result of challenges 
related to each other that accumulate over time (Autio et al. 2000; Sapienza et al. 2006). While 
some studies have highlighted the risk of premature internationalization, international 
entrepreneurship research also shows that early expansion can succeed when supported by dynamic 
capabilities, niche strategies or strong international networks (Cavusgil & Knight 2015; Freeman et 
al. 2006). Identifying and addressing these risks that affect each other is vital for improving results, 
especially in small open economies, like Finland, where early expansion to foreign markets is often 
inevitable (Luostarinen & Gabrielsson 2006; Kuivalainen et al. 2012). 
38 
 
5 Methodology and data analysis 
5.1 Research approach 
Qualitative research is a humanistic approach to inquiry that centres on understanding the deeper 
meanings and complexities of human behaviours, experiences, and social phenomena. Unlike 
quantitative research where the goal is to measure and quantify different variables, qualitative 
research prioritizes the investigation of subjective experiences, observations and the meanings 
behind specific actions and interactions. Qualitative research is not typically attached to specific 
sample size or rigid research design. Alternatively, qualitative research is considered flexible, that 
includes multiple methods, like questionnaires. (Creswell 2014). One of the main aspects of 
qualitative research is scepticism to prior knowledge of things that are considered to be true or as 
the only truth. The researcher needs to keep an open mind when approaching the topic, trying to 
understand the construction of meanings and realities in different contexts. This type of behaviour 
drives the collection of qualitative data, that often constructs from unstructured sources or naturally 
occurring ones that reflect complexity and nuance of the real environment. (Denzin N. et al. 2007).  
 A key feature for qualitative research is its focus on exploring processes and functioning in their 
natural environment, what allows the researchers to appreciate the depth of human experience 
without imposing assumptions. Subjectivity is important for this approach, because individual 
experiences and perspectives are crucial parts of understanding the whole topic. Hoped outcome is 
not to generalize findings to a wider population, but to get insights into the complex ways in which 
people interpret and respond to their world. (Patton 2015). Qualitative research can often be 
considered to circle around “what” and “how” questions. With these questions the researcher is 
guided towards understanding the underlaying dynamics, meanings and contexts surrounding the 
research question. In qualitative research the analysis is often driven by the data itself. This has the 
outcome of a more exploratory process that may evolve throughout the study, by being adjusted by 
new insights or by shifts to the perspective as the research unfolds. With these characteristics it is 
often shown that it is exactly qualitative research.  (Juhila 2021). 
Often, qualitative research focuses on topics that are previously recognized and somewhat familiar. 
Therefore, it often critically examines the subject rather than assuming it as an established truth. 
Additionally, qualitative research needs extensive definition and conceptual clarification, as these 
elements are vital for framing the research topic. Qualitative research is often based on non-
numerical data and rather consists of questionnaires, observations and discussions. It does not 
39 
 
convert the data to a numerical form but rather handles it in its original form. Moreover, data is kept 
in its context and interpreted as an integral part of the broader framework in which it exists. 
Meaning it is often built on naturally occurring data, meaning that the information emerges 
independently of the researcher’s influence. For qualitative research, focusing on human behaviour 
is another key characteristic. Examining how people act in different situations and what kind of 
habits or routines they develop. Qualitative research values individuals’ unique approaches, 
experiences and perspectives that contribute to the research. Therefore, qualitative research often 
recognizes subjects more as active participants rather than as passive research subjects. It also 
embraces complexity, acknowledging that experiences and interactions are not straightforward or 
easily categorized. Qualitative research does not aim to find specific causes for specific effects but 
explores how different actors influence each other. Because of this, qualitative research tends to be 
data driven rather than theory driven, meaning that findings are found from the analysis of collected 
data and not strictly guided by predefined theoretical frameworks. (Juhila 2021) 
Key aspect of qualitative research is the way of treating data as a whole and not isolating individual 
factors from one another. Mutual connection of multiple factors is important, because meanings and 
interpretations are found through these relationships. There are often two key phases in qualitative 
analysis. Simplifying the observations and bringing out deeper meanings. In practice these phases 
are not strictly separated and tend to intertwine with each other. The process of refining 
observations to core themes often leads to deeper interpretation, where researchers try to make 
sense of the patterns and structures that are noticed from gathered information. This is important for 
qualitative research, because it aims to construct a comprehensive understanding by considering all 
aspects and their relation to one another. (Alasuutari 2011) Qualitative research is mostly 
centralized around individual cases, meaning different types of experiences, perspectives and their 
meanings. Because of this researcher’s own interaction with these aspects is remarkably significant 
in qualitative research. When observations are gathered in qualitative research they are approached 
inductively. This means that the assumptions are based on the findings and developed throughout 
the process. (Koskinen et al. 2005.) Characteristic for qualitative research is also understanding and 
describing the topic. Research aims to gain insight into specific themes and to the factors that 
influence them. However, it is not only about understanding, but it is also about how the findings 
are shaping the theory and how the theory is based on the findings. For qualitative research it is also 
essential that people who participate in the research have a reasonable level of knowledge on the 
topic and have the ability to discuss and describe it in sufficient detail. Therefore, selection of the 
40 
 
participants plays a significant role and should be done carefully, because it ensures the quality and 
relevance of the research. (Tuomi & Sarajärvi 2018.)  
This research adopts a qualitative research approach mainly because the primary goal is to 
understand and explain investor’s perspectives on the challenges Finnish start-ups face in 
internationalization. Qualitative research is specifically suited for exploring subjective experiences, 
interpretations and complex phenomena which cannot be easily measured (Creswell 2014). Because 
investor perspectives are shaped by experience of the industry, strategic decision making, market 
trends and interaction with the start-ups, a qualitative approach offers the flexibility necessary to 
capture the fundamental insights. The research aims to find and establish connections between 
empirical findings and theoretical frameworks by integrating investor perspectives with theories 
such as Zaheer’s (1995) Liability of foreignness, Barney’s (1991) Resource-based view and 
Johanson and Mattsson’s (1988) Network theory. The analysis aims to discover patterns in failed 
internationalization efforts and how investors perceive risk factors, cultural differences, market 
barriers, regulatory obstacles and start-up readiness. These frameworks are used to frame the 
background and discussion, but they did not guide the coding or analysis of the qualitative data, 
which was conducted inductively. 
Qualitative research does not focus on a single method but instead incorporates multiple approaches 
depending on the main research questions and research objectives (Denzin & Lincoln 2018). In this 
research the sample has been carefully and purposefully selected, as is characteristic of qualitative 
research ensuring that part-takers in the research provide valuable insights based on their 
experiences. The target group in this research consists of investors, because their experience is vital 
for identifying factors that influence failure, common challenges that start-ups face during 
internationalization and overall, on the investors and start-ups dynamic in global markets. The 
research is also particularly interested in understanding investor’s role in start-ups and obtaining 
their experience about working with start-ups. While the structured questionnaire included both 
open- and closed-ended questions, this study adopts a primarily qualitative approach, with emphasis 
on identifying themes from open-ended investor responses. The research process typically starts 
from the researcher’s interest in a specific topic, that is followed by defining the research questions 
and problems (Alasuutari 2011). After that theoretical frameworks are identified and these act as 
reference points for observations. Next the data is collected and analysed, while conducting the 
analysis there is an intention of not being influenced by theoretical assumptions. By savouring this 
perspective, findings will emerge naturally from the data. Finally, a structured analysis and 
discussion are presented, where findings are compared with existing frameworks and theories. Whit 
41 
 
this there is also the goal of highlighting patterns, inconsistencies and new insights. (Tuomi & 
Sarajärvi 2018.) 
The data for this research is collected by conducting a structured questionnaire. The structured 
questionnaire is aimed to investors who have funded Finnish start-ups attempting international 
expansion. Structured questionnaire-based data gathering method was chosen because it allows the 
opportunity to reach a bigger number of target groups while still maintaining a qualitative focus on 
subjective experiences and viewpoints (Fink 2015). Unlike a structured quantitative structured 
questionnaire, this study uses qualitative structured questionnaire format in which the majority of 
the questions are open-ended, even though the same set of questions was presented to all 
participants. In this sense, the structure of the structured questionnaire resembles a structured 
questionnaire, where each respondent answers the same pre-determined questions without follow-
up probing. However, the emphasis in this study is on the open-ended responses, which were 
designed to allow participants to elaborate on their experiences and perspectives in their own words. 
Open-ended questions provide participants with the freedom to elaborate on their perspectives, 
experiences and observations. The structured questionnaire was administrated electronically during 
the beginning of 2025, ensuring ease of access for responders across different locations. The 
structured questionnaire was administered through multiple distribution channels to maximize its 
reach among relevant respondents. First a link to the structured questionnaire was sent directly by 
email to 49 individually selected investors with experience in Finnish start-up internationalization. 
Second, the structured questionnaire was shared by FiBAN (Finnish Business Angels Network) 
through their internal communication channels. Third, a researcher’s personal contact shared the 
structured questionnaire link with an email group of start-up investors, though the exact number of 
recipients reached through that group is unknown. In addition to the initial round of distribution, the 
researcher later sent email to 63 individuals that were known to have experience as investor in start-
up internationalization and approached one person to ask for help in distributing the structured 
questionnaire with his network. Altogether, these channels helped distribute the structured 
questionnaire widely, and according to Webropol the structured questionnaire link was opened by 
262 individuals, indicating substantial visibility among the target audience. The structured 
questionnaire was designed to be anonymous, allowing investors to share their views openly and 
without bias. 
The target group consist of investors who have directly funded Finnish start-ups expanding abroad. 
To fit the target group a person was expected to have experience in start-up investments, 
particularly in Finnish start-up firms attempting internationalization. The participant was also 
42 
 
expected to have prior involvement in venture capital, angel investments or advisory roles related to 
start-up growth. As a requirement to be included to the target group was also to have experience or 
knowledge on international market dynamics, funding challenges and risk assessment in early-stage 
start-ups. The structured questionnaire managed to gather 10 answers from investors, ensuring a 
diverse perspective from venture capital firms, angel investor networks and independent start-up 
advisors. This compilation of investors allows a comprehensive understanding of investor concerns, 
decision-making process and common pitfalls observed in internationalization.  
The objective of this study is to examine investors perspectives on the challenges, difficulties and 
failures of Finnish start-ups in internationalization. Specifically, the research aims to identify 
critical factors that investors perceive as contributing to failure in foreign markets. Additionally, the 
research aims to understand how investors experience can help recognize risks on 
internationalization at an early stage. Furthermore, the research aims to explore the ways how 
investors assess the readiness of start-ups for internationalization, and what expectations investors 
have regarding strategy, market knowledge and resources before they are committing to funding. 
The purpose is not to evaluate and focus on the capabilities of individual start-ups or their business 
models. Research rather focuses on investors’ general experience and insights on start-ups 
expanding across national borders. The main emphasis of this research is on the investor’s role and 
influence on Finnish start-ups internationalization process. The research does not aim to analyse 
successful cases of internationalization or the broader development of start-up ecosystem. Instead, 
the focus is on investors’ observations of failures and the lessons that can be drawn from these 
experiences. By creating an understanding of the investor’s perspectives, the research aims to 
provide practical insights into improving start-up internationalization strategies and the 
collaboration between investors and start-ups. 
Artificial intelligence tools, specifically ChatGPT and Consensus, were used at the early stages of 
this thesis to support topic development and source discovery. ChatGPT was helpful in 
brainstorming ideas, structuring early outlines and exploring key themes around start-up 
internationalization. It provided general explanations and clarification on concepts, which helped 
shape the research development. None of its outputs were used directly in the final text. Consensus 
was used as a research-oriented search engine to find peer-reviewed articles and refine the focus of 
the literature review. These tools served as complements to traditional research methods, assisting 
in the early stages of the thesis process more efficiently without replacing critical thinking or human 
judgement. The use of artificial intelligence in this thesis followed the guidelines provided by the 
University of Turku. 
43 
 
5.2 Data collection 
In the research a structured questionnaire was chosen as the main data collection method. This 
decision was made since a greater number of responses will offer a greater amount of experience 
and knowledge. However, in collecting the data for the research, it is a qualitative structured 
questionnaire, because specifically wanted are the experiences and thoughts of participants 
regarding the topic. By deciding to collect data by structured questionnaire it enables collecting 
comprehensive enough description of human experiences and it can be used to conclude end results. 
Experiences are vital for the research and therefore in the structured questionnaire asks the 
participants to assess them more. The structured questionnaire also includes open-ended questions 
to gather also experiences by participants in a written form.  
Structured questionnaire research is often considered as a fully structured questionnaire 
questionnaire, that consists of predetermined questions based on a theoretical framework. The main 
objective is to gather responses to all questions included in the structured questionnaire. Structured 
questionnaires often only include questions that are relevant for research. leaving no room for 
additional questions or follow-up questions. Each question that is presented in the structured 
questionnaire should have a connection to the theoretical background of the study, ensuring that the 
information collected is relevant and connected to the research objectives. This structured approach 
enables effective ways to gather a significant amount of research data in an easily manageable 
straightforward manner. (Tuomi & Sarajärvi 2018; Bryman 2016.) However, one downside of 
structured questionnaire research is the limited quality of the responses. There is the difficulty of 
using open-ended questions, because they tend to cut down the number of participants who will 
finish the structured questionnaire. This has the outcome that collected data may lack the richness 
and detail that other methods, such as questionnaires could provide. The inflexible structure of 
structured questionnaires can also restrict the ability to elaborate on answers, potentially limiting the 
extent of the insights gained. (Tuomi & Sarajärvi 2018.) This research gathered a decent number of 
responses to the structured questionnaire. The structured questionnaire included multiple open-
ended questions, but that appears to not have had a significant impact on the participants. One 
remarkable reason for this could be the general nature of the target group, investors are used to 
describing and presenting their opinions, experiences and activities. Therefore, open-ended 
questions most likely did not weaken the response rate significantly. 
The data for this research was gathered with a qualitative structured questionnaire aimed at 
investors, that possessed experience in funding or playing an active role in Finnish start-ups that 
44 
 
have attempted internationalization. The construction and design of the structured questionnaire was 
made considering the goals of the research and the research questions. Therefore, the structured 
questionnaire was planned to explore the challenges start-ups face in internationalization according 
to investors’ perception and to identify key factors contributing to Finnish start-ups failure in 
international expansion. The structured questionnaire was designed to reflect the research questions 
and topics presented in the literature review, without being directly tied to a single theoretical 
framework. This allowed the open-ended questions to capture the full extent of investor 
perspectives.  
The Structured questionnaire (Appendix 1) consisted of 19 questions, combining multiple-choice 
and open-ended questions. This structure allowed respondents to provide both structured insights 
and qualitative elaboration on their experiences. The structured questionnaire was divided into 
sections and each of them focused on a different aspect of the investor’s perspective regarding 
challenges on internationalization. At the beginning of the structured questionnaire, respondents 
were given a brief introduction explaining the purpose of the study, its academic nature and the 
importance of their participation. It was also noted that participation was completely voluntary and 
anonymous, with data being stored securely and used solely for research purposes. Respondents 
were informed that all collected data would be deleted by 31.12.2025, ensuring compliance with 
ethical research practices. 
The first section of the structured questionnaire gathered background information on the 
respondents, including their role as an investor, years of experience, and involvement in Finnish 
start-ups’ internationalization efforts. This section ensured that the responses came from individuals 
with relevant expertise. The second section focused on challenges in internationalization, where 
respondents were asked to identify the most significant barriers start-ups face when entering foreign 
markets. These included issues such as lack of market knowledge, insufficient funding, regulatory 
barriers and cultural differences. Investors were also asked to highlight the most common mistakes 
Finnish start-ups make in their internationalization strategies. 
The third section examined investors’ criteria for assessing start-ups readiness for 
internationalization. Respondents were asked to evaluate factors such as market research, financial 
resources, leadership capabilities and scalability of the business model. Additionally, they were 
asked how often they think Finnish start-ups are adequately prepared for internationalization. The 
fourth section explored the role of investors in start-up internationalization, assessing where the 
involvement level of investors typically is regarding the start-up’s construction of 
45 
 
internationalization strategy. Respondents were asked about the types of support they provide and 
offer, such as financial assistance, strategic advice, networking opportunities and regulatory 
guidance. Investors were also encouraged to elaborate on which forms of support they consider 
most critical for success in internationalization.  
The fifth section focused on patterns of failure, asking investors to reflect on recurring reasons why 
Finnish start-ups fail in international markets and internationalization attempts. This section aims to 
identify common themes in failed internationalization attempts and whether certain challenges are 
consistently observed across different instances. Finally, the structured questionnaire concluded 
with questions on improving internationalization outcomes, including what start-ups could do to 
increase their chances of success and how investors could contribute more effectively to the start-
up’s success. Respondents were also asked about their risk tolerance in start-up investments and 
how it influences their decisions regarding internationalization. 
The structured questionnaire was distributed electronically during January and February of 2025. 
The reason behind distributing the structured questionnaire electronically was to ensure 
accessibility for respondents regardless of their location and because it is the most inviting and 
effortless for respondents. A total of 10 responses were received, representing a diverse range of 
investors, including venture capitalists, angel investors and private equity investors. The structured 
questionnaire link was shared by the researcher through multiple different channels to ensure broad 
distribution among the target of investors. Initially, the link was sent directly to 49 individually 
selected investors known to have experience in Finnish start-up internationalization. In addition, 
FiBAN shared the structured questionnaire through its communication channels. FiBAN is one of 
the largest and most active angel investor networks in the world, consisting of members who are 
actively involved in Finnish start-ups both in domestic and international environment. Furthermore, 
additional 63 individuals were contacted on a second round to increase the number of respondents. 
Also, one known contact was asked to distribute the structured questionnaire link within their own 
investor network, which included an email group of start-up investors. Though the exact number of 
recipients reached through that group is unknown. According to Webropol, the structured 
questionnaire was opened by 262 individuals, demonstrating that the structured questionnaire 
achieved substantial visibility among the intended audience, even though the number of completed 
responses remained more limited. 
The estimated time to complete the structured questionnaire was 15 minutes, making it a convenient 
yet comprehensive method for collecting qualitative data. This structured questionnaire served as 
46 
 
the primary data collection method due to the research’s focus on investor perspectives and the need 
for insights from a broad range of investors. The decision to conduct a structured questionnaire 
rather than interviews was made to ensure a higher response rate and broader coverage of investor 
experience. Although structured questionnaires have limitations, such as the potential for less 
detailed responses compared to questionnaires, the inclusion of open-ended questions helped 
mitigate this issue by allowing respondents to elaborate on key topics. 
5.3 Data and data analysis method 
The data for this research was gathered using an electronic structured questionnaire built with 
Webropol and distributed during January and February 2025. The structured questionnaire targeted 
investors that possess experience in funding Finnish start-ups that had attempted entering foreign 
markets. To reach the intended target group, the link was sent directly to a considerable number of 
persons who were known to have necessary experience, also a well-known and widely operating 
organization FiBAN (Finnish Business Angels Network) shared the link to the structured 
questionnaire in their communication channels. FiBAN’s role was limited to sharing the structured 
questionnaire, they were not involved in the research design, execution or analysis. Due to small 
sample size, no inferential statistical analysis was conducted. The qualitative data was analysed 
using descriptive statistics only and the qualitative responses were interpreted using inductive 
thematic analysis. 
The structured questionnaire consisted of closed and open-ended questions. The structured 
questions worked for capturing respondent characteristics and general views, using multiple choice 
questions and one to five scale evaluations. These questions addressed aspects such as investor type, 
experience level, risk tolerance, perceived challenges and success factors. The responses were 
assembled and analysed in Microsoft Excel using basic descriptive statistics. This information was 
used to investigate the open-ended responses and support the interpretation of broader patterns. 
The open-ended questions in the other hand aimed to bring out deeper qualitative insights into 
investor point of view on internationalization challenges, readiness factors, reasons and causes of 
failure and investors own roles in the process. A total of ten complete responses were received. 
Although the sample size is relatively small, the respondents represent a highly relevant group for 
the focus of the research. Most of the respondents were also highly experienced and had 
participated in a great number of start-up internationalization attempts. Due to the nature of the 
research, a qualitative approach was chosen. The structured questionnaire method allowed for the 
47 
 
collection of diverse perspectives while remaining feasible within the scope and timeframe of the 
research. 
The open-ended responses were analysed using a manual, qualitative content analysis approach. 
The responses were transformed from Webropol into Microsoft Excel for organization and 
examination. The analysis followed a data-driven content analysis process based on Tuomi and 
Sarajärvi (2018), which allows themes and patterns to emerge directly from the data, without the 
use of a predefined theoretical framework. Due to relatively low number of responses, the closed-
ended data was analysed using descriptive statistics only, and the open-ended responses were 
approached through qualitative content analysis to capture investor perspectives. 
The analysis proceeded through the following stages: 
1. Familiarization: All open-ended responses were read multiple times to form a 
comprehensive understanding of the data. 
2. Initial coding: Repetitive expressions, experiences, phrases and ideas were identified and 
divided into preliminary categories. 
3. Theme identification: The categories were grouped into broader themes that reflected the 
shared perspectives of investors. 
4. Interpretation: The themes were interpreted un relation to the research questions to ensure 
consistency and relevance. 
The research questions provided a structural guide for organizing the findings under thematic 
headings, such as perceived challenges, investor roles, failure patterns and suggestions for 
improvement. This approach allowed for transparent and coherent interpretation while preserving 
the respondents’ original intent. All participation in this structured questionnaire was voluntary and 
no personally identifiable data was collected at any stage. Respondents were informed about the 
purpose of the research and consent was given through the completion of the structured 
questionnaire. The collected data was handled confidentially and analysed in accordance with the 
University of Turku’s ethical research guidelines and general good scientific practice. 
5.4 Overview of respondents 
To achieve relevant insights into the challenges and failure patterns Finnish start-ups face during 
internationalization, a structured questionnaire was conducted among investors who have 
48 
 
experience in funding and advising start-ups. A total of ten responses were collected. The sample 
size, despite being limited, represents a well-targeted and experienced group of investors, whose 
insights reflect both qualitative depth and practical relevance for the Finnish start-up ecosystem. All 
of the participants had previously invested in Finnish start-ups and had directly supported firms in 
their initial efforts to expand to new markets outside domestic one. 
The participants were asked to identify their main role as investors. The roles included angel 
investor, venture capitalist, corporate investor, and other private equity professionals. The meaning 
of this question was to map the diversity of perspectives and investment philosophies within the 
sample group. The distribution of investor roles is presented in Figure 2, which provides a visual 
representation of the participant’s background. Figure 2 represents how the structured questionnaire 
participants identified themselves in terms of their main role as investors. From the respondents 
70% were angel investors, 20% were venture capitalists and 10% were private equity investors. 
This diversity helps reflect a broad range of insights from different investor perspectives to Finnish 
start-up internationalization. 
 
Figure 2 Distribution of investor roles 
In addition to their role respondents were also asked to indicate the number of years they have 
experience in investing and working with start-ups. The meaning of this question was to ensure that 
70 %
20 %
10 %
Distribution of investor roles
Angel investor Venture Capitalist Private Equity Investor
49 
 
the answers reflect experienced viewpoints and to account for variation in discovered challenges 
across different levels of professional maturity. The distribution of experience years is shown in 
Figure 3, which illustrates the range from investors at the beginning of their career to highly 
experienced ones. Notably, all of the respondents had experience in investments related to 
internationalization, confirming the relevance of their experiences and perspectives. Bar charts 
display the number of years of experience respondents have. The majority reported 8-12 years of 
experience, while others had either 4-7 years, 13-20 years or 1-3 years of experience. This confirms 
that the responses reflect insights from well experienced investors with remarkable exposure to 
start-up internationalization efforts. 
 
Figure 3 Distribution of investor experience in years 
One of the main central questions in the structured questionnaire was whether the respondent had 
invested in Finnish start-ups to support their initial internationalization attempts. All the 
respondents answered affirmatively, establishing a consistent baseline for experience. Additionally, 
participants were asked to estimate the number of such cases they had been involved in. Most of the 
participants confirmed to have supported at least 4-10 start-ups in this context, indicating repeated 
exposure to the challenges and dynamics of early internationalization efforts. The multiple 
respondents had an even more comprehensive experience, as can be seen from figure 4, which 
illustrates the distribution of investors’ involvement in supporting internationalization. Figure 4 
shows the distribution of respondent’s practical involvement in start-up internationalization. Most 
respondents stated that they have supported 4-10 start-ups, while a notable part of the respondents 
had experience with over 20 start-ups. This demonstrates deep and repeated exposure to the 
10%
20%
50%
20%
0%
10%
20%
30%
40%
50%
60%
1-3 years 4-7 years 8-12 years 13-20 years
Distribution of experience years 
50 
 
internationalization process, strengthening the reliability of insights gathered on patterns of failure 
and investor roles. 
 
Figure 4 Distribution of investors’ involvement in supporting internationalization 
This level of exposure further strengthens the validity of the analysis, as recurring investor insights 
are based on multiple cases rather than isolated experiences. Given the natural challenges of 
internationalization in small open economies like Finland, this practical experience is particularly 
valuable for understanding patterns of failure and opportunity. 
Respondents were also asked to assess how frequently Finnish start-ups are sufficiently prepared 
when they begin their internationalization process. The question was measured using a scale 1 – 5, 
where 1 meant “Never prepared” and 5 meant “Always prepared”. The results revealed an average 
score of 2.6, indicating a general perception among investors that Finnish start-ups are rarely 
adequately prepared for international expansion. Figure 5 summarizes investor perceptions of how 
well Finnish start-ups are prepared when internationalizing. Most respondents evaluated readiness 
between 2 and 3, with an average score of 2.6. The result highlights a concern that Finnish start-ups 
are often missing sufficient preparation, particularly in areas like strategy, resource planning and 
understanding of the market. 
0%
5%
10%
15%
20%
25%
30%
35%
1-3 start-ups 4-10 start-ups 11-20 start-ups 21-50 start-ups More than 50
start-ups
Distribution of investors involvement in supportting 
internationalization
51 
 
 
Figure 5 Investors’ assesment of start-up readiness for internationalization 
Displays how investors rated the preparedness of Finnish start-ups for internationalization on a scale from 1 = 
never prepared to 5 = always prepared. 
This finding is consistent with prior literature that emphasizes the liability of foreignness and the 
insufficient market understanding that start-ups often face when going abroad (Johanson & Vahlne 
2009; Zaheer 1995). From the investor's perspective, lack of preparation can be seen in many forms, 
including underdeveloped market entry strategies, poor resource allocation and excessive reliance 
on domestic validation metrics. 
The structured questionnaire attempted to understand how actively investors participate in shaping 
the expansion strategies of the start-ups they have invested in. In the structured questionnaire 
respondents were asked to estimate involvement on a scale from one to five, one meaning “Not 
involved at all” and five meaning “Heavily involved”. The average score among respondents was 
4.0, indicating that investors normally play a moderate to significant strategic role in 
internationalization process. Figure 6 shows that 80% of respondents rated their own involvement in 
shaping the internationalization strategies of start-ups they are involved with as 3 or 5. The average 
of investors score was 4.0, which highlights that investors are not passive capital providers but 
actively contribute to shaping internationalization strategies. 
10%
40%
30%
20%
0%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
1 2 3 4 5
Distribution of investors opinion on start-ups 
readiness for internationalization 
52 
 
 
Figure 6 Investors’ involvement in shaping start-up internationalization strategy 
Illustrates how actively investors participate in forming the internationalization strategies of the start-ups they 
fund, rated on scale from 1 = not involved to 5 = heavily involved. 
This extent of involvement suggests that investor’s role is not limited to providers of capital but also 
acts as strategic advisors. Many of the respondents disclosed offering market entry advice, 
introducing start-ups to international networks and providing mentoring and strategic guidance. 
Such involvement reflects the increasingly active and multifaceted role investors play in guiding 
start-ups through the complexities of internationalization. 
5.5 Descriptive statistics of the data 
This section presents the key quantitative findings of the structured questionnaire conducted among 
investors who have supported Finnish start-ups in their internationalization efforts and operations. 
The objective of this analysis is to identify the most popular challenges perceived by investors, the 
scale of investors involvement in internationalization, the criteria they use to assess readiness and 
the forms of support they typically offer. The results are based on multiple choice and one-to-five 
scale questions and are analyzed using descriptive statistical methods. 
As shown earlier in Figure 5, investors commonly consider Finnish start-ups to be insufficiently 
prepared for internationalization. Multiple respondents noted that under preparedness extends 
beyond the most visible issues and often involve deeper challenges, such as unconfirmed 
assumptions considering the foreign market, poor alignment of product offerings and demand and 
overly optimistic expectations considering timelines and growth. These findings are consistent with 
prior research on the liability of foreignness (Zaheer 1995) and the experiential learning challenges 
0 0
40%
20%
40%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
1 2 3 4 5
Distribution of investors involvement in shaping 
the internationalization strategy of start-ups they 
invest in
53 
 
that start-ups internationalizing early encounter, especially in small open economies (Johanson & 
Vahlne 2009). The results highlight the importance of fundamental strategic preparation, creation of 
realistic objectives and cooperation with investors prior to entering new markets.  
In order to understand the impact of individual investor preferences on their decision making, 
respondents were asked to evaluate the extent to which their risk tolerance influences their 
investment decisions, especially in the start-up internationalization context. As figure 7 shows, the 
average score of investors answers was 3.8, reflecting a moderately high level of risk acceptance. 
 
Figure 7 Influence of investor risk tolerance on internationalization funding decisions. 
Shows how investors rated the extent to which their risk tolerance affects their decision to invest in Finnish 
start-ups planning internationalization. Scale was from 1 = no influence to 5 = strong influence. 
Although start-up investors are normally accustomed to uncertainty, this result suggests that risk 
preference still guides the decision-making process. Especially, when start-ups lack clear strategies 
or sufficient market validation. While investors are generally used to uncertainty in early-stage 
ventures, this result indicates that decisions to fund internationalization are still guided by caution 
and depend on case-by-case assessments, especially in terms of the maturity and competence of the 
founding team. 
Respondents were asked to select the most significant challenges Finnish start-ups face during 
internationalization. A total of 41 responses were collected from the ten participants, with the option 
of choosing multiple challenges. The most frequently mentioned issues are presented in Figure 8. 
10% 10% 10%
30%
40%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
1 2 3 4 5
Distribution of risk tolerance influence on decision 
to invest in Finnish start-ups planning 
internationalization
54 
 
 
Figure 8 Most common challenges identified by investors in start-up internationalization 
The most common challenges cited by respondents were unclear or misaligned internationalization 
strategies, difficulty in recruiting local talent or building an international team and inadequate 
business networks in foreign markets, each of which was selected by at least half of the 
respondents. In addition, challenges such as lack of adequate market research, insufficient funding, 
limited scalability and cultural differences were frequently selected. These findings reinforce the 
observation that many start-ups rely heavily on domestic validation and have difficulties adapting to 
the diverse demands of foreign markets. The results highlight the need for better strategic 
alignment, higher knowledge of the target market and stronger international partnerships to improve 
the success rate of Finnish start-up internationalization. 
To improve the understanding of how investors evaluate start-up readiness for internationalization, 
respondents were asked to identify key assessment criteria. There was a possibility of choosing 
4
4
3
5
6
1
2
6
1
4
1
2
2
0 2 4 6 8
Cultural differences and lack of local market
understanding
Insufficient funding for international expansion
Lack of market research and preparation
Inadequate business networks in foreign markets
Challenges in recruiting local talent or building an
international team
Regulatory and legal barriers in target markets
Language barriers and communication issues
Unclear or misaligned internationalization strategies
High competition in foreign markets
Lack of scalability or readiness in the business model or
product
Limited support from investors or advisors during
internationalization
Overestimating the demand for products or services
abroad
Other
Most common challenges identified by investors in start-up 
internationalization
55 
 
multiple answers and a total of 59 selections were made across ten participants. These answers are 
presented in Figure 9. 
 
Figure 9 Criteria used by investors to assess start-up readiness for internationalization 
Illustrates the key factors investors consider when evaluating wheter a start-up is ready for internationalization. 
From the responses, the two most frequently selected were understanding of the target market and 
strength and expertise of the leadership team. Both were chosen by seven of the ten respondents. 
These results indicate that investors place strong emphasis on both analytical market knowledge and 
the leadership team’s capability to implement internationalization effectively. Following these two 
closely were four criteria, each selected by six respondents. Clarity of the internationalization 
strategy, scalability of the offering, existing networks in the target market and commitment to long-
term international growth. These selections suggest that investors value strategic coherence, 
potential for scalability and existing external relationships. Other factors, such as sufficient financial 
resources, selected by five, and proven product-market fit in the domestic market, selected by four, 
were also viewed as important factors, although to a lesser degree. Notably, regulatory preparedness 
and cultural adaptability were seen as less critical, with only one respondent selecting regulatory 
navigation and three selecting internal cultural openness. 
The diversity of selected criteria demonstrates that investor evaluations are multidimensional and 
grounded in both strategic foresight and operational readiness. The emphasis on leadership quality 
0 1 2 3 4 5 6 7 8
Clarity and feasibility of the internationalization strategy
Understanding of the target market (e.g., customer needs,…
Sufficient financial resources to support expansion
Scalability of the product or service for international markets
Strength and expertise of the leadership team
Existing business networks or partnerships in target markets
Proven product-market fit in the domestic market
Readiness of operations and supply chain for scaling…
Ability to navigate regulatory and legal requirements in…
Cultural adaptability and openness within the organization
Commitment to long-term investment in international growth
Past experience with international business operations
Other
Criteria used by investors to assess start-up readiness for 
internationalization
56 
 
and market understanding reflects the investor expectation for strong planning before entry and 
execution capability. 
Respondents were lastly asked to indicate the form of support and help they typically provide for 
start-ups during internationalization processes. Participants were capable of selecting multiple 
answers and a total of 47 responses were received, meaning multiple respondents selected more 
than one form of support they typically offer. The most frequently selected forms of support are 
presented in Figure 10. 
 
Figure 10 Types of Support provided by investors during start-up internationalization 
Displays the most common forms of support investors offer to start-ups in the internationalization process, 
based on multiple selections per respondent. 
The findings suggest that investor participation in expansion to new markets extends well beyond 
financial support. Strategic guidance and offering a way to international networks appear to be the 
most frequently provided forms of support. These elements are crucial for overcoming knowledge 
gaps and improving opportunities for successful market entry to competitive markets. Nearly all 
forms of support were selected by multiple respondents, confirming the versatile nature of investor 
involvement in start-ups foreign market entry efforts. 
0 1 2 3 4 5 6 7 8 9 10
Financial support (e.g., direct funding, loans, equity)
Strategic advice on internationalization plans
Access to business networks or partnerships in foreign
markets
Mentorship and coaching for founders or teams
Assistance with market research and analysis
Support with regulatory and legal compliance in
foreign markets
Facilitating connections with potential customers or
distributors
Helping build or expand the international team
Providing tools or frameworks for risk management
Monitoring and evaluating internationalization
progress
Types of support provided by investors during start-up 
internationalization
57 
 
5.6 Thematization of data 
In addition to close-ended questions the structured questionnaire also included open-ended 
questions to collect investors insights regarding internationalization challenges of Finnish start-ups. 
The qualitative data was analyzed through thematic content analysis, consistent with the approach 
outlined in chapter 5. The analysis revealed four key themes: strategic deficiencies, adaptation 
issues and market knowledge, organizational limitations and investor-start-up relationship 
dynamics. These themes reflect recurring observations by investors and bring out critical areas of 
challenges for start-ups attempting internationalization. Respondent quotations presented in this 
section have been anonymized and, where necessary, minimally edited for grammar and clarity. The 
original meaning and content of the response have been retained. 
The most visible theme was the lack of structured and functional internationalization strategies. 
Investors mentioned multiple times that start-ups have a habit of underestimating the complexity of 
market entry to new international markets and have not formed detailed plans considering timelines, 
entry tactics, and resources. As a result of this many investors viewed poor preparation as a key 
reason for failure. 
“Poor market-entry strategy” 
“Too optimistic expectation of market traction” 
Investors regarded premature entry and overconfidence based on domestic prosperity as critical risk 
factors. This observation corresponds to the previous results, where only 60% of investors 
considered start-up internationalization strategies to be sufficiently clear. 
The second key theme focused on inadequate market knowledge and limited customer knowledge 
in foreign markets. Investors pointed out that start-ups often lack basic understanding of customer 
needs and market conditions while also having difficulties internalizing regulatory requirements in 
the target market and country. 
“Not understanding how difficult international markets are” 
“Failure to research and adapt to local markets” 
Respondents expressed that that assumptions based on domestic market experience do not 
automatically transfer to foreign contexts, especially in markets that are culturally distant to 
Finland’s domestic market. 
58 
 
Organizational shortcomings were recognized as another critical problem among Finnish start-ups. 
Several respondents mentioned that start-ups often lack internal capacity or experience to manage 
simultaneously both domestic and international activities. 
“Lack of resources and experience to handle international expansion.” 
“Overdependence on founders” 
Common issues included insufficient international requirements, unclear delegation of 
responsibility and excessive reliance on the founding team. 
The final theme related to interaction between the investor and the founder. Even though most 
investors expressed a willingness to offer strategic guidance and support, some mentioned that 
founders were hesitant to fully leverage the networks provided by investors or underestimated the 
value of external advice. 
“Start-ups often do not listen to advice or use investor networks.” 
“Unrealistic timelines set by start-ups” 
Investors reported occasional tensions regarding risk assessment, expectations for speed of market 
entry and alignment of long-term objectives. 
The qualitative results offer valuable insight into the key areas where investors perceive Finnish 
start-ups face barriers in internationalization. The four themes, that were insufficient strategic 
planning, limited knowledge of foreign markets, internal resource constraints and underutilization 
of investor support, align closely with the patterns identified previously in chapter 6.2. 
Figure 11 highlights the four central themes identified by investors as contributors to Finnish start-
ups failure in internationalization. Strategic shortcomings were frequently mentioned, particularly in 
the form of poor or unrealistic market entry plans. Market knowledge and adaptation challenges 
were also highlighted, including insufficient research and offerings that did not fit the conditions of 
the target market. Organizational limitations emerged as another key theme, with investors pointing 
at insufficient internal capabilities and a lack of experienced leadership. Lastly, the relationship 
dynamics between investor and start-up were identified as a barrier, especially when founders do 
not fully accept or use the investor support or when expectations with these two are not aligned. 
Together, these themes create a comprehensive foundation for understanding the recurring patterns 
that prevent successful internationalization. 
59 
 
 
Figure 11 Key themes contributing to the failure of Finnish start-up internationalization. 
Visual summary of the four primary themes identified by investors as contributing to internationalization failure 
among Finnish start-ups. 
5.7 Patterns and synthesis 
The findings of this study, based on both structured and open-ended structured questionnaire 
responses, reveal a consistent set of challenges and critical issues identified by investors regarding 
Finnish start-up internationalization. This section synthesizes the results of the analysis to provide a 
comprehensive view of the recurring themes and patterns according to investor respondents. The 
analysis of close ended responses pointed out that investors view Finnish start-ups as generally 
unprepared for internationalization, with an average preparedness grade of 2,6 out of 5. Investors 
reported a high degree of involvement in start-up internationalization strategies, averaging 4.0 out 
of 5, indicating that their role extends further than providing capital, having a significant role in 
strategic and operational support. Investors viewed their risk tolerance to 3,8 out of 5, what is 
Failure of Finnish 
start-up in 
internationalization
Market 
knowledge and 
adaptation
Investor - Start-up 
relationship 
dynamics
Organizational 
limitations
Strategic 
shortcomings
60 
 
moderately high, even though investors demonstrate that lack of preparation and ambiguous 
strategies remain as significant obstacles for funding international expansion. 
The most commonly identified challenges in the close ended responses were lack of market 
knowledge, incompletely defined market entry strategies, overestimation of product-market fit and 
limited access to international talent. These observations were strengthened by the open-ended 
response analysis. The open-ended responses revealed four dominant themes, that were strategic 
shortcomings, insufficient market knowledge and adaptation, resource limitations in the 
organization and underutilization of investor support. The open-ended responses deepened the 
quality and detail of patterns identified in the close-ended structured questionnaire results. In the 
answers there were repeated situations where start-ups entered foreign markets prematurely, 
underestimating the value of local market knowledge or failing to allocate adequate resources to 
domestic and international actions. Responses also displayed experiences of tensions forming 
between investors and founders, including unrealistic expectations and poor communication 
regarding the use of networks and expertise investors possess. 
In combination, the results suggest that Finnish start-ups will continue to face recurring and 
predictable challenges and barriers when pursuing international markets. The findings show clear 
consistency between the investor reported evaluation criteria, the challenges most often 
encountered, and the qualitative examples provided by respondents. Across both open- and close-
ended responses, investors highlighted that success in internationalization is remarkably dependent 
on strong team capabilities, fact-based market knowledge, comprehensive strategic planning and 
considerable cooperation between start-ups and investors. 
The alignment between the open-ended and close-ended data strengthens the credibility of the study 
and offers a solid foundation for the findings and conclusion presented in chapter 7. The insights 
obtained demonstrated how investors experience and expectations can serve as valuable guidance 
for start-ups to enhance their readiness and develop strategies for entering foreign markets. 
61 
 
6 Findings 
This chapter presents the key findings of the study by addressing the research questions presented at 
the beginning of this thesis. The purpose of this section is summarizing the main results and 
highlighting the most significant insights obtained from the analysis of investor structured 
questionnaire responses. 
The first research question focused on how investors observe the challenged Finnish start-ups face 
when internationalizing. Both open-ended and close-ended results point out that Finnish start-ups 
are usually underprepared when entering new markets. Investors were asked to evaluate the 
preparedness, and their responses average was 2.6 out of 5. They identified the most common 
challenges that were lack of market knowledge, poorly defined market entry strategies, 
overestimation of product-market fit, and difficulties in attracting international talent. The answers 
clearly showed that premature internationalization, combined with false expectations, leaves start-
ups open to significant risks in international markets. Investors frequently expressed a lack of 
flexibility and underestimation of competitive intensity abroad. 
As one investor put it: 
“Being non-flexible, not trusting local experts, and looking for easy wins – that’s a sure 
way to fail.” 
Another noted: 
“Even when providing SaaS, companies often target the biggest markets just because 
‘we already know the language’ – instead of truly understanding market fit.” 
The second research question focused on the specific factors that investors view as critical to start-
up internationalization failure. The findings revealed four main patterns contributing to failure, 
these were lack of a structured expansion strategy, insufficient understanding of foreign markets 
and customer knowledge, internal organizational limitations and not accepting or fully utilizing 
investor support. Investors pointed out that many start-ups enter international markets without 
conducting thorough market research or even without an adequate plan. That frequently leads to a 
poor adaptation to the market and results in loss of competitive advantage. Additionally, limited 
number of resources and inadequate internal functionality were viewed as key barriers to sustaining 
international success. 
One investor commented: 
62 
 
“Internationalization is seen as an objective in itself, rather than just a way to expand 
the target market.” 
Another observed: 
“Start-ups often completely underestimate the challenges. It’s a lot harder than the 
home market – going there before having a grip on the domestic market is suicidal.” 
The third research question focused on the investors’ perceived role in supporting the 
internationalization of start-ups. The structured questionnaire results indicated that investors tend to 
play an active role that applies to areas beyond capital. Investors participating in the structured 
questionnaire estimated the average involvement to 4.0 out of 5, reflecting a strong strategic and 
advisory contribution from investors. Popular forms of support included strategic guidance, access 
to international networks, advice on market entry and recruitment assistance. While investors 
expressed a willingness to offer expertise and resources, they also pointed out that founders often do 
not exploit the support available, what ends up as missed opportunities for more rapid and efficient 
market entry. 
For example: 
“We help set realistic expectations and make sure they are sufficiently prepared before 
they expose themselves too much.” 
Another stated: 
“Providing experience-based knowledge on best practices and offering financial 
support are both key.” 
One investor emphasized: 
“Investors can boost courage, especially when they have deep experience in 
internationalization – but the mindset must come from the founders.” 
The last research question explored how investor experience and knowledge can be leveraged to 
improve start-ups internationalization success. The findings suggest that investors expect start-ups 
to demonstrate clear evidence of readiness prior to internationalization. Investors expect start-up to 
demonstrate detailed market research, a defined strategy, strong leadership capabilities and the 
financial and operational capacity to grow and scale. Investors believe that early engagement and 
alignment between investors and start-up teams can reduce risks and improve outcomes. Moreover, 
investors emphasized the value of collaboration and that founders must actively leverage and utilize 
investor networks and strategic advice throughout the internationalization process. 
63 
 
Investors highlighted several specific readiness criteria: 
 Clarity and feasibility of the internationalization strategy 
 Understanding of the target market 
 Sufficient financial resources 
 Product-market fit 
 Experience of the leadership team 
 Cultural adaptability 
One investor summarized: 
“They should have a clear idea of their ICP and PMF in the home market and have 
conducted sufficient market research of the target market to have realistic 
expectations.” 
These findings collectively reflect the complexity of internationalization from an investor’s 
perspective. They emphasized not only the operational and strategic deficiencies in Finnish start-
ups but also the importance of investor engagement and realistic planning for internationalization 
success. 
64 
 
7 Conclusion 
7.1 Theoretical contributions 
The aim of this thesis was to investigate why Finnish start-ups often face difficulties in their 
internationalization efforts, with a specific focus on the perspective of investors. Through a 
questionnaire aimed at investors that had directly supported Finnish start-ups entering international 
markets, the study identified recurring challenges, causes of failure and the investors role in shaping 
the internationalization outcomes. The analysis combined both open-ended and close-ended 
questions data, revealing a consistent pattern of perceived under preparedness, strategic 
deficiencies, poor market knowledge and organizational limitations within internationalizing start-
ups. These findings reflect prior research on internationalization challenges, including the liability 
of foreignness and externality (Zaheer 1995; Johanson & Vahlne 2009), which can be especially 
evident when start-ups lack networks and contextual knowledge in new markets (Coviello & Munro 
1997). 
The findings showed that investors have an active and diverse role in start-up internationalization. 
Investors are providing capital, but in addition they offer strategic guidance, access to international 
networks and offer support in operational planning and labor procurement. However, start-ups do 
not always fully utilize investors’ input, also tensions may arise because of differences in 
expectations, readiness and timelines. These tensions reinforce the earlier findings from investor 
literature (Gabrielsson & Gabrielsson 2013; Wiltbank et al. 2009) that emphasize how 
misalignment between founders and investors can hinder internationalization efforts. 
The study contributes to international entrepreneurship literature by offering insights into early-
stage internationalization from the investor’s viewpoint, that is an area understudied. The results 
reinforce and extend previous research in the fields of born globals and international new ventures 
(Knight & Cavusgil 2004; Oviatt & McDougall 1994), by showing how investor involvement can 
mitigate some of the key risks associated with rapid foreign expansion. These include insufficient 
financial and human capital, as well as weak strategic planning (Gabrielsson et al. 2008). This 
perspective complements existing research in international entrepreneurship, where investor roles 
are often overlooked despite their relevance (McDougall & Oviatt 2000). 
Moreover, the thesis helps clarify how readiness assessment and strategic alignment, factors often 
discussed in international theory, are practically applied by investors when evaluating and 
supporting start-ups. These observations link closely to the Uppsala internationalization model 
65 
 
(Johanson & Vahlne 1977; Johanson & Vahlne 2009) and network theory (Johanson & Mattsson 
1988), both of which emphasize knowledge accumulation and embeddedness in business networks. 
The findings also support criticisms of traditional incremental models by showing how Finnish 
start-ups often pursue accelerated internationalization due to their small domestic market, aligning 
with the born global view and prior research on Finnish international ventures (Kuivalainen et al. 
2012; Gabrielsson & Gabrielsson 2011).  
7.2 Managerial implications 
For Finnish start-ups, the findings highlight the significance of truth-based preparation before 
pursuing foreign markets. Start-ups should invest in well executed market research, create realistic 
internationalization strategies and be willing to utilize networks and experience of their investors. 
Failure in these areas may result in avoidable mistakes and lost opportunities in international 
markets. For investors, this thesis suggests a need for proactive alignment with start-up teams early 
in the expansion process. Coaching, strategic involvement and clear communication regarding 
expectations can improve the outcomes and reduce disagreements during higher risk stages of 
internationalization. Support organizations may also benefit from these findings by customizing 
their support tools to focus on matching investors and founders, building networks and ensuring 
readiness. 
7.3 Limitations of the study 
The primary limitation of the study is the sample size, which, while carefully targeted, included 
only ten investors. As such, the findings should not be generalized across sectors or geographies. 
Additionally, the use of qualitative structured questionnaires instead of questionnaires may have 
limited the depth of some individual responses. Another limitation concerns the scope of investors’ 
profiles. While respondents represented a mix of angel investors and venture capitalists, the study 
did not separately analyse variations across different investor types or funding stages in depth. 
Furthermore, the data may be affected by self-selection bias, as investors who chose to respond may 
have stronger opinions or particularly memorable experiences related to start-up 
internationalization, potentially influencing the overall tone of the findings. The study’s exclusive 
focus on the Finnish start-up ecosystem also limits the applicability of its conclusions to other 
national contexts, where institutional regulations, funding environments and internationalization 
models may differ significantly. 
66 
 
7.4 Suggestions for future research 
Future research could expand the sample to include broader range of investors, including 
international investors working with Finnish or Nordic start-ups. Comparative research between 
successful and unsuccessful internationalization cases could also shed further light on best practices 
and risk factors. Additionally, future research could explore the dynamics between investors and 
founders by including both perspectives in the analysis. This would provide a more comprehensive 
insight into the strategic decision-making process during internationalization efforts. It would also 
offer valuable insights into how investors and founders’ collaboration or misalignment affects 
outcomes. 
67 
 
8 Summary 
The objective of this master’s thesis was to investigate why Finnish start-up companies often face 
challenges and failures in their internationalization efforts, specifically from the perspective of 
investors. The topic is timely, as Finland’s small domestic market forces start-ups to seek 
international growth early in their life cycle. While internationalization offers many growth 
opportunities, it also involves substantial risks that can lead to failure. This study aimed to uncover 
investors’ experiences and observations considering the factors that contribute to these failures. 
A qualitative research approach was applied, and data was collected by conducting an online 
structured questionnaire. The target group consisted of investors with experience funding Finnish 
start-ups during their internationalization efforts. The structured questionnaire included both 
multiple choice and open-ended questions, and the data was analyzed using descriptive statistics 
and qualitative content analysis. 
The results indicate that investors observe Finnish start-ups as generally unprepared for 
internationalization. The most mentioned challenges included poor market knowledge, week market 
entry strategies, overestimation of product-market fit and internal resources limitations. 
Additionally, investors provide more than just capital by offering access to their networks and 
guidance, start-ups tend to not fully utilize these. Four central themes emerged from the analysis, 
these were lack of strategic preparedness, limited market knowledge and adaptability, internal 
resources constraints and not taking full advantage from the relationship with investors. These 
themes represented the most recurring base causes of failure in Finnish start-up internationalization 
from the investors’ viewpoint. 
This research contributes new insights to the investor’s role in the start-up internationalization 
process and offers practical recommendations for both start-ups and investors. Start-ups key focus 
should be in developing realistic strategies, conducting comprehensive market research and 
collaborating closely with investors. Meanwhile, investors should work to align expectations and 
provide support early in the expansion process. 
68 
 
References 
Alasuutari, P. (2011) Laadullinen tutkimus 2.0, 4 uud. p. Kustannusosakeyhtiö Vastapaino. 
Aldrich, H. – Ruef, M. (2006) Organizations Evolving (2nd edition). Sage. 
Altbach, P. – Knight, J. (2007) The Internationalization of Higher Education: Motivations and 
Realities. Journal of Studies in International Education. 11(3-4), 290-305. 
Anderson, E. – Gatignon, H. (1986) Modes of Foreign Entry: A Transaction Cost Analysis and 
Propositions. Journal of International Business Studies, 17(3), 1-26. 
Autio, E. – Almeida, J. – Sapienza, H. (2000) Effects of Age at Entry, Knowledge Intensity, and 
Imitability on International Growth. Academy of Management Journal, 43(5), 909-924. 
Autio, E. – Sapienza, H. – Almeida, J. (2000) Effect of Age at Entry, Knowledge Intensity, and 
Imitability on International Growth. Academy of Management Journal, 43(5), 909-924. 
Autio, E. – Sapienza, H. – George, G. – Zahra S. (2006) A Capabilities Perspective on the Effects 
of Early Internationalization on Firm Survival and Growth. The Academy of Management 
Review. 31(4), 914-933. 
Autio, E. (2005) Creative Tension: The Significance of Ben Oviatt’s and Patricia McDougall’s 
Article ‘Toward a Theory of International New Ventures’. Journal of International Business 
Studies, 36(1), 9-19. 
Baldridge, R. – Curry, B. (2024) What is A Start-up? The Ultimate Guide. Forbes. 
<https://www.forbes.com/advisor/business/what-is-a-start-up/> retrieved 9.11.2024. 
Barney, J. (1991) Firm Resources and Sustained Competitive Advantage. Journal of Management, 
17(1), 99-120. 
Bertoni, F. – Colombo, M. – Grilli, L. (2011) Venture Capital Financing and the Growth of High-
tech Start-ups: Disentangling Treatment from Selection Effects. Research Policy, 40(7), 
1028-1043. 
Billing, M. (2025) 11 Family Offices for Start-ups to Tap Into in the Nordics. Sifted. 
<https://sifted.eu/articles/nordic-family-offices-to-tap-into?> retrieved 12.4.2025. 
Blank, S. (2013) The Four Steps to the Epiphany: Successful Strategies for Products that Win (2nd 
edition). K&S Ranch. 
Blank, S. (2013) Why the Lean Start-up Changes Everything. Harvard Business Review, 91(5), 64-
72. 
Block, J. – Fisch, C. – Vismara, S. – Andres, R. (2019) Private Equity Investment Criteria: An 
Experimental Conjoint Analysis of Venture Capital, Business Angels, and Family Offices. 
Journal of Corporate Finance. 58, 329-352. 
69 
 
Bryman, A. (2016) Social Research Methods (5th edition). Oxford University Press, 2016. 
Busenitz, L. – Drover, W. – Matusik, S. – Townsend, D. – Angling, A. – Dushnitsky, G. (2017) A 
Review and Road Map of Entrepreneurial Equity Financing Research: Venture Capital, 
Corporate Venture Capital, Angel Investment, Crowdfunding, and Accelerators. Journal of 
Management, 43(6), 1820-1853. 
Business Finland, (2024) Finland has the Best Start-up and Growth Company Ecosystem in the 
World. <https://www.businessfinland.fi/en/whats-new/blogs/2024/suomessa-on-maailman-
paras-start-up--ja-kasvuyritysekosysteemi>, retrieved 12.2.2025 
Bussgang, J. (2010) Mastering the VC Game: A venture capital insider reveals how to get from 
start-up to IPO on your terms. Penguin, 2010. 
Calof, J. – Beamish, P. (1995) Adapting to Foreign Markets: Explaining Internationalization. 
International Business Review. 4(2), 115-131. 
Carree, M. – Thurik, R. (2010) The Impact of Entrepreneurship on Economic Growth. Handbook of 
Entrepreneurship Research. 557-594. 
Cavusgil, S. – Knight, G. (2015) The Born Global Firm: An Entrepreneurial and Capabilities 
Perspective on Early and Rapid Internationalization. Journal of International Business 
Studies, 46(1), 3-16. 
CBInsights (2024) 483 Start-up Failure Post-mortems. <https://www.cbinsights.com/research/start-
up-failure-post-mortem/ > retrieved 23.4.2025 
Chetty, S. – Stangl, L. (2010) Internationalization and Innovation in a Network Relationship 
Context. European Journal of Marketing, 44(11/12), 1725-1743. 
Cockayne, D. (2019) What is a start-up firm? A methodological and epistemological investigation 
into research objects in economic geography. Geoforum, Vol.107, 77-87. 
Coviello, N. – Munro, H. (1997) Network Relationships and the Internationalisation Process of 
Small Software Firms. International Business Review, 6(4),361-386. 
Coviello, N. (2006) The Network Dynamics of International New Ventures. Journal of 
International Business Studies. 37(5), 713-731. 
Creswell, J. (2014) Research Design: Qualitative, Quantitative, and Mixed Methods Approaches 
(4th edition) Sage Publications. 
Cuervo-Cazurra, A. – Narula, R. – Annique Un, C. (2015) Internationalization Motives: Sell More, 
Buy Better, Upgrade and Escape. Multinational Business Review. 23(1), 25-35. 
Cui, G. – Liu, Q. (2001) Emerging Market Segments in a Transitional Economy: A Study of Urban 
Consumers in China. Journal of International Marketing. 9 (1) 84-106. 
70 
 
Cumming, D. – Johan, S. – Zhang, M. (2014) The Economic Impact of Entrepreneurship: 
Comparing International Datasets. Corporate Governance: an International Review, 22(2), 
162-178. 
Cunningham, J. – Walsh, G. (2016) Business Failure and Entrepreneurship: Emergence, Evolution 
and Future Research. Foundations and Trends in Entrepreneurship. 12(3), 163-285. 
Denzin, N. – Lincoln, Y. – Taylor, S. (2007) The Sage Handbook of Qualitative Research (3rd 
edition). Prometheus (Saint Lucia, Brisbane, Qld), 25(1), 115-117. 
Denzin, N. – Lincoln, Y. (2018) The SAGE Handbook of Qualitative Research. (5th edition). Sage 
publications. 
Dereli, D. (2015) Innovation Management in Global Competition and Competitive Advantage. 
Procedia-Social and Behavioral Sciences. 195, 1365-1370. 
Ehsan, Z. (2021) Defining a Start-up – A Critical Analysis. SSRN Electronic Journal. 
Eiche, J. – Kabst, R. – Schwens, C. (2011) The Moderating Impact of Informal Institutional 
Distance and Formal Institutional Risk on SME Entry Mode Choice. Journal of 
Management Studies, 48(2), 330-351. 
Elo, S. – Kajula, O. – Tohmola, A. – Kääriäinen, M. (2022) Laadullisen Sisällönanalyysin Vaiheet 
ja Eteneminen. Hoitotiede, Vol.34(4), 215–225. 
ESM, (2015) European Start-up Monitor. <https://start-upverband.de/fileadmin/start-
upverband/mediaarchiv/research/sonstige_studien/20160303_European_Start-
up_Monitor_2015.pdf> retrieved 14.11.2024 
European Comission, (2020) User Guide to the SME Definition. Publications Office of the 
European Union. 
European Investment Bank, (2024) Financing and Commercialisation of Cleantech Innovation. 
<https://www.eib.org/en/publications/20240003-commercialisation-of-clean-and-
sustainable-technologies> retrieved 23.2.2025. 
Everett, J. – Watson, J. (1996) Do Small Businesses Have High Failure Rates? Evidence From 
Australian Retailers. Journal of Small Business Management. 34(4), 45-62. 
Feicheng, M. – Xin, L. – Xuli, T. (2022) Internationalizing AI: Evolution and Impact of Distance 
Factors. Scientometrics. 127(1), 181-205. 
Fink, A (2015) How to Conduct Structured questionnaires: A Step-by-Step Guide (6th edition). 
Sage. 
Forsgren, M. (2016) A Note on the Revisited Uppsala Internationalization Process Model – The 
Implication of Business Networks and Entrepreneurship. Journal of International Business 
Studies. 47(9), 1135-1144. 
71 
 
Freeman, S. – Edwards, R. – Schroder, B. (2006) How Smaller Born-Global Firms use Networks 
and Alliances to Overcome Constraints to Rapid Internationalization. Journal of 
International Marketing, 14(3), 33-63. 
Fritsch, M. – Mueller, P. (2004) Effects of New Business Formation on Regional Development 
Over Time. Regional Studies. Vol.38(8), 961-975. 
Gabrielsson, M. – Gabrielsson, P. (2011) Internet Based Sales Channel Strategies of Born Global 
Firms. International Business Review, 20(1), 88-99. 
Gabrielsson, M. – Gabrielsson, P. (2013) A Dynamic Model of Growth Phases and Survival in 
International Business-to-business new Ventures: The Moderating Effect of Decision-
making Logic. Industrial Marketing Management, 42(8), 1357-1373. 
Gabrielsson, M. – Kirpalani, V. – Dimitratos, P. – Solberg, C. – Zucchella A. (2008) Born Globals: 
Propositions to Help Advance the Theory. International Business Review, 17(4), 385-401. 
Gabrielsson, M. – Luostarinen, M. (2006) Globalization and Marketing Strategies of Born Globals 
in SMOPECs. Thunderbird International Business Review, 48(6), 773-801. 
Gabrielsson, M. – Pelkonen, T. (2008) Born Internationals: Market Expansion and Business 
Operation Mode Strategies in the Digital Media Field. Journal of International 
Entrepreneurship, 6(2), 49-71. 
Gompers, P. – Lerner, J. (2001) The Venture Capital Revolution. The Journal of Economic 
Perspectives, 15(2), 145-168. 
Gonzalez-Rozada, M. – Yeyati, E. (2008) Global Factors and Emerging Market Spreads. The 
Economic Journal. 118(533), 1917-1936. 
Heinonen, J. – Kovalainen, A. – Pukkinen, T. – Stenholm, P. (2009) Global Entrepreneurship 
Monitor. Finnish 2008 Report. Turku School of Economics. 
Hitt, M. – Ireland, R.  -Zahra, S. (2000) International Expansion by New Venture Firms: 
International Diversity, Mode of Market Entry, Technological Learning, and Performance. 
Academy of Management Journal. 43(5), 925-950. 
Hood, N. – Johanson, J. – Mattsson, L. – Vahlne, J. (1988) Internationalisation in Idustrial Systems 
– A Network Approach. Strategies in Global Competition, 19, 287-314. 
Ilmari, M. (2024) Suomessa on Maailman Paras Start-up- ja Kasvuyritysekosysteemi. Business 
Finland. <https://www.businessfinland.fi/ajankohtaista/blogit/2024/suomessa-on-maailman-
paras-start-up--ja-
kasvuyritysekosysteemi#:~:text=Suomi%20tavoittelee%20asemaa%20maailman%20parhaid
en%20start-up-%20ja%20kasvuyritysekosysteemien,Sen%20vuoksi%20start-up-
72 
 
yritykset%20ovat%20avainasemassa%20Business%20Finlandin%20strategiassa.> retrieved 
9.11.2024. 
Insights, C.B. (2018) 253 Start-up Failure Post-Mortems. Cbinsights. <https://www. cbinsights. 
com/research/start-up-failure-post-mortem> retrieved 9.11.2024. 
Johanson, J. – Vahlne, J. (1977) The Internationalization Process of the Firm-A Model of 
Knowledge Development and Increasing Foreign Market Commitments. Journal of 
International Business Studies. 8(1), 23-32. 
Johanson, J. – Vahlne, J. (2009) The Uppsala Internationalization Process Model Revisited: From 
Liability of Foreignness to Liability of Outsidership. Journal of International Business 
Studies. 40(9), 1411-1431. 
Johanson, J. – Wiedersheim-Paul, F. (1975) The Internationalization of the Firm – Four Swedish 
Cases. Journal of Management Studies. 12(3), 305-323. 
Kallinen, T. – Kinnunen, T. (2021) Teoksessa Juhila Kirsi (toim.) Laadullisen tutkimuksen 
verkkokäsikirja. Tampere: Yhteiskuntatieteellinen tietoarkisto. 
<https://www.fsd.tuni.fi/fi/palvelut/menetelmaopetus/kvali/> retrieved 26.1.2025. 
Keupp, M. – Gassmann, O. (2009) The Past and the Future of International Entrepreneurship: A 
Review and Suggestions for Developing the Field. Journal of Management, 35(3), 600-633. 
Knight, G. – Cavusgil, S. (2004) Innovation, Organizational Capabilities, and the Born-Global 
Firm. Journal of International Business Studies. Vol.35(2),124-141. 
Knight, J. (2003) Updated Defenition of Internationalization. International Higher Education, 33. 
Koskinen, H. (2022) Kohti Start-up-Suomea? Poliittinen talous, 10(2), 89-97. 
Koskinen, I. – Alasuutari, P. – Peltonen, T. (2005) Laadulliset menetelmät kauppatieteissä. 
Vastapaino, Tampere. 
Kotiranta, A. – Pajarinen M. – Rouvinen P. (2016) Characteristics of Finnish Start-ups. ETLA 
Raportit – Reports 66. 
Krippendorff, K. (2019) Content Analysis: An Introduction to its Methodology (4th edition). Sage 
publications. 
Kuivalainen, O. – Sundqvist, S. – Saarenketo, S. – McNaughton, R. (2012) Internationalization 
Patterns of Small and Medium-Sized Enterprises. International Marketing Review, 29(5), 
448-465. 
Kuivalainen, O. – Sundqvist, S. – Servais, P. (2007) Firms’ Degree of Born-Globalness, 
International Entrepreneurial Orientation and Export Performance. Journal of World 
Business, 42(3), 253-267. 
73 
 
Lahtinen, H. – Pekkala, H. – Halme, K. – Salminen, V. – Härmälä, V. – Wiikeri, J. – Lamminkoski, 
H. – Lähde, K. – Mikkelä, K. – Rouvinen, P. – Kotiranta, A. – Pajarinen, M. – Dalziel, M. – 
Barge, B. – Meade, C. – Zhao, X. (2016) Start-up-yritysten kasvun ajurit ja pullonkaulat. 
Valtioneuvoston selvitys- ja tutkimustoiminnan julkaisusarja. 30/2016. 
Laurell, H. (2018) An International New Venture’s Commercialization of a Medical Technology 
Innovation: The Role of Institutional Healthcare Settings. International Marketing Review, 
35(1), 136-163. 
Lieberman, M. – Montgomery, D. (1998) First-mover (dis)advantages: Retrospective and Link with 
the Resource-Based View. Strategic Management Journal, 19(12), 1111-1125. 
Lu, J. – Beamish, P. (2006) SME Internationalization and Performance: Growth vs. Profitability. 
Journal of International Entrepreneurship. 4(1), 27-48. 
Luostarinen, R. (1994) Internationalization of the Firm. Helsingin kauppakorkeakoulu, 1994. 
Mainela, T. – Puhakka, V. – Servais, P. (2014) The Concept of International Opportunity in 
International Entrepreneurship: A Review and a Research Agenda. International Journal of 
Management Reviews, 16(1), 105-129. 
Manigart, S. – Baeyens, K. – Van Hyfte, W. (2002) The Survival of Venture Capital Backed 
Companies. Venture Capital (London), 4(2), 103-124. 
Manigart, S. – Sapienza, H. – Vermeir, W. (1996) Venture Capitalist Governance and Value Added 
in Four Countries. Journal of Business Venturing, 11(6), 439-469. 
Marmer, M. – Herrmann, B. – Dogrultan, E. – Berman, R. (2011) Start-up Genome Report Extra on 
Premature Scaling. Start-up Genome.< https://innovationfootprints.com/wp-
content/uploads/2015/07/start-up-genome-report-extra-on-premature-scaling.pdf > retrieved 
24.6.2025. 
Mason, C. – Harrison, R. (2008) Measuring Business Angel Investment Activity in the United 
Kingdom: A Review of Potential Data Sources. Venture Capital (London), 10(4), 309-330. 
McDougall, P. – Oviatt, B. (2000) International Entrepreneurship: The Intersection of Two 
Research Paths. Academy of Management Journal, 43(5), 902-906. 
Msrchand, A. – Hennig-Thurau, T. (2013) Value Creation in the Video Game Industry: Industry 
Economics, Consumer Benefits, and Research Oppotrunities. Journal of Interactive 
Marketing, 27(3), 141-157. 
Mudambi, R. – Zahra, S. (2007) The Survival of International New Ventures. Journal of 
International Business Studies. 38(2), 333-352. 
Neogames, (2022) The Finnish Game Industry Report 2022.< https://neogames.fi/wp-
content/uploads/2023/05/FGIR2022report.pdf > retrieved 22.2.2025 
74 
 
Nummela, N. – Puumalainen, K. – Saarenketo, S. (2004) A Global Mindset – A Prerequisite for 
Successful Internationalization? Canadian Journal of Administrative Science, 21(1), 51-64. 
Oviatt, B. – McDougall, P. (1994) Toward a Theory of International New Ventures. Journal of 
International Business Studies, 25, 45-64. 
Oviatt, B. – McDougall, P. (1997) Challenges for Internaionalization Process Theory: The Case of 
International New Ventures. Management International Review, 37, 85-99. 
Oviatt, B. – McDougall, P. (2005) Defining International Entrepreneurship and Modeling the Speed 
of Internationalization. Entrepreneurship Theory and Practice, 29(5), 537-554. 
Patton, M. (2015) Qualitative Research & Evaluation Methods (4th edition) Sage Publications. 
Perks, K. (2009) Influences on International Market Entry Methdo Decisions by European 
Entrepreneurs. International Journal of Entrepreneurship, 113,1-20. 
Pickering, K. (2024) Five Unicorns and Under 6m People: What Makes Finland’s Start-up 
Ecosystem Different? Sifted. <https://sifted.eu/articles/finland-start-up-ecosystem-brnd> 
retrieved 23.2.2025 
Politis, D. (2008) Business Angels and Value Added: What Do We Know and Where Do We Go? 
Venture Capital (London), 10(2), 127-147. 
Pretorius M. (2009) Defining Business Decline, Failure and Turnaround: A Content Analysis. 
Southern African Journal of Entrepreneurship and Small Business Management. 2(1), 1-16. 
 Ries, E. (2011) The Lean Start-up: How Today’s Entrepreneurs use Continuous Innovation to 
Create Radically Successful Businesses. Crown Business. 
Robehmed, N. (2013) What is a Start-up? Forbes. 
<https://www.forbes.com/sites/natalierobehmed/%202013/12/16/what-is-a-start-up/> 
retrieved 9.11.2024. 
Roberts, J. – Kayande, U. – Srivastava, R. (2015) What’s Different About Emerging Markets, and 
What Does it Mean for Theory and Practice? Customer needs and solutions. 2(4), 245-250. 
Rodriguez, C. (2008) Foreign Operation Methods: Theory, Analysis, Strategy. International 
Marketing Review, 25(6), 717-720. 
Rugman, A. – Verbeke A. (2001) Location, Competitiveness, and the Multinational Enterprise. 
Oxford Handbook of International Business. 
Salonen, P. (2007) Onnistu Suuressa Maailmassa: Opas Globaaleille Kilpakentille. Talentum. 
Schepis, D. (2020) How Innovation Intermediaries Support Start-up Internationalization: a 
Relational Proximity Perspective. Journal of Business & Industrial Marketing. 
Schreier, M. (2012) Qualitative Content Analysis in Practice (1st edition). Sage Publications. 
75 
 
Schulz, A. – Borghoff, T. – Kraus, S. (2009) International Entrepreneurship: Towards a Theory of 
SME Internationalization. International Journal of Business and Economics, 9(1), 1-12. 
Schumpeter, J. (2021) The Theory of Economic Development. Routledge. 
Slush, (2024) About us. <https://slush.org/about/> retrieved 12.2.2025 
Spigel, B. (2017) The Relational Organization of Entrepreneurial Ecosystems. Entrepreneurship 
Theory and Practice, Vol.41(1), 49-72. 
Start-up Genome (2025) The Global Start-up Ecosystem Report 2025. Start-up Genome. 
<https://start-upgenome.com/report/gser2025/introduction> retrieved 23.6.2025. 
Stenholm, P. – Suomalainen, S. – Kovalainen, A. – Heinonen, J. – Pukkinen, T. (2013) Global 
Entrepreneurship Monitos (GEM) – Finnish 2013 Report. Turku School of Economics, 
University of Turku, TSE Entre. 
Stinchcombe, A. – Dobbin, F. – Baum, J. (2000) Social Structure and Organizations. Economics 
Meets Sociology in Strategic Management, 17, 229-259. 
Swoboda, B. – Olejnik, E. – Morschett, D. (2011) Changes in Foreign Operation Modes: Stimuli for 
Increases Versus Reductions. International Business Review, 20(5), 578-590. 
Tuomi, J. – Sarajärvi, A. (2018) Laadullinen tutkimus ja sisällönanalyysi. Tammi yhtiö. 
Welch, L. – Luostarinen, R. (1988) Internationalization: Evolution of a Concept. Journal of General 
Management. 14(2), 34-55. 
Wennekers, S. – Thurik, R. (1999) Linking Entrepreneurship and Economic Growth. Small 
Business Economics. Vol. 13, 27-56. 
Wiltbank, R. – Read, S. – Dew, N. – Sarasvathy S. (2009) Prediction and Control Under 
Uncertainty: Outcomes in Angel Investing. Journal of Business Venturing, 24(2), 116-133. 
Zaheer, S. (1995) Overcoming the Liability of Foreignness. Academy of Management Journal, 
38(2), 341-363. 
  
76 
 
Appendix Questionnaire 
 Question Answer Type 
1 What is your primary role as an 
investor? 
Multiple Choice 
(Single Answer) 
2 How many years of experience 
do you have in investing in 
start-ups? 
Multiple Choice 
(Single Answer) 
3 Have you invested in Finnish 
start-ups to support their first 
internationalization attempts? 
Yes/No 
4 If yes, approximately how 
many such start-ups have you 
supported? 
Multiple Choice 
(Single Answer) 
5 What do you consider the most 
significant challenges Finnish 
start-ups face when entering 
international markets? 
Multiple Choice 
(Multiple Answers 
Allowed) 
6 In your experience, what are the 
most common mistakes Finnish 
start-ups make in their 
internationalization strategies? 
Open-Ended 
7 What criteria do you use to 
assess a start-up’s readiness for 
internationalization? 
Multiple Choice 
(Multiple Answers 
Allowed) 
8 In your view, what do you think 
Finnish start-ups should at least 
know when starting to 
internationalize? 
Open-Ended 
77 
 
9 How often do you think Finnish 
start-ups are sufficiently 
prepared for 
internationalization? 
Scale (1 = Rarely, 5 = 
Always) 
10 How involved are you in 
shaping the internationalization 
strategy of the start-ups you 
invest in? 
Scale (1 = Not 
Involved, 5 = Very 
Involved) 
11 What kind of support do you 
typically offer to start-ups 
during their international 
expansion? 
Multiple Choice 
(Multiple Answers 
Allowed) 
12 Please elaborate on any specific 
types of support by investors 
you believe are most critical 
during international expansion. 
Open-Ended 
13 Based on your experience, what 
recurring patterns or reasons 
contribute to the failure of 
Finnish start-ups attempting 
internationalization for the first 
time? 
Open-Ended 
14 In your opinion, what could 
Finnish start-ups do to improve 
their chances of succeeding in 
internationalization? 
Open-Ended 
15 How can investors contribute 
more effectively to improving 
internationalization outcomes of 
Finnish start-ups? 
Open-Ended 
78 
 
16 How would you define your 
risk tolerance in the context of 
Finnish start-up financing? 
Open-Ended 
17 How does your risk tolerance 
influence your decision to 
invest in Finnish start-ups 
planning internationalization? 
Scale (1 = No 
Influence, 5 = Major 
Influence) 
18 How would you describe the 
current Finnish start-up 
ecosystem? 
Open-Ended 
19 Do you believe that the Finnish 
start-up ecosystem sufficiently 
prepares companies for 
internationalization? 
Yes/No