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78 Pekka Himanen and Manuel Castellspersonal risks to be entrepreneurs if there is an expectation of high rewards, butthe Finnish state discourages this through high taxation.The low level of start-up entrepreneurialism is clearly one of the biggestchallenges for the Finnish model. However, figure 2.13 also shows that a lowentrepreneurial culture is not a necessary consequence of the welfare state. Forexample, Denmark, which has a generous welfare state, equals the US level ofentrepreneurial motivation. A related problem of entrepreneurialism is the factthat the venture capital market still lacks both resources and the kind of expertisethat entrepreneurs turned venture capitalists bring in Silicon Valley to helpstart-ups in a rapid global breakthrough. Figure 2.14 shows how the venturecapital market is smaller in Finland than in Europe in general. Again, this isnot a necessary feature of the welfare state. One of the world’s biggest venturecapital markets is in Sweden (in relative terms) and the liberal Ireland isbehind Finland.Public entrepreneurialism refers to putting innovation into practice in thepublic services. However, although there has been some innovation to get thepublic services through the recession of the early 1990s, generally the publicsector cannot be described as a “culture of innovation” or as having an “entrepreneurialspirit.” This problem is much bigger for Finland than for the UnitedStates because of its large public sector and aging population.1.000.900.800.700.600.500.400.300.200.100.000.870.650.250.190.13Sweden UK Europe Finland IrelandSource:European Private Equity and Venture Capital AssociationFigure 2.14Venture capital market in Europe as a whole and in selectedEuropean countries