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The Nordic tech startup scene is sending a message to the global investment community: the best is yet to come.
The region’s reputation for innovation is nothing new, but its geographic location and insular approach to early-stage startup development has previously created a one-way street when it comes to building global relationships.
It’s been a street lined with positive testing grounds and initial traction across Norway, Sweden, Iceland, Denmark and Finland, before businesses have to leave in search of business growth further afield.
But in recent years, that dynamic has shifted to become slightly more balanced, especially off the back of Swedish unicorns and the international exposure they have generated.
Finally, Nordic startups have the potential to lure the rest of the world to them, and they are eager to express what investors should expect when they arrive.
“The low-risk structure that comes with being a testing ground could make the Nordics appealing to international players, but if you’re from London or the US, you’re not exactly short of domestic options, so I understand why they wouldn’t have been looking here previously,” said Karen Dolva, CEO and co-founder of No Isolation, an Oslo-based social company that combats loneliness and now has offices in London following a concerted expansion push.
“However, we definitely want to break free from the insular vibe that exists in the Nordics – to leverage the positive traits of that culture, but better promote and share it with people outside of that bubble.”
Dolva suggested that it wouldn’t take a drastic change of approach from international investors to share in the benefits. Simply, rather than analysing the “idyllic” characteristics of the ecosystem from afar and waiting for scaleups to break away, they would ingratiate themselves into the network so as to identify lucrative opportunities earlier.
This is a momentum shift that has already taken place to an extent in neighbouring Sweden.
“Compared to other Nordic markets, Sweden’s startup culture is very well developed,” said David Prien, CEO at FirstVet, an online vet consultation company that has expanded to the UK and Germany in recent years, and has come even more into its own during the Covid-19 pandemic.
“Sweden is still a small country, of course, but the economic structures in place have been ripe to capitalise on the success stories that have gone global,” he added.
Read more about tech startups in the Nordics
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- Nordic Tech startups focused on the enterprise sector are attending the Slush startup event in increasing numbers.
This is a positive sign for Sweden’s neighbours, with similar structures and supportive regulations in place across the Nordic region.
In Norway, this is epitomised by the volume of incubators – such as Startup Lab – which have helped companies such as No Isolation on their way, as well as a tax back-payment structure that supports research and development in the tech space.
Prien added: “In Sweden, that structure begins during education. A lot of the startup founders – including myself – have come from the same schools and backgrounds, which ensure that you, as an entrepreneur, are put on the right track, ideas can manifest, and exposure can be achieved quickly.”
A small world
The reason this roadmap is so important to know from an outsider’s perspective is that it contributes to a very connected ecosystem – one that they would have to learn, understand and integrate with if they are to leverage the glut of innovation inside.
“In Iceland, this starts very early on, and my entrepreneurial experience has been very positive as a result of the substantial support available for startups like ours,” said Georg Ludviksson, CEO at Meniga, a digital banking software company originating in Reykjavik in the aftermath of the 2008 financial crash.
“The whole region has a digitally native population which believes in, and encourages, innovation as key pillars of the future economy. This is reflected in the support you receive – both from peers as part of a close-knit collaborative culture, and in the form of government grants and incubators.”
The idea of infiltrating such a cohesive and collaborative environment may have been off-putting traditionally, but FirstVet’s Prien said the time has come to embrace that culture, be part of it, and access the innovation within it.
“External entities should absolutely be prepared for how small a world it is here,” he said. “It informs behaviours, communications and levels of transparency that they may not be used to. But the benefits of ingratiating into that culture are ever-growing.”
A maturing ecosystem
A key word for No Isolation’s Dolva is “trust”. Having been involved in numerous meetings and pitches in the UK since No Isolation’s migration, she has noticed that the default attitude is not to trust, like it is in the Nordics – and that’s a balance that needs rectifying.
She said: “If you’re an investor, expect transparency, but also ensure that you’re transparent about what you’ll be evaluating the company on. It has to go both ways, and I think that’s maybe a key contention that has prevented these relationships from forming traditionally.”
Hope on this front derives from the Nordic region’s evolution as a serious innovator in the tech space. Having previously been typecast as a trendy or quirky area, that perception now vastly undervalues the ecosystem’s maturity.
Ludviksson added: “In the 10 years since I founded Meniga, I have personally seen how the Nordic ecosystem has developed into one of the best in the world. From a venture capital, funding rounds and investment perspective, the whole ecosystem has matured and is becoming increasingly integrated into larger US and European ecosystems.”
As this particular penny drops, a snowball effect is imminent. Dolva said: “If I was a foreign investor looking for opportunities in the Nordics – and especially Norway – I’d be so tempted by the notion of ‘going first’.”
It may only require a few distant observers to come a little closer and dive into the ecosystem, to ignite a balance shift in the Nordics. In return, they will suddenly find themselves enveloped in a hub of talent, innovation, support and capital.
“It’s already happened for Sweden and Finland, which have caught the eye of the global community,” said Prien. “The transition from ‘trendy’ to ‘major player’ is well under way, with the strong, renowned culture being exposed and explored more seriously now.”
This is especially the case among scaleups. On the startup front, it would take a more sizeable leap of faith for UK or US-based investors to fly the nest. But, at more progressive junctures of a company’s life, the likelihood of earlier conversations with external parties is increasing.
The message now is to have faith in that instinct, and to really see what the Nordic tech startup scene is all about.
Ludviksson added: “I believe the Nordic ecosystem is increasingly becoming a serious contender to the other, much larger and mature ecosystems. Over the past decade, the amount of successful and tech-savvy startups emerging from the Nordics has been well documented. But I think we’ve only seen a fraction of the international tech successes that will come out of this region.
“For investors to make themselves appealing to this exciting and young entrepreneur base, I think they need to share founders’ ambitions to scale with speed and efficiency, and really trust in their ability to do so.”