Stepan Popov -

A new take on an old relationship: Nordic startups lure UK investors to their front doors

When startup worlds collide: investment and entrepreneurship partnerships form across the Nordics and UK

The pendulum of power when it comes to international business growth is now swinging firmly towards the Nordics and its exciting tech startup ecosystems. The region’s portfolio of unicorns and novel scaleups is encouraging traditionally larger markets to track their unique outlook and skillset from the very outset of a new venture.

It is no secret, historically, that startups deriving from the Nordics have had to adopt a global mindset from day one. In fact, they still have to do so on two distinct fronts: first, to ensure they’re reaching out to a big enough market size to make their proposition viable; and simultaneously, to catch the eye of investors in these larger markets to aid their overall growth. 

However, as the strength of tech businesses from this region becomes more and more pronounced, the dynamic of that latter requirement is beginning to change. Rather than waiting for novel, innovative and, to an extent, already successful businesses to pass their eye or reach out to them, investors and prospective partners are now focusing their scouting missions around Nordic ecosystems, to get ahead of the journey and make their moves much sooner.

Such is the lure of talent and ideas that exist in this region, UK and US counterparts – in particular – are now looking to involve themselves with these ventures at a far earlier stage, taking a calculated gamble on these solutions-driven, niche-finding, digitally motivated entrepreneurs from day one.

It’s led to a scenario where it is startups, not scaleups, that can boast co-ownership and co-driven entities from across both regions, theoretically giving these businesses a greater chance of success and a quicker route to the international exposure that all Nordic ventures need.

John Kristensen, founder, chief operating officer (COO) and chief financial officer (CFO) of Stockholm-born and internationally run artificial intelligence (AI) language learning app, Astrid, said: “From our specific vantage point, it is very much the case that British investors are monitoring Swedish startups more intensely, based on the track record of the latter producing incredibly impactful ventures far beyond the size of its home market.

“Investors in the UK, as well as from the US and Asia, have their focus on the region, as proved by the number of scouts now on the ground here.”

A new slant on a historic relationship

Astrid’s proposition of making high-quality private English tutoring more accessible around the world is testament to Kristensen’s account. With one office in Stockholm and another in Oxford, the company’s growth can be attributed  to its diversity of investors that include a number of leading entrepreneurial families from across the world. Astrid has been advised by Time Partners Limited, an independent private markets advisory firm based in London."

Chairman and CEO of Time Partners Limited, Mark Florman added: “There wasn’t always a synergy between the two countries, but over the past 15 years a number of Swedish leaders, such as Niklas Zennström of Atomico, have really set out to enhance collaboration. Overall, I think we would say the Swedes have taken the lead in developing collaboration between the two countries, but that situation is now changing.”

Kristensen affirms that Astrid represents a combination of extended networks, largely formed from “inbound interest” and “warm introductions”. This is a new slant on a former relationship, which largely relied on Nordic entrepreneurs bringing an already promising business to investors’ front doors.

“The broader business and trade links between Sweden and the UK are obviously well-established and have remained strong for centuries. Out of this relationship, over the years, has grown firm flows on all fronts and levels, ranging from capital to talent and corporate activity,” he said.

“However, what has only recently intensified from a technology and startup perspective is the cross-pollination or strengthening on a VC [venture capital] fund or portfolio level, where more teams have a Stockholm and London setup, sharing deal flow, insights and networks.”

A cultural fit

Perhaps this evolution should come as no surprise given the strength of the Nordic tech startup scene in recent years. It may even sound patronising to confirm that international investors would be interested in a region that fostered the likes of Spotify, Klarna and Skype.

Yet, the slight evolution of this relationship isn’t simply a result of the solutions being conjured. Rather, Kristensen also points towards more equal participation in a relationship formed out of values.

“Despite our differences, the UK and the Nordics share many important fundamental similarities that underpin a deep relationship,” he said. “Culturally, the fit is incredibly strong, which may explain why early-stage partnerships and relationships tend to work well between the two markets.

“At a stage of a company’s life when trust and transparency between startups and investors is absolutely essential, shared values can often be the most critical aspect to establishing and successfully developing any partnership.”

An equal relationship 

It would seem then, that while there was always a synergy of values, the success of tech startups from the area has been the kicker – a nuance boost that has changed the relationship from “when you arrive at our door, we’ll be ready for you”, to “I want to find you before anyone else does”.

This isn’t to say that the pendulum has swung completely in the other direction, though. What this more equal balance has also offered is heightened confidence among the Nordic contingent when they do still go out in search of international support. Going a step further still, the dynamic is also yielding examples where Nordic finances are bolstering UK businesses.

“British investors are monitoring Swedish startups, but much more could be done. Britain is a very competitive place, and that’s why they’re scouting Nordic ecosystems to begin with now”
Mark Florman, Time Partners

Cloud-based procurement platform, DeepStream falls proudly into this category as a company that enables industry titans including Britishvolt, Maersk and Northvolt to conduct commercial trade in a more efficient way.

“We’re proud as a British company that is being backed by significant Nordic investors, and as an example of the successful technological collaboration that takes place between the two regions,” said DeepStream CEO Jack Macfarlane. “I was lucky enough to have Johan Schiller – a former colleague and now board member – as part of my journey from the outset, who had a great network in the Nordic ecosystem. This relationship was perhaps the genesis of this collaboration, and therefore the business.”

Macfarlane agreed that this bond between both areas is formed of cultural synergy as well as business interest, citing Skype and Revolut as other prime examples.

“The cross-dissemination of not only capital, but also ideas, between the two regions has only increased since DeepStream was founded,” he said. “And, from a cultural point of view, with regards to fostering a positive entrepreneurial spirit, I think both have learnt a lot from each other in how to balance business-at-all-costs and team-above-all-else philosophies.” 

Another dynamic shift to come?

Where does this leave the Nordics in terms of its global stature in the tech arena, if eyes are now so transfixed on the countries’ ecosystems that their startups are receiving an early lift into international domains?

“On a scale of zero-Silicon Valley, I’d say Stockholm – as an example – is now a seven,” Florman posed, noting that strong promotion from the Swedish Chamber of Commerce in London keeps the door open to entrepreneurs who want to visit the UK regularly, to ingrain themselves in the investment community. However, that door is now a two-way one, and Florman said Nordic startups need to be prepared to capitalise on this positive momentum.

He concluded: “British investors are monitoring Swedish startups, but much more could be done. Britain is a very competitive place, and that’s why they’re scouting Nordic ecosystems to begin with now.

“However, there are many opportunities coming to British investors from all over the world and countries like Sweden need to stand out more and perhaps develop a singular platform or place in London where some of their earlier ideas can be shared.”

Who is to say another dynamic shift across this thriving and lucrative relationship isn’t on the cards? 

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