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A Beginner's Guide to the Nordic Startup Ecosystem

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The Nordic region, defined as Denmark, Iceland, Finland, Norway, and Sweden (and less formally Estonia), is responsible for a disproportionate share of European innovation. Daniel Blomquist, a Kauffman Fellow and Principal at Creandum, compiled the data below regarding the venture capital ecosystem in the Nordic region. With experience as a board member for multiple start-up companies based in the Nordic region, Blomquist has both unique insight and access into the area’s venture capital landscape.

With companies like Kazaa, MySQL, Rdio, Rovio, and Skype, the region is capable of generating exciting technologies despite comprising only 4% of Europe’s entire population. Since only 14% of Europe’s VC capital is invested in the Nordics, as indicated below, the landscape is less competitive than the rest of Western Europe, allowing for comparatively attractive valuations:

The Nordic region has become an attractive geography for venture capital investment by multiple standards of measurement. In the following six categories, including the “best countries to start a company”, the “global innovation index”, and the “global competitiveness index”, Nordic countries hold 43% percent of the top ten positions across each category, outpacing the rest of Europe (27%), Australasia (15%), and North America (10%):

 

In addition, as indicated in the following graph, the average exit value of Nordic companies has grown by 70% from the 1999-2004 period to the 2005-2010 period. This growth is primarily driven by companies like MySQL, Rovio, Skype, and Spotify, along with Kazaa, which can be credited for putting the region “on the map”:

Lastly, the vast majority of larger exits in the region were made by Nordic investors, reflecting a trend of local investors backing winning companies from their own neighborhood. The following also depicts a newer trend, where US venture capitalists have begun to recognize opportunities outside of their traditional strike zone by partnering with successful entrepreneurs in the Nordic region: