To take the investment temperature of the Nordic zone, we have sought the views of Venture Capitalists Helge Hellebust (Partner at Ferd Ventures in Norway (www.ferd.no) and Bjørn Stray (Partner at Northzone Ventures in Sweden www.northzone.com), and also spoken to Eilert Hanoa, CEO of Mamut, a successful business software company, founded in Norway (www.mamut.com).

The VCs

Whilst examining the Nordics start-up scene, Helge Hellebust finds that native conditions have helped foster native entrepreneurs:

“The relatively high education level, social welfare system and growing private equity industry contributes to the start-up scene developing in a positive manner. State funded seed money is available, as is support from organisations such as Innovation Norway and various incubators to help many start-ups through the initial stages... And importantly, it is viewed as socially acceptable to establish your own business and take on an element of risk to earn money.”

Bjorn Stray reinforces this impression:

“There is a high degree of risk willingness among entrepreneurs and investors, and a community of experienced entrepreneurs, capital sources and service providers that can support early stage companies in the Nordics. By instinct, entrepreneurs seek capital from people and funds that they know, and therefore many companies are funded locally. So in that sense one might say there is a “community”. The Governments across the Nordic region provides capital financing through funds such as Argentum (Norway), Finninvest (Finland) and Vækstfonden (Denmark). The fact that a number of established technology companies have been global leaders in their space provides individuals with a technology and market insight essential in helping create companies which can quickly take unique propositions to the market.”

Hellebust feels that the Nordic approach to start-ups also affects deal flow:

“The quality of deal flow is relatively high, partially due to the cultural heritage which dissuades establishing a new company unless you have a “really good idea”. As more and more “classic” venture success stories become known, the positive development is likely to continue. But we still have a long way to go and a lot of untapped potential.”

Both of the VCs can also see that the marketplace has been affected by today’s economic climate:

“VCs are still active, but with a stronger appetite for later stage investments. The strength of the downturn is difficult to gauge, however it would seem to be stronger in other parts of Europe than in the Nordics” states Hellebust.

“The best companies can still get funding. However there will be a shakeout of companies and investors alike. For the long term the fundamental is that there is continuous technology development and that start-ups will solve problems, grow and create value and will secure a living space for players in the industry” confirms Stray.

The Entrepreneur

Eilert Hanoa started Mamut in 1994 with a vision of simplifying the way smaller organisations do their business by offering software, services and knowledge. Today, Mamut has more than 400,000 customers in 16 countries. Hanoa recollects his company’s humble origins:

“I established my first company as a 15-year-old in 1986 and after 10 years in the software industry, I incorporated Mamut in December 1994. We started without any external funding or any kind of governmental assistance, local VCs joined in 1998, including Northzone Ventures and other co-investors, and our development from 1995 to 2009 has largely been based on long-term investors.”

He feels that today’s start up market is a much more challenging environment for the entrepreneur:

"Today, 15 years after establishing Mamut, the entry barriers are even bigger than they were then. It is more difficult to get full funding at the right terms in the early start-up phase. The result is fewer start-ups and that very few companies are able to go global. In contrast my company’s business plan from Day One was to conquer our home market, then expand internationally.”

Hanoa has a slightly different view than the Venture Capitalists regarding the supporting infrastructure surrounding the entrepreneurial community in the Nordics:

“There is a huge political focus on supporting start-ups in the Nordics, but to actually succeed in starting-up a company, the main success factors are the willingness and true passion from the founders. Start-ups often succeed despite the lack of governmental support, not because of any support offered. In fact, the social security network is well developed in the Nordics, so the risk of failing is low and success is rewarded with high taxes! The social security system is more of a barrier than a catalyst for starting up.”

Although Hanoa does also speak highly of its benefits:

“When expanding regionally, a Norwegian based headquarters has provided a real advantage as the local economy is strong, innovation is high, cash has been available, knowledge workers are available and infrastructure is well developed”

Hanoa is also working to give something back to the entrepreneurial community:

“We are actively supporting start-ups in our seven core markets by offering a complete software package for entrepreneurs that helps them plan and start up their own business. We also engage in seminars and training, both through Mamut and through my role as Chairman of ICT Norway.”

The Recruiter

Gillamor Stephens supports venture backed businesses across EMEA - from early stage University spinouts to later stage businesses. Paul Gillespie, a Founding Partner follows the adage “good companies will always get funding” and this is true wherever they may be in Europe.  

“However the Nordic region does have a strong infrastructure in place to assist the creation of start-up companies, and maybe the somewhat isolated location of the Nordics makes the region more self-reliant and therefore more likely to operate as a community than other parts of Europe. What is clear is that across the Nordic region there is a vast array of early stage companies that have an opportunity to become successful global players in their market. If the local Governments, VCs and corporations continue to work together the Nordics will continue their international success story.”

The Nordic Venture Forum