This post is written by Kjetil Holmefjord, the manager of the incubator at Oslo-based StartupLab. It draws on an investigation on the most funded Nordic tech startups, conducted by himself and Rasmus Christensen during the spring of 2014. While the data could benefit from a refresh, the findings still depicts a very interesting story worth sharing.

When Aileen Lee published her much-cited article regarding the Unicorn Club, investigating US companies with valuations exceeding $1Bn, it was given a lot of attention. The article gave fresh perspectives on many of the globally leading technology companies of our time. A little less than a year ago, my fellow student Rasmus Christensen[i] and I wanted to do a similar investigation of another region that often gets credited for producing a disproportionately large number of great technology companies, namely the Nordic region.

Given that the Nordic region’s population is much smaller than the US’ population, we had to establish a somewhat different criteria if we wanted our data to have any volume at all. While the number of conclusions you can draw from an analysis of 39 US companies is limited, it’s even more limited if you only look at the 7 from the Nordic region (Spotify, Klarna, Supercell, King, Zendesk, Unity3D, Mojang).[ii] Since it is uncommon to release valuations when VC investments are announced in the Nordics, we instead went out looking for all Nordic companies with +$10M in total funding, founded 2003 or later[iii]. Not necessarily unicorns but extraordinary enough for us to wanting to learn more about them.

We identified 31 Nordic companies with more than $10M in funding at the time of data collection (June 2014). It might not come as a big surprise that we found Sweden to be the undisputed Nordic leader in terms of “well-funded” tech startups. 55% (17) of the 31 companies originated from Sweden, and among them the two most funded companies (Spotify and Klarna). Still, all other countries were also represented (Denmark (6), Finland (4), Norway (3) and Iceland (1)). On average, the companies had 2,7 founders, with 1 and 6 founders as the outliers (four companies had one founder, while two companies had six founders).

Having identified quite a few Nordic startups with big VC checks in their pockets, we were curious to learn more about where these Nordic companies raise their money. In particular, we wanted to know whether there was a difference between the companies/founders that did and did not raise venture capital from Nordic investors. We divided our group of companies into two such groups and found that almost half (14/31) of the companies did not raise money from Nordic VCs. [iv] Among the 17 companies who initially raised money from Nordic VCs, 12 have later gone on to also raise money from non-Nordic, including the 11 with the most funding. The full lists looked like this:

Knowing that it’s “all about the team”, we took a further dig into the founders of the 31 companies. Obviously, which investors a company receives money from is dependent on acceptance from said investors, but it is also reliant on the founders pitching to and accepting term sheets from said investors. We wanted to know whether there could be any differences between the founders only taking money from non-Nordic investors, and those involving Nordic investors?

Founders with only non-Nordic investors are more likely to have former entrepreneurial experience. 70% of such founders had previously been involved in an entrepreneurial venture, compared to 48% of the founders who initially raised money from Nordic VCs. There could be multiple reasons, but our main theory is that more experienced entrepreneurs probably seek a different type of investor. Given their entrepreneurial experience, they might not seek the same operational assistance that local investors provide, and instead value investment partners with better insight and access to greater markets than the Nordic region.

Furthermore, founders with only investors from outside the Nordics are likely to have a better overall background (college/university education, entrepreneurial experience as well as industry-related experience). In addition to more founders with entrepreneurial experience potentially having a different investor preference, this could also be caused by the investors’ preference. The more geographically distant investors are, the less they are able to follow up and monitor their investments. Furthermore, they might be less willing to “bet” on less experienced founders, offering a possible explanation for the difference between the two groups of founders.

We hope these findings advance the knowledge around the Nordic startup ecosystem. The data we built this investigation upon took us a while to assemble, and we believe it might be used to learn even more. Therefore, we are releasing it (available here), and we highly encourage others to build, update and expand on it.

Also, I’d love to hear your thoughts, as there probably is much more to learn about this group of companies and founders. Feel free to tweet me, and I’ll also continue to publish similar stuff on my blog in the future. And if you’re an entrepreneur/startup in Norway looking to build a huge business – reach out to us at StartupLab!


[i] This investigation was done as part of writing a Masters thesis. Those interested can read our entire thesis here

[ii] Interestingly enough, when comparing the amount of unicorns we and Aileen Lee identified, the Nordic region “produces” almost 2.2x the unicorns that the US does per capita.

[iii] Given that there usually is a correlation between funding amount and valuation, we found this to be an interesting enough criteria.

[iv] As a side note: looking at the amount raised, we found that companies backed by Nordic VCs in general raised about twice as much money ($85.7M vs. $39.5M).