The Scandinavian Startup Scene

I spent a day in Cophenhagen yesterday. Got up at before dawn (which is really early this time of year in Paris) and got home after sunset (which is really late this time of year in Paris).

But it was totally worth it. I spent a full day in the offices of Sunstone Ventures with my friend Christian meeting startups every hour back to back. Christian set up the day and all I had to do was sit in the meetings, listen, and ask questions. Then afterwards, I caught up with my friend Martin who has been working in and around the startup scene in his homeland of Sweden and Denmark and also the Netherlands.

The startup community in Scandinavia isn’t much different than the startup community in New York or Silicon Valley. Each and every company that I met was similar in some important way to a company that I have seen in the US. However, there are a few important differences that I noted.

I saw two companies that participate in the online advertising technology business. One primarily serves the online agency market and one primarily serves the online publisher market. Neither were doing anything completely new (at least I didn’t see it), but both had built significant market share in the Scandinavian market. They had real customers using their platforms to run real campaigns. Both were looking for capital to expand to the rest of europe and then on to the US.

We don’t see that kind of opportunity so much in the US. The companies in the online advertising business don’t have an easily accessible market that they can get started in. Neither of these companies will be able to build a large (greater than $20mm per year) business if they stay in Scandinavia but they will be able to build a real business, serving real customers, with solid products before having to face the tougher competition of the rest of the world. And I see that both as an advantage and a disadvantage. I think its an advantage to have a "home court" advantage when you are just getting started. But I also worry that it can make it even harder to break out of the region when its time to do that.

Another interesting thing that I saw in a lot of these companies, that reminds me very much of the NY startup market, was active use of remote development. There were at least two and I think maybe three companies I saw that are doing development in Tallin, Estonia. While not technically in Scandinavia, Estonia (and Latvia and Lithuania) are an important source of development talent for european tech companies including ones in Scandinavia. It’s a very short flight to these small countries and I think they are well situated, both geographically and talent wise, to become more important to the tech startup world in the coming years.

I enjoyed meeting all the companies and am nervous about calling out any of them without calling all of them. But there were several that are bloggable for various reasons.

Christian is an investor in Issuu. Issuu is "youtube for high end publications". Think magazines and catalogs and brochures that are designed of print but need an online presence. Here’s a catalog for an Italian furniture house that I found on Issue.

And here’s a NYC rocker photo book that I found on Issuu.

Print isn’t going to go away anytime soon for these kind of publications and so it makes sense that there should be an online resource to upload and share them. Issuu is that place.

The second company that bears mention is one near and dear to my heart because it is using web technologies to make the world a better place, specifically Africa. The company and service is called myc4 and its like Kiva+Grameen+Prosper focused exclusively on providing access to capital to African small businesses. I really like the way the service is constructed. Although you do lend directly to the small businesses, you do it through "lenders" which are local companies that set up operation on the platform. The lender takes a cut of the loan but deals with the hassles of diligencing the loan, servicing it and collecting it. I think this will bring the default rates, which are high in services like Prosper, down significantly. If you feel like loaning some money to a small business in Africa, go do it through myc4 and let me know what you think.

Finally, I met a company called ESNation that owns one of the top videogaming teams in europe called Meet Your Makers (MYM). They are competing this weekend in Paris in the Electronic Sports World Cup. I’ve never been to a video gaming tournament. I think Josh and I will check that out this weekend. Call it diligence.

Anyway, that’s a short summary of my day in Scandinavia yesterday. It was a blast. Thanks to Christian and Martin for their hospitality. I think I’ll be back.

#VC & Technology