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While the Nordic region is generally doing well on the global startup scene, Denmark is catching up to its Nordic neighbours in terms of investment and capital. But there are still obstacles ahead, experts warn.

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Denmark is a small country, that is for sure. Geographically, it is the 138th largest country in the world and the 112th largest in the world in terms of population. But on the startup side, the red and white vikings may be moving up the global hierarchy.

After record highs in both 2019 and 2020, 2021 saw another record year of activity in the Danish venture market, with Danish companies attracting a total of DKK 14 billion across 131 investments, significantly more than ever before. From 2020 to 2021 alone, the amount invested increased by a factor of 3.6 – the highest growth rate in the entire Nordic region.

Developments in the burgeoning Danish venture market mean that Danish companies have overtaken Nordic neighbours in Finland and Norway in attracting venture capital. However, it is still clearly Swedish companies that attract the largest total amount of venture capital.

And now foreign countries are starting to catch on to the trend.

“When we look at the Nordic countries, there are many unicorns per capita. And here the Danish ecosystem has become a more interesting, dynamic environment with, among other things, interaction between several startup organisations, large companies, universities and startups. We are also slowly starting to see this spill over effect we know from other countries, where entrepreneurs start their second startup journey with reinvested capital and reacquired talent,” says Michael Wiatr, General Partner at global venture capital firm Antler, which established offices in Denmark a little over a year ago.

This made Copenhagen one of Antler’s 26 locations worldwide. And so far they have made a total of 12 Danish investments – including in companies like Onemarket, Zupply, 0-Mission, Kitchenswaps and Flows.

But what has been decisive?

“If we look at the evolution, there has been a consistently more focus on startups – a better support system, quite simply. Universities have started to teach entrepreneurship, capital is more available, also thanks to the dynamic support from foundations like the Growth Fund and the Innovation Fund, and then Denmark is generally good at organising itself through business-promoting clusters,” Michael Wiatr explains.

Increased professionalisation

Investment rounds also increased in 2021, with more than one in three rounds at +€100 million. At the same time, international investor participation has been high in 70 percent of investment rounds in 2021, confirming that interest from abroad in Danish companies is high.

And according to Michael Hansen, CEO of Danish Business Angels, it’s also a sign that Danish startups have become better and more professional – especially when it comes to raising capital.

“There has been a professionalisation over the past decade, with start-ups maturing much earlier for investment. The quality of cases is simply increasing. And the interest and therefore the fight for capital has become much tougher. For example, we are now seeing companies queuing up and on waiting lists for our angel investor pitch events,” Michael Hansen describes.

Entrepreneurship has become increasingly sexy. An increased focus in society in general – including through the TV programme The Lion’s Den – has made more people aware of Danish startups.

Not (yet) on a par with Sweden

In Denmark, new high-growth firms created 4.332 full-time jobs between 2017 and 2020. This was the highest number of jobs created in the last ten growth periods, and also the highest since the financial crisis in 2008.

But we still have some way to go to catch up with our Swedish neighbours. Especially when you look at the tax rules around stock market listings and or the complexity around giving employee shares, which companies are highly demanding in the global battle for talent.

“Many of these conditions are unwanted and inhibit startups. So it’s not because we have as good rules as in Sweden and the UK that there will be. It’s because we have some good investors who want to give back to the ecosystem. I don’t even dare to think what would happen to the supply of capital to Danish startups if we just approached the rules in London. Then it would all explode,” Michael Hansen says with a smile.

In addition, Denmark has not had a long-term strategy in this area.

“Sweden is a good example of an ecosystem that got on the startup wave early. It’s clear that they’re bigger than Denmark. Among others, the earlier unicorns (e.g. Unity, JustEat and TrustPilot, ed.) that took off, slowed us down. But all the momentum and growth we have here at home shows we’re on the right track,” explains Michael Wiatr of Antler.