Denmark, a scaleup forge in the Nordics

A new Report on Danish ICT scaleup ecosystem completed by SEP with the active contribution of Copenhagen Capacity, Innovation Center Denmark and Silicon Vikings presented today at TechBBQ in Copenhagen.

Nordic countries are an innovation powerhouse in Europe and Denmark is without any doubt one of the main pillars. This is the main finding of the last Report “Denmark, a scaleup forge in the Nordics” presented today at TechBBQ in Copenhagen.

The report was written by Mind the Bridge (MtB), a Silicon Valley/European organization dedicated to technology scouting for large corporations, as part of SEP-Startup Europe Partnership (a Startup Europe Initiative) with the active contribution of Copenhagen Capacity, Innovation Center Denmark and Silicon Vikings. SEP is a pan-European platform, established by the European Commission and Startup Europe and led by Mind the Bridge, that is dedicated to support the growth of European startups.

“Denmark seems to have cemented its position at or near the top of every global quality-of-life survey – commented Alberto Onetti, Chairman of Mind the Bridge and SEP Coordinator – and now it looks like a fertile ground for scaleups: it shows 1.7 scaleups every 100 thousand people. Not surprisingly, Denmark ranks third in the European Innovation Scoreboard”.

As a matter of fact, the survey counted 96 scaleups in Denmark, i.e. i.e. startups that cumulatively raised over $1B in VC funding or through the IPO channel. This makes 22% of the total scaleups mapped from the 5 Nordic countries (430 in total, including Denmark, Finland, Iceland, Norway and Sweden). 

Collectively, the 96 Danish scaleups raised $1.3B (capital raised since inception), specifically$1.1B (85%) through venture capital funds, while an additional $0.2B (15%) was raised on the stock market through the IPO channel. This is about one fifth (20%) of the total capital raised by scaleups in the Nordic countries and the 0.49% of the GDP of Denmark, in line with the average in the Nordic region (0.5%), slightly higher than in the UK (0.42%), 3 times higher than Continental Europe and 8 times higher than Southern Europe.

IPOs – The Report recorded 6 Danish scaleups that went public after 2010: most of them got listed abroad in order to seek favorable matches. Two companies (Napatech in December 2013 raising $22.4M and Asetek in March 2013 securing $33M) went public at the Oslo Borse, while two other IPOs occurred respectively in the First North and in the Oslo Axess. The largest IPO – raising $100M at a $700M valuation and accounting for half of the capital raised – is Zendesk, that went public in the US at the NYSE in May 2014. On average, Danish scaleups each raised $13.5M, $11M of which from Venture Capital.

“The Danish scaleup ecosystem is pretty young – commented Peter Munkholm Nielsen, Business Development Manager, Copenhagen Capacity – 63% of Danish scaleups have been founded after 2010. And it is growing fast: 69% of Danish scaleups had a funding event in the last two years. The results of the Report are extremely encouraging”.

Scalers – Denmark shows also 4 “scalers”. i.e. companies able to raise over $100M in funding. These companies (Zendesk, Momondo Group, Tradeshift, and Trustpilot) cumulatively raised the 45% of the total capital made available to Danish scaleups. Other 2 scaleups (Asetek and SiteImprove) raised over $50M each contributing for an additional 10% of total capital raised. 

Size – The vast majority of Danish scaleups (81%) fall into the small scaleup category ($1-10M in capital raised). They account for 20% of the overall capital raised by Danish scaleups. Additional 25% of the overall capital made available to Danish scaleups has been raised by the mid-scaleup segment ($10-50M).

Hot Sectors – Web Content, Enterprise services and Software solutions dominate the Danish scaleup landscape. They respectively account for 31%, 22% and 16% of the overall capital raised by Danish scaleups. In terms of number of scaleups, Software solutions includes the vast majority of scaleups accounting for 20% of the overall amount of Danish companies. Hardware and mobile equally attracted 6% of the overall capital made available to Danish scaleups.

Hot cities – 70 out of the 96 Danish scaleups (73% of the total) are located in Copenhagen.  Another 7 scaleups (7% of the total) are located in Aarhus. This makes it the second scaleup hub in Denmark. The remaining 19 scaleups (which account for the 16% of overall capital raised by Danish scaleups) are scattered all over Denmark.

Dual companies – As similarly reported in other European ecosystems, Denmark shows 7 Dual Companies, i.e. startups that have moved their headquarters abroad, while maintaining a strong operational presence in the country of origin: Tradeshift, Zendesk, Realm, Soonr, Zmags and Issuu moved their headquarters to the US, while Momondo moved its headquarters in the UK after completing an M&A (but received post seed funding by US investors). They represent the 35% of the Nordic dual scaleups (7 out of 20).

M&As – SEP Monitor tracked 51 M&As in Denmark since 2010, approximately the 25% of exits mapped in the Nordic countries, with a growing trend from an average of 4 transactions in the period 2010-2012 to 13 in the subsequent period 2013-2015 (up to 19 only in 2015).

Only 24% of acquisitions were completed by domestic companies – more interested in digital media companies – 31% of the Danish startups have been acquired by other European players – mainly focused on advertising/promotion companies (67%) – while 39% were bought by US companies – mainly interested in software solutions (55%).

Finally, US seem to be the place to go to for boosting the scale-up process of Danish companies, due to the large availability of capital and market relevance.