Even if you already think a lot is happening in The Nordics, rest assured that there are plenty of great startups that you probably have not even heard of yet
As a German born entrepreneur, and one which has been in The Nordics for a very long time and has started several companies here, I find it fascinating to analyse why so many great startups are emerging from a region with so few people.
The “Shut up and Build Stuff” syndrome
The Law of Jante is the idea that individual success and achievement in Scandinavia is seen as unworthy and inappropriate. However, this is only partially true, and in my experience it is used more as an excuse rather than something you actually notice. However, one of the effects of this is that people are rather bad at bragging or showing off. The results of this are striking, even if they build the world’s best products, you will have a hard time getting them to tell you that. One of the reasons Stockholm has received so much attention over the last couple of years is not because all of a sudden there are a lot of great startups, but rather thanks to the initiative #sthlmtech, with Tyler Crowley the instigator, an American who is not afraid of telling the world how great the startups in Stockholm are and has encouraged others to do the same. We can now see similar initiatives gathering pace in Copenhagen (#cphftw), Helsinki (#helyes) and Oslo (TBC). So, if you already think a lot is happening in The Nordics, rest assured that there are plenty of great startups that you probably have not even heard of yet!
Long Winters and Fast Internet
Even though only 26 million people live in The Nordics, it is actually the most densely populated place at this northern latitude, with only the existence of the Gulf Stream making the region habitable. This creates an atmosphere of extremely dark and long winters, which leads to people staying indoors, which subsequently leads people to staying indoors at their computer… Luckily, The Nordics, in what can only be described as incredible foresight by the authorities, were at the frontier when it came to rolling out broadband access and subsidising computers in order to make them affordable to the general public. Already in the 90′s most inhabitants, even relatively poor families had access to a computer at home with internet. This created a whole generation of tech-savvy people, building internet services for their friends before the Internet became commonplace all over the world.
Studiestöd – enabling people to create.
Another strong reason why Nordics have created great Startups is that most of the countries have free higher education. This, together with a support system that provides student loans to finance the rent and food, creates a society where young people (18-25) get those years to pursue what ever they want with no need to worry about the future or present too much. You could argue that 98% of the youth don’t really use this time very effectively, or even realise what a great opportunity it is. But the 2% that do, have the time and resources available to them to create amazing products and companies. This is also the reason why a lot of great bands are from the Nordics, as well as why the region is so strong in the gaming sector.
A lack of red tape and good healthcare
Well OK, maybe the quality of the healthcare itself is subjective, but having a strong social security net enables entrepreneurs to focus on building great companies. With easy to access Health insurance, unemployment benefits and bureaucratic frameworks, red tape really is at a minimum. The crazy thing is you can still hear new entrepreneurs complain that the process of starting a limited company, which can be done online in three minutes in Sweden, is too long and not user-friendly enough!
It’s not the taxes.
During all my years as an entrepreneur here, starting my company Contentor and being involved and meeting lots of other entrepreneurs through Mindpark and being involved in Young Entrepreneurs of Sweden, I have never actually heard anyone say the renowned high taxes in the region is their biggest problem. In fact, the only time someone complains about taxes is if you ask them about it directly – and then not because the income taxes are going to motivate an entrepreneur, but rather that with lower taxes he could afford to employ more people. The notion that entrepreneurs are driven by earning as much money as possible is a myth – the Nordics show that entrepreneurship here is about wanting to create things and making a difference to the world, not earning money. This was confirmed when I recently spoke with an American researcher doing a study on the ICT sectors in the Nordics. He also believed that taxes are something the outside world (mainly Americans) see as a problem, but that societies here do not see at all.
But could we do better?
Of course, these points are only a part of the answer. The real world is much more complex and nuanced – and there are plenty of differences between the conditions in the individual Nordic countries. Also, the collaboration and networking between the Nordic countries is also rather bad (and in some cases, almost non-existent). Just recently the startup scene has begun to use English as the primary language for blogposts and events – an important shift, as even if the languages here are fairly similar having the conversations in English makes it easier to communicate across borders. And more importantly, makes the scene inclusive for expats and foreign students. Norway is the outlier of the region – with an employee in the oil industry earning roughly €100,000 a year, it just creates a too perverse incentive to work there – and not create your own company. However, even in Norway interesting stuff is happening. But the region is not without it’s problems. Tight immigration policies make it unnecessarily hard for foreigners, especially outside of the EU, to get a job permit for longer then a couple of months. Also, most of the Nordic countries have strong labour laws, from a previous era when big corporates where the norm, this can cause unnecessarily big problems, in a startup culture where long hours and low pay are typically the norm.
But improvements are not just missing from the government side.
A major problem here is that a lot of entrepreneurs get stuck focusing on the domestic markets. Even though the size of the domestic markets are limited, the focus on international markets is still not there for the majority. Also, a lot of entrepreneurs are reluctant to take funding, viewing it as a bad thing – something which mostly comes from bad experiences with government run funds or inexperienced investors, or simply just a lack of knowledge. Bigger ambitions, and a higher knowledge of funding, is something that would enable further Startups to grow bigger. But in the last couple of years there has been some development here, especially in Helsinki, Stockholm and Copenhagen, where knowledge travels swiftly between entrepreneurs at one of the numerous meet-ups, events and conferences. I am very confident that we have only seen the beginning of what great companies this region can create.
This post was originally published on The Nordic Web
Photo Credit: Shutterstock/ Nordic flags