We may end up looking back on April 2016 being a very significant month for the Nordic startup scene. Not only did the number of investments drop for the second consecutive month for the first time in over two years, a storm appears to be brewing in Sweden as Spotify’s founders write an open letter to the Swedish Government. We’ll dig into that, take a look at a Finnish food ordering startup and their impressive investors as well as the eventual sale of one of Sweden’s biggest game studios.
Wolt are the darling of the Finnish startup scene right now, a statement that can be backed up by the fact that they took home three of the awards at the Finnish finale of the Nordic Startup Awards last week.
A lot of this is down to the fact that their founder and CEO Miki Kuusi, the former CEO of Slush and therefore a popular, respected and well-connected young man. However, in recent weeks I’ve been aware of the strength of the team around Miki so this is certainly not a one man show.
Although they are operating in a space that is well crowded and one where it is hard to differentiate your offering, they’ve certainly given themselves a decent shot at it after raising a further €10 million. More impressive than the amount of money is where the money came from. Their backers now read like a who’s who of the most influential investors in the Nordics as Niklas Zennstrom, Illka Paanenen and Risto Siilasmaa have all put money into the company.
I personally still have concerns over the market they operate in and how they differentiate themselves, but it appears that smarter men than me don’t. Either way, with a strong team in place and cash in the bank, Wolt are certainly going to give the food ordering market their best shot.
After nearly one year of speculation and a deadline of the end of 2015 for finding a buyer, Bonnier finally announced they had sold Toca Boca four months into 2016 to Canadian toy company Spin Master. The price remained undisclosed, however there were reports of it having an upper level of $100 million, a price I considered to be particularly low. At the time I noted
“Toca Boca offers strong brand potential still, and although revenues are low, for them to be making money in this space (and for them to be growing) is impressive enough for me to have faith in them that they will be able to continue to do so, and at a rate that defies a $88.5 million valuation.
For me, the top end of the given range would be my starting point, and I believe their true value should sit somewhere between $120 million and $240 million, so, if the reports are accurate, then someone is about to have a bargain on their hands.”
With the price undisclosed, we may never know just how much of a bargain Spin Master managed to get but although it is not on King levels, it still represents another solid exit for a Swedish gaming studio, as they and Toca Boca continue to churn out the gaming hits.
A storm is coming, or so it seems. After two strong years of hope and positivity for the future of the Nordic startup scene, the underlying issues which have remained throughout are beginning to come to a head. There are some real problems in terms of Government and policy issues in all Nordic countries when it comes to recognising the opportunities and risks for the regions tech startups and there is a considerable lack of awareness and support from the Government in all Nordic countries.
Spotify’s founders have had enough, publishing an open letter to the Swedish Government effectively stating that unless things improve they will have no choice but to grow the company outside of Sweden. Their main issues all revolve around the issue of ensuring they can continue to attract top talent: housing prices, educational reform to include programming and the tax on stock options.
We hope that this open letter at the very least will wake up Governments not just in Sweden but the rest of the Nordics as well, as changes do need to be made to ensure we don’t lose the progress that has been made in the last couple of years. We plan to give our perspective on the wider issues in the coming weeks, although if the Governments are not willing to listen to Europe’s most valuable tech company, we are not holding our breath.