With a combined population of just 26 million, the Nordics are understandably proud of all achievements from any of their countrymen.
However, due to the relatively small size of the region and its home markets, often some of its greatest startup successes have come from the countrymen that have long left the Nordics and have set up their companies elsewhere.
A lot of the individual countries often claim these successes as their own, simply based on the founder’s nationality, however, when it comes to analysing their true capability to create and grow successful tech startups, it serves to be more critical.
We were recently questioned on how we define which startups come from which country, so we thought we would be open about our definitions, and explain when a Nordic startup is a Nordic startup (at least according to us).
A startup founded in and with their HQ in the Nordics should be considered a Nordic startup.
Trustpilot is a great example of a Nordic startup that has been founded in, raised capital in and has grown in the region. Despite having offices in the U.S, UK, Germany and Australia, Trustpilot have kept their headquarters in Copenhagen, making them a clear cut case.
A startup with at least 50% of their staff in the Nordics should be considered a Nordic startup.
Having been founded in Copenhagen, Tradeshift have since moved their headquarters to San Fransisco. However, 50% of their staff are still situated in the Nordics, and they currently have a 100 open head count in Copenhagen. When a company keeps their roots in the Nordics and still provides jobs in the region contributing to the economy, then we believe they should be considered a Nordic startup, especially if at least 50% of their operations are still based there.
A startup founded in the Nordics who raised their first investment round while based there, before moving on.
While we believe in being as critical as possible when it comes to these definitions, we also have to be realistic. Although raising capital is no longer as much of an issue as it once was, there was a time when Nordic startups didn’t have much choice but to move on to raise more capital and grow their company. Due to this restriction, we have a general rule of any company that was founded in the Nordics and managed to raise their first investment round there before moving on should be considered a Nordic startup. This is predominantly due to the fact that this demonstrates operations in the region at some point.
A startup founded in the Nordics but established elsewhere should not be considered a Nordic startup
On the flip side, a company simply being founded in the region, but never having any operations there and being established elsewhere, should not be considered as a Nordic startup. Soundcloud are a classic example of this.
A startup founded by someone of Nordic nationality but founded and built elsewhere should not be considered a Nordic startup.
This is where we really draw the line. If a company happens to be founded by someone of Nordic nationality but was not founded in or it doesn’t (and has never had) any operations in the Nordics, then it simply can’t be considered a Nordic startup.
Then there are companies which can’t be considered Nordic startups, but have their roots in the region, and may ultimately end up benefiting it.
Avito are a Russian company with Swedish founders by our definitions above, however, after Naspers recently acquired Avito for $2.8 billion, the founders indicated their intentions to invest some of their proceeds from the sale into Swedish startups, while one of the Nordics most active investors, Northzone, saw a return of $155 million on the sale. Therefore despite this being a Russian success, the Nordics look set to benefit from it.
This last example is a perfect demonstration of how tricky it is to define exactly what a Nordic startup is. In fact, it shows that despite having some clear criteria as we have laid out above, it probably serves us best to deal with companies on a case by case basis, as no companies circumstances are the same.
However, by having the set of criteria above in place, we are at least able to keep to a fairly consistent level when it comes to our statistical analyses.
So, this is how we define “Nordic startup”, have comments/suggestions/questions on our criteria? Then let us know in the comments.