From pioneer to powerhouse — why we’re doubling down on Danish tech

How do we explain Denmark's success?

So how then do we account for Denmark’s outsized success given it ranks just 17th among EU member states by population? As always there is a broad spectrum of reasons, of which I’d argue that the following are pivotal:

Entrepreneurs, everywhere

Many nations talk a good game when claiming that their society is entrepreneurial and innovative, but Denmark demonstrably does far more than that. Over my lifetime and recently in particular, an entrepreneurial attitude and startup mindset has long since taken root among Danes. This is borne out, for example, by the fact that Denmark has the third largest volume of patent applications in Europe, while tellingly, at Balderton, we’ve backed more Danish than German founders over the last two years (despite the vast population disparity).

No surprise then that Denmark ranked in the top six nations worldwide in the Global Entrepreneurship Index 2018, with the country scoring particularly highly in the categories of ‘Opportunity perception’ (‘Can the population identify the opportunities to start a business and does the institutional environment make it possible to act on [them]?’), ‘Technology Absorption’ (‘Is the tech sector large and can companies rapidly absorb new technology?’), ‘Human Capital’ (‘Are entrepreneurs highly educated, well trained in business and able to move freely in the labour market’) and ‘Risk Capital’.

In our experience, the level of ambition among Danish entrepreneurs tends to be global from day one. In part, that is because there is an ever-deepening pool of founders who are on their second or third business, and may also have had done a stint in Silicon Valley. A poster-child for this trend is Jakob Jønck, CEO and co-founder of Simple Feast. A recent addition to the Balderton portfolio, Simple Feast is Jakøb’s third startup; he previously co-founded Endomondo (which was acquired by Under Armour) and was head of operations at MyFitnessPal, based in the San Francisco Bay Area, (also acquired by Under Armor).

Jakøb is part of a new breed of ultra-bold Danish founders who benchmark themselves against the market leaders in their field. With this second generation of founders – which also includes Unity Technologies founder David Helgason, alongside the founders of Denmark’s other most celebrated scale-ups such as Zendesk, Trustpilot, Just Eat and Vivino -- all of whom have become angel or super-angel investors and board members, we’re seeing a step change in the way startups now build their teams, execute on their visions, articulate their stories, and above all understand how businesses can be run. Together, like the proverbial rising tide in a harbour, they are lifting startups across the ecosystem.

A plugged-in government, leading the way

A second reason for Denmark’s success is the way the Danish Prime Minister, Lars Løkke Rasmussen, has not just spoken warm words about the tech sector but walked the walk too. Driven by his belief that tech entrepreneurship is a growth engine for European prosperity, creating jobs, value and opportunity, Mr. Rasmussen has cleverly brought together a group of tech influencers, including entrepreneur Tommy Ahlers, formerly chair of (Balderton portfolio company) Peakon, now minister of Science, Technology, Information and Higher Education. Indeed Jakob Joenck is one of the advisers in this government panel too. The results of this are already plain to see: regulations on employee equity have been relaxed, making it easier for startups to compete for top talent by offering stock options.

Embracing the technology scene has already led the Danish Government to appoint the first ever ‘ambassador to Silicon Valley’ to help attract investment into Danish tech, and burnish the credentials of Denmark’s startups stateside. Having support and a sympathetic ear at the top of national government is something few ecosystems can truly claim, and will encourage far greater synergy between lawmakers and the needs of the startup community. A prime example is how easy it is to apply for a work and residence permit and launch a startup in Denmark as a foreign national.

Cultural underpinning

Third, Denmark has a number of inbuilt cultural advantages over other hubs, the most obvious of which is the ubiquity of the English language (an estimated 86 per cent of Danes speak English), making overseas expansion and setting up in or moving to Denmark for non-Danish speakers far easier. The Danes find it natural that in a group setting with a single non-Danish speaker, the conversation switches to English. In fact Denmark was ranked as the third-best non-native English-speaking country in the world.

From culinary experimentation to a coveted reputation in design and even TV drama, Copenhagen is a globally admired city with the quality of life in the Danish capital reflected in the way it often tops lists of the world’s most liveable cities. Trend-setting Monocle Magazine has repeatedly named it as such, while Copenhagen has consistently appeared high up in the Economist Intelligence Unit’s index of Liveable Cities, (it currently ranks second in Europe, behind overall leader Vienna, and ninth out of 140 cities globally.) That plays an important role when it comes to attracting talent and entrepreneurs from around the world. As does the country’s impressive array of science parks and tech accelerators.

Furthermore, an OECD study found that Denmark has the lowest inequality rate among OECD nations, and bolstered by a generous cradle-to-grave welfare state - which also serves as a financial cushion for entrepreneurs in bootstrapping mode - it is one of the happiest nations on earth.

Meanwhile, the ecosystem is further boosted by Denmark having one of the world’s top five rated higher education systems producing a highly educated workforce, with universities such as the Technical University of Denmark (DTU), one of Europe’s leading engineering schools, and Copenhagen Business School offering startups a constant stream of highly skilled management and engineering graduates.