The need for “Startup intermediaries”

Last week Copenhagen experienced two high quality startup events. At TechCrunch Nordic and at Mini Seedcamp Copenhagen many high quality investors, advisors and other valuable members of the European startup community descended upon Copenhagen to assess the state of affairs with respect to Danish and regional startups. I think that everybody who participated agrees that these were successful events that need to be repeated at least once a year.

In addition to insightful presentations by Tommy Ahlers, ex-ZYB founder, Martin Ferro-Thomsen,, and Michael Jackson of Mangrove Capital, ex-Skype, a lot of good discussions about funding conditions for startups in Denmark took place.

I have previously written about the sad state of Danish VCs when it comes to offer Danish startups more than “just” money. Adding to the misery of Danish startups, it was the opinion at the two start-up events that in the European funding eco-system the problem was not so much the often “poor quality” of money in outer rims such as Denmark but more generally a lack of available angel and seed financing.

From this perspective, there would be a lot to be pessimistic about if you were thinking about doing a startup in Denmark. However, I also sensed some serious growing up and a “facing the music” attitude among a lot of the participants at TechCrunch Nordic and Mini Seedcamp Copenhagen.

People seem to be saying: OK, let us face that we do not have and probably never will get a funding eco-system anywhere near the size or with the quality of that in London, Boston and Silicon Valley. With our welfare system and high taxation, this is probably never going to happen at least in the Northern part of Europe. But wipe your tears, get over it, and look at the bright side of life.

Funding eco-system or not, a lot of good ideas, a lot of high quality entrepreneurs and a lot of good startup companies are dreamt up, founded in and funded from out of this region. We just have to be realistic and focus on doing what we are good at and find our particular niche into today’s totally globalised startup eco-system.

And at TechCrunch Nordic and Mini Seedcamp there were actually some good ideas that at least to me seemed like an eye opener with respect to how we can actually improve the conditions and the success rate of Danish and regional startups. One of the presenters – I cannot remember who – suggested that those Danish entrepreneurs who had made it, having had their startups funded by international high value investors – be it VCs or angels – should be more visible to new Danish startups.

These individuals should make sure that they are – if not always present – then at least have their attention firmly fixed at events like those last week and other good events such as Startup Bootcamp, Startup Weekend, Venture Cup, First Friday and so on that take place in Denmark, and where a lot of very good talent is discovered these days.

In Denmark these days, a lot of good activity takes place at these startup sandbox levels. When the VC and funding expertise is not available in Denmark, then a network of successful entrepreneurs should serve as a sort of intermediaries of the best of the creed from the sandbox to the best of the creed of international funding. People such as Tommy Ahlers, David Helgasson, David Heinemeier Hansson, Janus Friis, Alexander Aghassipour, Morten Lund, Henrik Werdelin and a lot of others should network more extensively here in Denmark and provide a bridge for the best of Danish startups to international investors both angels and VC in London, Boston and the Silicon Valley.

Such neural links would add so much more value. Getting access to pitching at the right conferences, to the people who hypes new interesting startups at the most influential blogs, to the right investors would promote a startup so much more than getting first round funding from a local VC with no international network and little understanding of the business model and its market.  And I guess this type of networking already takes place. But I think that much could be done to improve its effectiveness.

Of course, this would mean that only a small fraction of Danish startups would get through to world class funding. Only the very best would make it. But at least the probability will diminish that uncut diamonds here in the region with such world class potential will not be discovered.

As for Danish VCs, transformation will have to take place as has been discussed before. Some Danish VCs will develop into international VCs and will face the tough competition in that market. Others – primarily those where the funds to a large extent derive from Danish government money – will continue operating primarily in Denmark. In my opinion, such purely Danish VCs should either be abandoned or should focus much more on providing seed money to startups in the sandbox. And of course with respect to such seed financing, a much better balance nust be struck between on the one side  the far too much bureaucracy and paperwork that today makes applying for government backed funds a real hassle and on the other side the need for some checks and balances. But that is another discussion.

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