Nordic founders may appear overtly modest, even when they are holding the hottest product in the market. During Slush 2017, Keva and Tesi organised the What’s Hot in the Nordics panel to discuss collaboration between Nordic and US venture capital.
In the panel, Adam Valkin from General Catalyst, Walter Masalin from NGP Capital, Fredrik Cassel from Creandum and Tom Henriksson from OpenOcean called for courage and customer-oriented product development from startups.
“In the Nordic countries, there are many talented startup entrepreneurs who are doing a fabulous job building their businesses. They are at the top of their fields, especially in product design and creating compelling consumer applications. Despite this, there is a cultural humility and perhaps a more understated approach, relative to Americans. While this is good generally, it makes sense to borrow stylistically from US entrepreneurs when pitching for business or investment in America.” says Adam Valkin from General Catalyst.
Finnish-born Tom Henriksson from OpenOcean explains that Finnish technology companies produce top quality products but there’s room for improvement in their business skills.
“Finns need to remember to pay attention to growing their user-bases and their revenues. We often focus too much on developing the best technology”, he points out.
The small market encourages companies to expand
In discussion with Henriksson and Valkin, Walter Masalin from NGP Capital, and Fredrik Cassel from Creandum were unanimous in their opinion that investors should be paying special attention to Nordic gaming companies and their ecosystems.
Walter Masalin from NGP Capital hopes that similar technological knowledge hubs would develop in other fields as well.
“I have been waiting for a company that would use the world-class expertise of the gaming industry to develop digital health technology.”
Henriksson and Masalin believe that the reason for Finnish companies to internationalise has been the limited size of the domestic market.
Swedish Cassel compares the attitudes of Nordic startups to the Vikings.
“During the past century, many Swedish companies, such as the car manufacturer Volvo and the automation and power engineering expert ABB, have set out to conquer international markets.“
The panel observed that European companies often have difficulties in entering the US market. Therefore, they tend to begin their world conquest from Great Britain. However, companies like Supercell have demonstrated that it is possible to jump from even a small Nordic country into the American market.
“Americans think that they are interested in foreign products, but often ultimately favor buying from domestic companies especially in the enterprise space. This means that non-native English speakers or people with foreign accents may be disadvantaged. This can be addressed by moving there or hiring local teams. With that said, Nordic entrepreneurs have a great reputation, generally speak great English, and people seem to like their accent,” Valkin jokes.
User-first strategy is best in the market
The biggest concern from the point of view of investment, the panelists agree, is an overflow of money into the market.
“There’s a lot of money going around, which also means tighter competition between startups. This means that there’s a risk of decreasing long-term profit potential”, Valkin points out.
Investors attach importance to user-oriented product design and the extent users are committed to the product. Creandum’s Fredrik Cassel points out that in the future thinking about the customer path in advance will assume a more prominent role in digital product development.
“Finnish engineers sometimes want to sit behind their desks and detest meetings with customers,” Open Ocean’s Tom Henriksson jokes and continues:
“Engineer-driven companies thrive on the Internet and on mobile platforms where a customer may download the best product without the seller and direct customer ever meeting. I am currently working with a Finnish company called Supermetrics, whose marketing reporting tools are used by thousands of advertising agencies and major brands, but they have rarely met their customers. However, now they are working on larger enterprise solutions, and meeting with their customers in person will certainly enable them to expand their business even more. “
Other investor panelists agree.
“Investors are paying close attention to how vertical integration, software, and AI can further transform the customer experience,” Valkin concludes.