Nordic startups stick to their domestic market

A majority of the best Nordic startups are content with being on the domestic market, and has no ambitions for global and international success, even though they have the potential to create tomorrow’s global successes.

It is looking good for the best Nordic startups, especially on their domestic market. EY’s Nordic Entrepreneurship Survey 2015, show that less than half have international ambitions.

53 percent of the entrepreneurs among this year’s Nordic participants in EY Entrepreneur Of The Year, has growth ambitions targeted towards the local market, with a goal of becoming a significant player or achieve growth and profitability in the local market.

In contrast, only 42 percent look overseas with ambitions of achieving international success.

“If you can run a successful business in one or more of the Nordic countries, then it is often a stepping stone to the rest of the world. The growth opportunities lay abroad for some startups, and they must consider whether their ambitions are enough to get a foothold in the new markets,” says Carsten Collin, Head of EY Entrepreneur Of The Year Denmark, and continues:

“The alternative for some of these startups may be, that one day they get pressured by foreign companies in their home markets.”

From local to global

There is no burning platform, which forces companies out of their home markets. The startups still expect the growth to continue, and more than a third expect to invest 5 to 25 percent of their turnover in further development. Most can self-finance this development, with 67 percent self-financing and 22 percent bank financing.

“It would be positive with more Nordic global successes, which can pull growth and development with them home as well as inspire other startups. We see that many can navigate through the international barriers and find the recipe for success, and several more have a real opportunity to follow them,” explained Carsten Collin and followed up:

“When you go from a local to a global market, then there is a number of new challenges, for example markets, ownership structure, partnerships, strategy, supplies, tax issues, culture, organization and financing. You go for the safety of your family, to unknown challenges.”

Carsten emphasizes that we are talking about the best growth dynamos, which not only are recovering from the impact of the financial crises, but that some of these never experienced the crises and are therefore better equipped than the majority.

Born with global ambitions

Several of the companies that have international ambitions can be characterized as so-called “Born Global” companies, which are thinking globally from the beginning and within the first three years of existence, have more than 25 percent of their turnover abroad.

“Many growth startups has international ambitions from the get-go. They aim towards potentially larger markets, because they either have a unique knowledge and a niche product or business model that is scalable,” expressed Carsten Collin.

The key to international success is often found in the business model, because the startups think globally from the beginning.

“It would be great if more startups had international ambitions, because Nordic entrepreneurs know how to build global innovations,” says Jessica Stark, CEO and Co-Founder of SUP46.

Jessica Stark also point out that Nordic tech is on fire, with almost 10 percent of the global BUSD (Billion US dollar) exits over the past 10 years. According to Creandum’s Nordic Exit Analysis 2015 was 2014 the best year ever for Nordic Tech exits, with more than €13 billion in total exit value.

This article is written based on a press release by Ernst & Young.