|The Nordics. Credit: Twitter|
By Tine Thygesen, The Entrepreneur Europe
For a small place tucked away in the furthermost corner of Europe, with only 25 million inhabitants, the Nordic region is punching above its weight when it comes to entrepreneurship. In the last few months alone, Spotify has IPOed with a market cap of $26 billion, iZettle has been sold to PayPal for $2.2 billion and Tradeshift has achieved unicorn status.
Other notable Nordic successes include Skype, King, Rovio, Unity, Just Eat, Endomondo, Bluetooth, Lego, Klarna, Trustpilot, Kiloo (Subway Surfers), Too Good To Go and Bang & Olufsen.
A recent analysis shows that Nordic businesses raised just over $1 billion in venture capital during the first half of 2017, with Sweden receiving the lion's share of the funds in the amount of $634.2 million.
The mere 25 million people in the Nordics are split into five countries (Denmark, Norway, Sweden, Finland, and Iceland) with five separate languages, forcing its citizens to be highly versed in English and foreign languages to make themselves understood broadly. Practically all citizens speak two languages, and many speak several. It also forces young companies to be "born-global" as their home markets are insufficient for major success. As such, many companies (also from outside the region) use these small countries with their homogeneous populations as a learning lab, a place to test new products and concepts relatively inexpensively, before the most promising ones are rolled out onto larger markets, typically the U.K., U.S., and Germany.
The region enjoys a (relative to other countries) high level of equality that ensures taking advantage of the 50-plus percent of the population that is female, homosexual etc., whose talents are underutilized in countries with high inequality.
In the future, one of the region's major opportunities may very well lie in its intrinsic concern for the environment, as the planet will need more and more solutions to combat climate change as global warming continues to worsen.
In recent years, the region has topped in global happiness ratings done by the United Nations Sustainable Development Solutions Network (in 2018 the top four were Finland, Norway, Denmark, and Iceland), which frees the population up from worrying about basic human conditions (health care is free and unemployment benefits available) enabling them to turn their energy into more fruitful labors, such as building companies and being productive at work.
All things combined, the Nordic region is a testament to the fact that many economic models, not just the ultra-capitalistic, can spur innovation and high-growth companies.
At first glance, one could be forgiven for thinking that the economic social democratic model of the Nordic countries, where tax rates are high and the state provides for citizens in need, would discourage entrepreneurship as a risky venture. After all, the need for personal financial success is less in a society with a solid economic safety net. In that way, the Nordic region refutes the myth that necessity is the mother of invention.
Actually, corporate tax rates in the Nordics are comparable to the rest of Europe, and some of the countries, such as Denmark, have a liberal labor market where it's easy to lay off staff. That is not to say that the region's entrepreneurs are not challenged by the legislative environment that taxes warrants and capital gains highly, but perhaps this is partially offset by the region is among the least corrupt in the world, with effective structures of governance including a highly digitized public sector. In addition, the region enjoys a high overall digital literacy across the population. In 2010, Finland was the first country in the world to declare broadband a legal right.
Without a doubt, much of the region's ability to create (for which the Scandinavians even have a special word, "skaberkraft," meaning "the power to create) stems from the high level of education. Education is not only free, but residents are paid a grant while undergoing higher education. The free education leads to a general education level that is among the highest in the world, providing entrepreneurs with an abundance of qualified labor in most fields.
Read more: Entrepreneur