More than a tweet, less than a blog.

So I was interviewed by a newspaper the other day (waiting for the article to see how misquoted I get) on seed and early stage fundraising in the Nordics, but it might as well have been “anywhere except for the US”.

There’s a misconception that fundraising is a simple binary issue, in the sense that either you get funded or you don’t. And that in markets (such as the Nordics) where there is little access to capital, the consequence is that many great ideas don’t get any money. 

However, the challenge in the Nordics and similar markets isn’t that you don’t get funded (you’re any good you will, eventually) but that it takes way longer, making it hard to execute at the speed required to compete in certain product categories or customer segments, where competition has quicker access to capital (for instance, by being based in downtown Palo Alto).

This is sometimes interpreted that investors in these markets lack vision, are too risk averse or plain ignorant. Not true, at least if Nordic investors are anything to go by. All things equal, they’re just smart (or in some cases, not smart) as their US counter parts.

What they lack isn’t brains or balls, but competition. In a hyper competitive market as NYC or SV you have to act fast to get the deal. Whereas in the Nordics, where an ambitious startup only has a handful of firms to choose from (and angel investing is pretty much non-existing), you can take your time.

Anyone that has raised money will tell you that competition for the deal is what makes deals happen. And when there is none, pretty much nothing happens (unless you run out of money and are forced to accept a shitty deal haha).

Again, this is perfectly rational behavior. If you’re an investor, looking at a company that is 10 months old, stalling the investment by a couple of months gives you double digit increases in data that allows you to reduce risk.

So while it’s tempting to whine on the few players that actually do invest in these markets, what we should do is to figure out how we can get more players to join the game.