The war for international talent just entered a new high. And it’s impacting the Danish welfare. A lot… This is the second post of a series of five inspiring posts where Frederik Vind will dive into different areas of the work with People & Culture in startups and scaleups. Frederik is Head of People & Culture at Nøie and investor.

Danish startups are raising money like never before. That’s nothing short of amazing for Danish society as a whole. One of the obvious reasons for that is how venture-backed startups equal creation of jobs. However, whether or not these jobs will be created and stay in Denmark is not a given: It’ll largely be determined by our ability to attract international talent, keep the potential “unicorn” startups in our little kingdom, and ultimately create a proper talent ecosystem in Denmark.

We’re witnessing an all-time high for Danish startups attracting capital: DKK 3.2 billion has already been raised in 2021, according to Børsen.

That’s record-breaking. And that’s great news. Not just for the startups raising money (good job to each and every one of them), but just as much for the Danish society as a whole: More money raised equals more jobs.

But it’s not all great news. Recently, alarming statistics were brought to light by Jacob Elleman-Jensen, on behalf of the Danish Ministry of Trade (Erhvervsministeriet): 7/10 of the biggest startups from Denmark have left… Denmark.

 

The self-fulfilling Danish scaleup talent prophecy

At Nøie, we’re happy to be contributing to the historical funding statistics, having just raised a €10m Series A. With the funding, we’re looking to expand our organisation by a great deal. From an operational perspective, we can easily operate our current pan-European market expansion from Denmark. This is currently our plan. But I’ve got to admit that we’re slowly starting to feel the pressure and see the benefits, of operating outside of the Danish borders. And the reason for that is simple: There’s an evident talent scarcity in Denmark.

There are so many great things to say about being a scaleup in Denmark. In fact, the only true challenge I’ve experienced, and the only one that has really kept me up at night, is the limited talent pool available. Especially talents with scaleup experience are scarce. This is due to the limited number of “unicorns” that we have succeeded in creating, and keeping, in Denmark, as this simply enforces a limited scaleup talent ecosystem.

And it gets worse from here: The lack of talent leads to lower valuations. And that leads to worse conditions when raising money. And ultimately, it leads to Danish scaleups crossing the border and setting up abroad.

In short, this is what I call the self-fulfilling Danish scaleup talent prophecy:

Talent is context-dependent 

Let’s just take a moment to dive into what talent exactly is.

And I’ll start the dive by being a bit philosophical: I firmly believe everyone is equal in the eyes of God (or whomever we believe in – if any). That means we’re all talented. But with that said, talent becomes context-dependent. Both in terms of how each and everyone of us performs the best and also where we thrive and thereby how we unfold our talent the best. When assessing talent, I tend to lean on the simple so-called AMO Performance equation:

Performance = Ability * Motivation * Opportunity 

The interesting factor in this equation is that we’re working with a multiplier (*) and not a plus (+). This basically means that you can have all the right abilities, but if the motivation or opportunity doesn’t fit and vice versa, you won’t get far in terms of performance.

“Opportunity” is tricky as this is where we, the employer, have to take a good, hard look at ourselves and consider whether or not we have the right culture allowing the right talent to perform with us.

In my experience, the equation gets a bit more complex in venture-backed scale-ups, as we’re breaking the organic rules of building a company by driving a forced growth journey that is fueled by external capital.

 

Startups are a crucial factor to the future Danish welfare

Maybe it’s a no-brainer for some. To those of you who aren’t exactly convinced as to why startups are so damn important for the future of Danish society and welfare, let me show you a simple example:

Extensive research is done on the American S&P index 500 (the US to 500 companies) and it shows a clear trend: The average lifetime of companies is decreasing. And it’s doing so fast. On top of that, predictions indicate that the companies who’ll rule the very same index in 10 years from now aren’t even “born” yet.

All in all, we can’t rely on the old giants. Instead, we need to be at the forefront of creating new successes. We need new giants. And we need them to stay in our country.

Talent accessibility will be the true differentiator in keeping Danish startups in the country

With the astronomical amount of funding raised in our small nation, I’m predicting a fierce war for talent coming up ahead. In fact, we’re already fighting it, but it’ll get even more ugly very soon.

Luckily, we’re no way near being doomed. What we experience at Nøie when recruiting international talent is that there’s usually a great motivation for moving to Denmark and especially Copenhagen – despite our size.

However, we do have serious structural challenges that counteract this motivation: Both in terms of high tax levels (when not hiring C-Level that can jump on the “forskerordning”), complex taxation of warrants, and last but not least our non-transparent work permit process that often entails long waits.

Let’s break the self-fulfilling scaleup talent prophecy and become world champions in attracting and integrating international talent. Let’s break the chain and create an amazing talent ecosystem in Denmark.

At the end of the day, it’ll benefit us all. And give back tenfold.