People, Culture & Startups #2 – The war for international talent just entered a new high
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.
Reasons why scaleup experience is so damn important:
- Scaleups are on a forced growth journey as a result of being fueled by external capital and attempting to win the market in a short period of time. Such a journey requires people who know the bumps on the way and aren’t afraid of those.
- Scaleups are like bumblebees that don’t know they aren’t designed to fly and therefore do it anyway. If you haven’t tried it, chances are that you’ll take some time to adapt – time that scaleups don’t have.
- Scaleups’ natural dependency to venture capital and the fact that one of the primary people evaluation criteria from venture capital firms is people onboard with scaleup experience (therefore also called people with fundable resumes).
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:
Companies average lifetime
Year Lifetime (years)
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.
Who am I?
My name is Frederik and I’m the Head of People & Culture at Nøie.
At Nøie, we want to create the best products and services to increase the quality of life for people with skin issues throughout their life. We have just closed a Series A and we’re in the midst of scaling our entire organisation both within people, market and solution. We have experienced hands-on the shift from the market testing phase to the scaling phase and how this shift brings the needs for a new type of organisation – not to mention communication, rhythms, and line of sight.
This is the second post of a series of 5 posts that’ll be shared bi-weekly. I’ll dive into different areas of the work with People & Culture in startups and scaleups. The next post is not written yet, so if you have any suggestions or ideas for a topic, please feel free to reach out.Not to forget: As we’re scaling fast, we’re always on the lookout for talented people throughout the entire organisation. If you’re interested in working in an impactful scaleup, either visit our career site careers.noie.com or connect with me on LinkedIn and send a message.