5 insights into the Nordic SaaS and software landscape

In a guest post, Clement Vouillon, senior research analyst at VC firm Point Nine Capital shares what he learned mapping the Nordic SaaS and cloud software landscape.


After France, we’re continuing our tour of the different European SaaS landscapes with the Nordic region - Sweden, Denmark, Finland, Norway and Iceland. In an attempt to get a global picture of this ecosystem we’ve listed 200+ SaaS and software startups from the Nordics that we have mapped and analysed through several data points.

The aim of this study is not to be exhaustive (nor to rank startups) but rather to describe the main characteristics of this ecosystem and to compare it with other European regions. If your SaaS company is not on the map please fill this form and we’ll add you.

Here are 5 insights we’ve drawn from this analysis:


1. Developer Tools, Productivity and Marketing are the most popular categories among Scandinavian SaaS entrepreneurs

The most popular category is “Developer Tools - Infrastructure” with 21% of the startups listed, followed by Collaboration - Productivity (17.6%) and Marketing (11.8%). These 3 software categories account for more than 50% of the startups on our map.

The distribution is similar if we limit our list to the VC-backed companies only:

When you look at the two graphs carefully you’ll notice that the Finance category accounts for 12.6% in the first case, but this number drops to 3% for VC backed companies.  Why is that? Don’t VCs like Finance startups?

The reason is simple: we actually found many small local ”invoicing & accounting” SaaS products. Since the Finance category highly depends on local laws and rules we found plenty of small startups that sell invoicing tools for Swedish, Finnish, Norwegian or Danish SMBs. These startups might be very good local businesses but they are hard to scale and are not a VC darling, hence the big difference.

Since we did a similar software category analysis for the French market, let’s compare them:

Interestingly the overall distribution looks the same: in both regions the top three categories are Developer Tools, Marketing and Productivity and in both cases they take the lion’s share with more than 50% of the startups listed. Following this triumvirate the other categories (HR, CRM-Sales, BI Analytics, Finance, Support…) each represent between 5 and 10% of our sample.

A slight difference between the Nordics and France is where the ‘Collaboration & Productivity’ category ranks. In the Nordics it ranks at the second spot while in France it’s at the third position. As a matter of fact there is a very live ecosystem of Productivity SaaS in the Nordics with already plenty of acquisitions that occured such as Podio by Citrix, Flowdock by CA, ProjectPlace by Planview and some big established players like M-Files in Finland.

To conclude our analysis on software categorization here is the split between vertical and horizontal SaaS companies (as a reminder horizontal software is industry agnostic software while vertical software is software tailored for a specific industry):

Again if we compare these numbers to the French cloudscape we find very similar results:

Two lessons:

  • Vertical SaaS are rarer than horizontal SaaS because they require industry specific knowledge which is more scarce.

  • In both regions the split is around 40% - 60% vertical.


2. Funding

Now let’s analyse this landscape from a funding perspective.

First the average amount raised by the VC backed startups of our list is $7.6M and the median value is $3.3M. Note that since we couldn’t access the funding data of every startup on our list we’ve limited our analysis to the companies for which we have data (i.e we didn’t assume no funding announced = bootstrapped).

Again these results are quite similar to what we found for the French SaaS ecosystem with respectively $7.4M and $2.4M. It seems that at its current level of maturity the funding values of European SaaS players tend to gravitate around $3M in median and $7M on average.

When we compare the funding values between horizontal and vertical companies the numbers stay relatively close, the median value being higher for vertical SaaS:

And finally let’s have a look at the funding values by software category:

As a short conclusion to the first 2 lessons, it’s quite interesting to see that the French and Nordic landscapes are very similar in terms of funding and software category distribution. It possibly hints at a similar SaaS market maturity in both regions (by European standards).


3. A very strong international mindset

As we’ve seen above, this Nordic landscape shares a lot of similarities with the French cloudscape in terms of funding values and software categories. But if there’s an area where we could spot major differences it’s definitely on how internationalisation is done.

For instance when we look at the companies that have moved their headquarters to the US we notice a big difference between France and the Nordics:

This graph shows that most vertical SaaS companies keep their headquarters in France while plenty of vertical Nordic companies move their HQ to the US.

To understand this difference we’ve studied the internationalisation playbooks of several of these companies and what we found is that the promising French vertical SaaS generally first spend time dominating their home market and later expand internationally on a country basis (and most of the time within Europe). Very few of them move to the US early on. Promising Scandinavian vertical SaaS have a different playbook as they migrate to the US much faster.

A possible explanation can be found in their home market size and cultural differences.

Sweden has a population of 10M people, Finland 5.5M, Denmark 5.6M and Norway 5M. France has 66M inhabitants, about 2.5 times the size of the total Nordic population. In these conditions it makes less sense for an ambitious Nordic startup to first dominate its home market. This is probably a major reason why these startups go to the US much faster. They cannot grow huge by staying at home so the best strategy is to target directly bigger markets like the US.

But the market size alone is not enough to explain this difference, it is also combined with major cultural aspects (otherwise we could expect this situation to happen in every small country). The Nordic population tends to have a much more “international” mindset. The English at a spoken and written level is a good indicator as Sweden, Norway, Denmark and Finland are all ranked in the top 5 adult english proficiency rankings.

This international mindset can also be seen through their local ecosystems.


4. Growing local ecosystems that support software startups

The Nordic region has also real growing local ecosystems which can be analysed through their main tech hubs, startup mafias and VC firms.

Tech Hubs

When we looked at the locations of the headquarters it was clear that each country had its own tech hub where magic happens: Copenhagen for Denmark, Stockholm for Sweden and the Espoo - Helsinki area for Finland. And when we spoke with locals it was clear that these ecosystems were growing as we heard the typical complaints in such situations: increasing rent prices and lots more competition for talent . It’s worth noting that Norway and Iceland are behind in terms of hub maturity but are improving fast.

Startup mafia

Another strong signal of a maturing ecosystem is the presence of startup mafias. By startup mafia we mean entrepreneurs who have previously worked in startups which were acquired / exited and who are launching their own startups after that. As we briefly mentioned above there has already been interesting acquisitions in the Nordic software / SaaS scene and several Nordic entrepreneurs are already onto their next venture:  Atomia (ex Pingdom), Peakon (ex Podio), the Skype mafia etc.


To fuel an ecosystem you need money and support. There are many firms based in the Nordic regions which invest in software and SaaS companies like Creandum (Sweden), Open Ocean Capital (Finland), Northzone (Sweden), Verdane Capital (Norway), Frumtak (Iceland), Alliance Venture (Norway), Nordic Makers, Atomico based in London but created by ex Skype founder Niklas Zennström etc… But local VC firms are not the only ones investing in Nordic startups, many European firms are doing that too like Point Nine Capital, Index, Balderton, IDInvest etc… It’s worth noting that in the current state of the market investments are slowing down in Scandinavia too.


5. A very diverse software landscape

Another very interesting aspect is how the SaaS ecosystem is reflective of local industries.

For example we found several startups selling “pick and shovel” software for the gaming industry (like GameAnalytics or Unity in Denmark). In Iceland you’ll find software powering the fishing industry (fishing is one of the main economic drivers for Iceland), in Norway several startups provide tools for the energy sector (which is the #1 industry in Norway) etc.

In a typical “scratching your own itch” approach, many entrepreneurs launch companies to solve problems that big local companies experience.

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