The last two or three years have seen such an increase in capital into the Nordics, one may assume that it is no longer particularly hard to raise money anymore, with more and more investors seemingly wanting a piece of the Nordic action.
However, this isn't actually the case, and while the Nordics has a blossoming investment ecosystem, it would still be a push to call it a mature one. As such, there are still some funding gaps. We took a look at investments from the first five months of 2016 (up to May 31st) to see where the money is going, and how many investors are actively investing in these rounds in order to see where the disparities may lie.
As we've already covered this year, early stage rounds have dominated so far in 2016, as is demonstrated below.
However, a more accurate measure of figuring out where the funding gaps lie is to look at how many investors are operating/actively investing at each round size.
Naturally, some rounds typically need more investors than others, which goes some way to explaining why there are more investors actively participating in $10 million+ rounds than in $5-10 million rounds. Even still, this is a round size that seemingly stands out as underserved, alongside the $500,000-$1 million round size.
It becomes even easier to see where the disparities may lie when we compare the number of investors participating versus the number of rounds at each size. One thing that should be noted here is that the majority of the undisclosed rounds (47) are likely to be in the <$500,000 range, which changes the picture considerably and means this is likely the most well-served stage in the Nordics right now.
Here the biggest disparities don't appear to be at the later stages, where after $3-5 million, the number of investors outnumber the number of rounds, but at the $500-1 million and $1-3 million stages.
Not forgetting that the <$500,000 is likely to be a lot lower due to the undisclosed rounds, it is again the $500-000-$1 million and $1-3 million that particularly stand out, with 2.39 and 1.84 funding rounds to investor respectively at these stages.
Yet the reason why these early stage rounds are not focused on as being underserved is because there are a lot of prolific investors who are very active and are backing a number of companies at this stage, meaning funding is widely prevalent even if there are not as many different investors matching the number of funding rounds.
And despite it appearing that there are plenty of investors at the later stages, as stated above, later rounds simply need more investors, so as the Nordics begins to see the maturity of all of the companies that have been backed at seed and Series A over the last couple of years, we still need more investors to be actively participating in the Nordics in these later-stages.
In conclusion, when I started this analysis I expected to be able to define a clear round size which was significantly underserved (my assumption was in the $5-10 million range), however, there's actually a case to be made for a funding gap at all stages still in the Nordics.
While this may appear to be a cop-out, what this demonstrates is that despite the substantial increase in capital, it is still necessary for the Nordics to continue to attract new investors to back the region's startups at all stages otherwise not only will we have funding gaps, we'll also have a bottleneck.