Only 3% of startups manage to survive the first 10 years - is there a way to help the “best of the best” prepare and accelerate their next stages of growth here in the Nordics? This was the aim with the Nordic Scalers initiative.
Nordic Scalers is a pilot by Nordic Innovation. The pilot ran over two years, from 2017-2019, with 33 companies from Sweden, Norway, Denmark, Finland and Iceland participating. The results from the evaluation points to some interesting findings.
Goals of the Nordic Scalers initiative
Provide access to relevant growth skills, competences, networks and funding opportunities for Nordic scale-up companies
Raise awareness about the importance of scale-ups in the Nordic region
Facilitate a scale-up community at the Nordic level
Brand the Nordics globally as a leading scale-up hub
Contribute to shared learning among key stakeholders, both public and private
Finnish 4Front and The Evidence Network from Canada conducted the evaluation of the Nordic Scalers pilot. The focus of the evaluation was to determine relevance, appropriateness and Nordic added value of the Nordic Scalers initiative.
"We found that the initiative has been especially successful in piloting new skills, competencies and networking opportunities for the participants, which was one of its main goals."Vesa Salminen, 4front.
It is going to take some time before we see the long term impact, since the pilot has just wrapped. Many of the goals are long-term and building a sustainable Nordic scale-up ecosystem needs a lot of work also in the future. But, based on interviews with the companies and stakeholders, Nordic Scalers has definitely contributed to that development, says Vesa Salminen, 4Front.
There are a limited number of scale-ups in the Nordic countries and clear advantages for a Nordic approach. The evaluation found that the pilot was well designed to address the needs of the companies.
A surprise for us, was the overwhelmingly good feedback from the participating companies. These are busy and already successful companies, and they were happy with the program design. We found that the initiative has been especially successful in piloting new skills, competencies and networking opportunities for the participants, which was one of its main goals. Based on the feedback, we also learned that the pilot helped the companies grow and further develop their strategies, says Salminen.
“[It is] important that you step out from your day-to-day business, force yourself to think and plan where you want to be in 3 years, not next Monday, next month… Otherwise you ́re stuck with the day-to-day things.”Participating company
The evaluation uncovered that a Nordic level program brings added value by helping to gain a critical mass of companies. Furthermore, Nordic Scalers and Nordic Innovation prove to be a good platform for exchanging knowledge and practices.
“Speaking to the other companies - that was the highlight for me - you realize that even if you have a totally different business, you have similar challenges with international expansion or company growing and making sure you have structures and processes in place to manage everything that needs to be handled”Participating company
Comparing Nordic Scalers to other peer programs
Brian Barge and Mimosa Zhao of the Evidence Network have written the literature review (link) on scale-up companies, published as a supplement to the evaluation. They have looked at how the Nordic Scalers program stacks up against 19 peer programs in countries outside the Nordics.
When it comes to support programs for high growth firms, Barge points to six key success factors:
Holistic goals are important. That the goals of the program are aligned with regional and national goals for building a strong economy. A timely intervention is also key. Companies face “trigger points” that cause a period of organizational change and the programs have to be responsive to these needs by providing engagement with business advisors and mentors at the critical time. When it comes to funding, the nature of scale-up companies requires investors to be willing to make long-term investments. A mix of simultaneous non-financial and financial support will benefit the participants most. Peer-to-peer support that promote networking, knowledge transfer, and learning opportunities for scale-ups is a highly important success factor and the programs need to have the appropriate selection criteria.
Definition of a scale-up
Minimum number of employees: 10
Minimum revenues: 2M€
Growth rate: Minimum 20% growth in employment or revenue in the preceding 3 years
*Defined for the Nordic Scalers initiative. Other initiatives might have different definitions.
He says the pilot succeeded in maintaining the right, strict selection criteria focused exclusively on scale-ups, and it used an important iterative approach, by doing mini evaluations along the way to make the design better. In the evaluation, 4Front found that the Nordic Scalers initiative complements and is well aligned with national initiatives. The pilot also provides the nature of services that scale-ups need. This further underscores the relevance of the pilot.
The importance of a good scale-up community
4Front found evidence in its review that the participating companies, public authorities and Advisory Board saw the value of growing a network through a program like the Nordic Scalers.
“[Most valuable was] getting external views and discussing some of the key challenges one-on-one with the mentors.”Participating company
One of the recommendations was that the program could have done even more to focus on building communities and peer-to-peer learning. Several of the participating companies emphasize the value of the mentoring they received, Salminen explains.
“[We] would have benefitted of having an assigned coach to the company for 1–2 years after the programme. Everything changes rapidly but there is no coach to tackle it with after the programme.”Participating company
This matches well with the insights from the literature review, says Brian Barge:
Programs with the biggest impact provide both financial and non-financial support. Connection with peer groups and the effects of a network stand out as most important. Also in the Nordic Scalers pilot.
Recommendations for the Future
Studies show that a small number of rapidly growing firms create disproportionally large numbers of new jobs, and that although the risks of targeting scale-ups may be higher that in promoting start-ups, the rewards are likely to be higher as well.
Going forward there is the question about the role of public policy on whether to support scale-ups. World economists agree that public policy should have a broad based approach and support both scale-ups and start-ups, and these should be seen as operating in harmony, says Barge.
4Front emphasizes the importance of building a broader ecosystem going forward:
In general terms I would say that the focus should be on further developing the peer learning elements and building a community for scale-ups. The Nordic Scalers initiative is a seed that could grow into a self-sustainable system that should be company- or entrepreneur-driven. Based on our evaluation there is definitely room for such initiatives also in the future, explains Vesa Salminen.
The article and interviews were carried out by Sidsel Linden, Linden Kommunikasjon.
Nordic Innovation on the Nordic Scalers initiative
“The evaluation validates our initial assumptions: that the focus on scale-ups is a highly relevant objective in the Nordic region and that a Nordic level program brings added value.”Anna-Maija Sunnanmark, Senior Innovation Adviser at Nordic Innovation.
The key strengths pinpointed by the external evaluation, that is the pilot’s exclusive focus on scale-ups, high-level of customisation and tailored one-to-one mentoring combined with peer-to-peer learning, are all factors we emphasised in Nordic Scalers from the very start.
I believe this is also why the pilot was able to differentiate itself from other programs in the Nordic region. But most rewarding result has definitely been the extremely positive feedback from the participating companies. The value the pilot has been able to create for the companies constitutes the whole rationale behind the Nordic Scalers initiative, Sunnanmark concludes.