The Global Startup Ecosystem Report 2024

Copenhagen Emerges as a Top Global Fintech Hub

Perched on the eastern edge of Denmark, Copenhagen has overcome the odds to become a premiere Fintech ecosystem. From the periphery of Europe's central banking and commercial centers, its startups have outperformed many regional peers. In 2023, its Fintech startups secured the third most VC funding per capita among the top 10 European ecosystems, according to Startup Genome research.

Getting to this point has been challenging. Due to its location and relatively small domestic market, Copenhagen's startups have faced challenges in building product-market fit. However, Copenhagen proves that thriving Fintech ecosystems can be built from outside by committing to an intelligent strategy, particularly around mentorship and Global Connectedness.

How Copenhagen Fintech Uses Mentorship to Guide Startup Success

Experienced mentors must be involved at all stages of a startup's journey to build a successful startup ecosystem. This is the mission of Copenhagen Fintech, a public-private non-profit industry cluster and startup support organization founded in 2016 to foster the development of the Danish Fintech sub-sector. The organization serves as the central hub for the ecosystem, providing co-working spaces, hosting accelerator programs like the New Nordic Challengers, and hosting events, including the signature Nordic Fintech Week, which attracts over 2,000 visitors from 60 countries annually to Copenhagen.

At Copenhagen Fintech, mentors come from various backgrounds, reflecting the range of expertise needed to produce successful startups. These include current and former Danish founders, commercialization experts, and industry partners. These stakeholders work directly with Copenhagen Fintech's startups to teach them how to become investment-ready.

For many early-stage Danish startups, the first lesson addresses their go-to-market strategy. For Copenhagen Fintech executives Thomas Kogh Jensen and David Grundy, this means convincing founders to think globally, a counterintuitive strategy for many early-stage startups who assume they should build locally and then expand once established. By initially designing with an international mindset, innovators can ensure that their products will succeed in a global marketplace while still moving fast and testing products within the Nordic market.

This strategy is affirmed at all stages of Copenhagen Fintech's program, achieved by connecting its startups with mentors who have succeeded in going global. One example is Chainalysis, a blockchain analytics company jointly founded in Copenhagen, London, and San Francisco, whose founders are both members and mentors at Copenhagen Fintech. 

“At Copenhagen Fintech, there are strong norms around the importance of giving back and maintaining local connections even after founders have gone global”

Thomas Krogh Jensen undefined
CEO of Copenhagen Fintech

Copenhagen Fintech also runs delegations to its network of investors and customers across Europe, the U.S., Latin America, and Asia who can help them acquire the customer base necessary to achieve scale.

Leveraging Global Connectedness for Startup Success

Building Global Connectedness to top ecosystems is critical to the success of startups, particularly those from smaller domestic markets. This enables startup founders to learn best practices from founders and stakeholders operating in the most globally competitive markets and provides them with a foothold to acquire global customers. The efficacy of this approach is well-documented. In the 2023 Scaleup Report, Startup Genome found that startups with high levels of Global Connectedness have a 3.25x higher rate of becoming a scaleup, defined as an early-stage startup that receives a $50 million or more valuation.

Copenhagen Fintech has long recognized this and has developed several global strategies for connecting its startups. In addition to running startup delegations to global hubs like London, Singapore, and Japan, they also run programs that bring the world to them. Hosting events such as the immensely popular Nordic Fintech Week brings stakeholders from over 60 countries looking to partner with local startups. The event has become a key date on the calendar of global Fintech startups.

Crucially, the naming of Nordic Fintech Week was intentional. Previously called "Copenhagen Fintech Week," it was renamed in 2022 to incorporate its Nordic neighbors. Rather than guarding the event solely for local startups, Copenhagen Fintech executives understood that incorporating its Nordic neighbors amplified their region's collective reach to the greater benefit of all.  

This spirit also guides their recently announced "New Nordic Challengers" accelerator, a partnership between Tenity and Copenhagen Fintech. The program accepts promising pre-seed startups from all Nordic and Baltic countries, helping to expand participating founders' networks and attracting a larger number of potential investors who can access startups from multiple regional ecosystems within one program.

Case Study: Uniify's Journey from Bootstrap to VC-Backed

One of Copenhagen Fintech's promising early-stage startups, Uniify, provides business onboarding processes for financial companies. Its co-founder and CEO, Nicolas Adegnika, explained how his startup exemplified a typical member journey. Initially bootstrapped, Uniify's founders assumed they should build locally first – that is, until meeting with Copenhagen Fintech. There, with particular mentorship and help from top Copenhagen Fintech executives, they pivoted their product development strategy to work in other global markets where they could scale their product more efficiently. As a result, they now have customers across Europe, including the large customer markets in the U.K. and Germany.

By demonstrating a robust and scalable customer acquisition strategy, Uniify became more investment-ready, raising a solid seed round of $3.25 million in 2023.

"The mentorship at Copenhagen Fintech transitioned us from a bootstrap setup to a growth-focused framework suitable for VC investment," says Adegnika. "Our discussions centered on go-to-market strategies, critical for our expansion beyond the Nordic region."

Copenhagen's Fintech Future: Opportunities and Challenges

Even as Copenhagen Fintech startups go global, many continue operations from Denmark, defying a common concern for many more miniature ecosystems that they help build successful startups only to lose them abroad. The level of qualified talent, more affordable space compared to other Fintech ecosystems, and the strong community fostered by Copenhagen Fintech all play a role in this, as does the high-profile success of Copenhagen-based startups like Flatpay and Cardlay, which have raised Series B and C rounds respectively, demonstrating that startups can do it from Copenhagen.

However, these aren't the only successes from Copenhagen. Many local early-stage startups have attracted considerable investor attention, solidifying Fintech as Copenhagen's leading sub-sector - securing 32% of all VC funding in the ecosystem from 2021 to 2023. As a result, the median early-stage deal amount increased by 3.7x for Fintech startups based in Copenhagen over this period.

Yet, some challenges remain. For example, tax regulations on Employee Stock Ownership Startup Options disincentivize Danish startups from offering these in compensation, reducing their talent attraction potential and diminishing the more significant economic impact of capital that could be returned to local employees when a startup exits.  

Additionally, Denmark's stringent criteria for claiming R&D tax credits have recently resulted in some local startups being required to pay back previous credits. This not only results in a financial loss for those startups but also adds an added layer of investor wariness over potential surprise regulatory conditions.

However, regulatory issues can only impact a growing ecosystem so much. Denmark is one of the most digitally connected countries in the world, and in addition to its liberal Fintech sandbox, it offers an array of advantages for startups.

As successes abound, the momentum continues, benefiting the next generation through the accrual of local capital and experience. The future looks bright for the Fintech sub-sector of Copenhagen.