Martin von Haller Groenbaek gave a presentation on the Nordic tech startup success story and efforts to lower transaction costs for angel investing. He outlined how the Nordic countries have high GDP, innovation, and quality of life. Nordic startups receive significant funding and have produced billion dollar exits despite a small population. Copenhagen's #CPHFTW initiative aims to improve its tech startup ecosystem through community events and resources. To reduce legal fees for angel deals, standardized SAFE documents from YCombinator use a simple future equity agreement without negotiations over valuation or shareholder agreements.

1. Martin von
Haller
Bird&Bird

2. 'Tech startups in the
periphery of Europe: The
Nordic tech success story'
StartupTurkey 25 February 2016
Martin von Haller Grønbæk
partner

3. StartupTurkey
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© Bird & Bird LLP 2016
Agenda
●The Nordic success story
●Building a tech startup
ecosystem (Case study
#CPHFTW)
●Lowering transaction costs
in angel investing

4. StartupTurkey
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Martin von Haller Groenbaek
● Partner, Bird & Bird CPH
● Co-founder of First Tuesday (1998),
Co-founder of Danish eBusiness
Association (1996), Co-founder Danish
Open Source Vendors Association
(2004), Co-lead Creative Commons
DK
● (Mikro) angel investor
● Chairman of #CPHFTW foundation
● "Open source advocate”

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© Bird & Bird LLP 2016
The Nordics
• Sweden, Denmark, Finland,
Iceland and Norway
• Brothers and sisters in love-hate
relationship - but family
• Fierce internal competition!
• Region not countries!
• Nordic network with hubs or
clusters

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The Nordic numbers
• Each nordic country’s per capita
nominal GDP is in top16(2014)
• Combined GNP is 1.7 trillion USD
(2014)
• 7-8th largest economy in the world
• 3,425,804 square kilometers (incl.
Greenland) , the 7th-largest country
in the world
• Population of around 26 million
people.

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“Nordic internal market”
• History, Language (+English),
Culture
• Legal infrastructure
• Minimal corruption
• Internal trading
• Exporters

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Business in the Nordics
• Sweden, Denmark and Finland in top10 of
most innovative countries (Iceland and
Norway in top20) -
https://www.globalinnovationindex.org/
• Nordic countries in top12 in Ease of Doing
Business - http://www.doingbusiness.org/
• Nordic countries in top19 of “networked
readiness" - http://www.weforum.org/
• Nordic Countries are "Mostly Free" in
Economic Freedom -
http://www.heritage.org/

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The Nordic societies
• WORLD HAPPINESS REPORT
• HUMAN DEVELOPMENT INDEX
• WHERE TO BE BORN INDEX
• COUNTRY STRENGTH INDEX
• GOOD COUNTRY INDEX
• GLOBAL COMPETITIVENESSS REPORT
• SOCIAL PROGRESS INDEX
• ENVIRONMENTAL PERFORMANCE
INDEX

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The Nordic tech startup success
• A hotbed for worldclass
innovative tech startups
• Broad range of sectors
(eCommerce, web, apps,
games, ERP, eGovernment,
IoT, hardware, health,
fintech, BigData)

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The “Nordic startup”
• “Nordic startups”
• Helsinki, Stockholm and Copenhagen
as hubs
• Born regional and global
• Integration of HR and finance
• Branding leverage and financial
diversification
• Geopolitical stability
• Sustainable growth

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The “Nordic investor scene”
• Plenty of funding!
• Supply vs. demand
• Few local VCs
• - but more international tier1 VCs
invest directly
• More smart angel money
• Less dependency on government
money
• (But no local market for exits)

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Nordic +1B USD exits

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Nordic tech investments
• With only 3% of Europe’s
population, the Nordics have
taken on 11% of Europe’s VC
investment and turned that into
$3.9 Billion yearly in exit value
over the last ten years. (source:
Creandum)

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Nordic +1B USD exits
• Since 2005, 9% percent of global
Billion dollar exits have come
from the Nordics.
• (Rest of Europe accounts for 8%
of the world’s Billion dollar exits
despite having the remaining
97% of Europe’s population.)

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Ratio of GDP to +1B USD Exits

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Compared to Rest of Europe

19. IoT&OpenSource
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Nordic Tech Startup communities
● The power of the hashtag
• #nordicmade
• #sthlmtech
• #Siliconfjord
• #CPHFTW
● Conferences
• SLUSH
• Nordic Startup Conference
• Many more meetups…

20. © Bird & Bird LLP 2015
Side 20

21. © Bird & Bird LLP 2015
Side 21

22. © Bird & Bird LLP 2015
Side 22

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CPHFTW
• A Startup Community
• "Startups for Startups by Startups"
• #CPHFTW
• (https://medium.com/@neilswmurray/copenhag
en-for-the-win-a282b3c3d32c#.lvjufv4r8)
• Leveraging the existing community
• Improving the ecosystem (the tech
startup c-suite)

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CPHFTW Organisation
• "Doocracy" (open source)
• Transparent communication
• Circle meetings
• Townhall Meetings
• CPHFTW IVS
• CPHFTW Foundation
• 80+ founders
• 100+ Euros raised

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CPHFTW Activities
• Townhall meetings
• Circles (BizDev, ProductDesign,
HR)
• Newsletters
• Databases (jobs and events)
• VC Dinners
• AngelNext
• International coop

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CPHFTW future
• Databases (OpenAPI, financial
statistics)
• 8-12 VC Dinners
• Angle networks facilitation
• International visibility
• A +1B USD startup in
Copenhagen!

27. New documents for angel investing
"or "The first thing we do, let's kill all the lawyers", Henry The Sixth,
Part 2 Act 4, scene 2, 71–78

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Transaction costs in Angel investing
• Relatively small investment sums
• More investors
• Legal fees are proportional too high
• Often inexperienced parties on both
sides
• "The paradox of angels and their term
sheets"
• Bad angel terms lowers chance of further
funding

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The potential and the solution
• More angel investing
• More syndication
• Higher amounts (eliminating need for
seed/pre Series A funding)
• Easier due diligence in next round
financing
• Less adversarial negotations
• More fair (market) terms
• International standardized investment
documents!

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The typical Angel investment
• Equity!
• Convertible note but still equity
• Discussion of valuation pre-money
• Maybe also discussion of other
valuations
• Negotiation of entire SHA
• Adversarial atmosphere
• Potential distrust
• Too many (or too few) lawyers

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The SAFE documents
• yCombinator
• (simple agreement for future equity)
• Not a debt instrument
• No interest
• No SHA
• No Valuation
• Only valuation cap
• High resolution financing!

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The SAFE documents cont.
• Shares are issued in future round of
financing
• Number of shares are based on the
valuation cap
• If valuation in the next round is lower
then the lower valuation applies
• Same rights as new investors
• Conversion is automatic, no repayment
option

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The SAFE documents cont.
• Certain protective provision (Change of
control)
• Variations
• Safe: Cap, no Discount
• Safe: Discount, no Cap
• Safe: Cap and Discount
• Safe: MFN, no Cap, no Discount

34. Thank You
Martin von Haller Groenbaek