Public funding for startups

Who will fund your company when other investors want to see more development and want you to be closer to the market than you are before they invest? Could the government or the EU help fund your startup? Public funding is an often overlooked source of financing for startups (although it isn’t applicable to all startups).

I recently held a workshop on public funding for startups, and how public funding can be used to avoid the all to common valley of death for startups.  You can download my slides from the public funding workshop here.

My main points from the workshop were:

1.Public funding is a great source of capital for many startups

2.Do your homework – and research what is relevant for you!

3.Three major forms of public funding relevant for startups: Grants, Equity, Loans

4.Often a lot of competition to get the funding

5.Public funding rarely support “ideas” – you need to bootstrap before

6.It takes a lot of work to be successful in your applications – but the payoff is worth it!

…and some specific points regarding public grants for startups:

1.Formal (often bureaucratic) application process

2.You will have to prove that you will help the Government realize their goals

3.The goals are different from grant to grant (also administrated by different public bodies)

4.You will have to co-invest – so prove that YOU also want to do it. They normally never fund 100% of  projects/activities.


Startup funding in Norway: LAVO app

Case Study: LAVO app – Know your customers and get the right people on board.

LAVO is a mobile app in the social media domain. Users set, follow and respond to video ‘challenges’, where they capture exciting moments and add music to bring their footage alive. Founded in 2015, the Norwegian company bootstrapped until the first angel investment round in 2016.

Founder and CEO Tom Roger Sokki explains:

“I had an idea around live streaming for a younger target group, where the consumer behaviour was constantly changing and the content needed to be cool. The product evolved into a challenge app, where publishers and the audience can interact, share, stay up to date and have fun together.

We bootstrapped initially, and the first investors came from the Bergen Angel Network in September 2016. The network consists of 40-50 early investors and five of them wanted to join the team, investing a total of NOK 2 million in that round. Since then things have moved fast.

The second seed round was done with help from a small advisor team in Oslo, Eikeland & Ravnaas, who put us in contact with Tom Erik Kjeseth, an award-winning film producer. He wanted to join the company because he liked the way we were working with floating media, film effects and music. Kjeseth also invested NOK 2 million and is now very involved helping us build our creative strategy.

The last seed round was closed with top-notch investors – big real estate owners in Oslo. Brothers Øystein and Torstein Tvenge are among the most successful investors in Norway, investing mainly on the Oslo Stock Exchange but also investing in startups where they see a huge potential, as they do in Lavo.  They were so bullish in the first meeting, I thought they wanted to buy the whole company! However, we secured the cash needed, NOK 8 million (approximately $1 million).

I think a lot of our success comes down to understanding our customer. I talked with two important organisations who represent LAVO’s target group. We conducted workshops to learn about their behaviour, needs, trends, what´s cool, what topics are important, and other patterns and I learned a lot about the type of product LAVO could be. We also spoke with a Norwegian TV channel who wanted a product that gave their audience more interaction, which gave me more drive and motivation to fine-tune LAVO.

As the product evolved, I questioned just about everyone: producers, content creators, talent, and musicians, until LAVO had a perfect place in the middle of the matrix.  We challenge content producers to interact with their audience and at the same time the audience is more involved than ever before. We are adapting to changes in user behaviour, and the investors see this as the way forward.

I would say that the most important thing we’ve learned is to work with good and smart people who believe in you and what you are doing.  This also means getting the right investors.  Our investors have delivered both hard capital and intellectual capital, as we expected.  As a startup you are often good at the product or service the company provides, but growing the company constantly, raising funds, is beyond your full control. So getting on board investors that know that part of the game, and that can also participate in many rounds of early fundraising, is important.

In Norway, we have few environments that specialise in startup-funding. It’s too early for the investment banks and most of the venture funds so you rely on rich angel investors. Luckily, I managed to get advisors on board who knew many of them, and who liked Lavo. Now they have all been taken on one hell of a ride!”

Investor material for early-stage startups

Yesterday (May 10 2017) I held a workshop at the PODIM conference in Maribor, Slovenia. Topic of the workshop was which type of investor material do you need to attract investors for a early-stage startup.

My main points regarding investor material are:

  • Investing in early stage startups is all about personal trust. Your startup don’t have that many data to show, so investors are mainly betting on the team/you. This means that the most important thing to convey in the investor material is that your team is world-class!
  • The three most important things when reaching out to potential investors: 1. Get introduced by mutual contacts, 2. Do your research and contact the relevant investors and 3. Be specific when contacting them (don’t just ask for coffee).
  • Regarding the need for introductions: All well-connected early-stage investors are getting a lot of requests per year – up to +1000 a year, but invest maybe in less than 10. This honestly mean that it’s really hard to get their attending if you are just cold emailing them. To stand out you need to get introduced via mutual contacts. This increased the chance that the investors are taking you seriously a lot!
  • Who are the investors relevant for YOUR startup: 1. Investors that invest in the same risk/reward matrix your startup is current in, 2. Investors that are interested in your industry (and understands it) and 3. Investors that invest in startups that are in the stage your company is currently in.
  • Do you really need a business plan ? I (and many other seasoned investors) don’t like business plans, because they are too long and often outdated. But this is really culture-dependent: Investors in some countries/regions still prefer along business plan. Check out what’s the status in your country before wasting too much time writing one.
  • What you for sure need in your dialogue with potential investors are: 1. An intro email (as explained above), 2. An executive summary (the 1-2 page “teaser” describing your startup very briefly) 3. The pitch deck (the typically 15-slide PowerPoint presentation that replaces the long business plan) and 4. The budget.
  • And please, don’t ask the potential investor to sign a Non Disclosure Agreement (NDA) before even meeting them. You first need to get them interested in your case (by disclosing non-confidential information), and most professional investors (business angels and VCs) will not even sign NDAs later in the process.
  • Ps. do you really need money from investors to grow your startup? And if you do, do you need them now or can it wait until you have more traction? The first money you take from investors are very expensive (due to a low valuation of your company)!

Feel free to download the presentation here.

Best regards,

Nicolaj Højer Nielsen




Premature scaling at Addwish

What happens when two inexperienced entrepreneurs get millions in Venture Capital funding? Sometimes it ends up with premature scaling and near-death experience, as in the case of Addwish.

Background: Addwish was initially a wish list solution for consumers and online stores that allowed users to manage the registration and purchase of gifts. The company was started by Brian Petersen and Kasper Refskou Jensen as a side project, which both worked on part-time. The two co-founders had managed to sign up a hundred web shops and had a total of 20,000 users who had tried their service. In early 2013 the company received a €1.5 million seed investment from venture capital fund Sunstone. Now the goal became to do an international rollout – very fast.

Kasper Refskou explains:

For the first year we had a goal of one million consumers on the wish list – a 50-fold increase! This meant a fast ramp-up from two part-time employees to 12 full-time employees during Christmas 2013. We also started to spend heavily on marketing, including some heavy Adwords campaigns for user acquisitions in the US. This led to a sharp increase in burn-rates, which rose to €100,000 a month. The initial strategy was to build a critical mass of consumers (who use the wish lists for free), and then monetize on the web-shops.
We just didn’t manage to reach those figures. For the first year we got 100,000 consumers – a huge growth, but only 10% of projections. So since the revenue stream from the web shops was still not in effect, this slower-than-anticipated growth was critical.

But the worst part was that we didn’t recognize until way too late we were heading in the wrong direction. We had lost our objectivity during the rush for the Christmas season peak. Despite so many clear signals of low traction in the consumer market and being unable to achieve the key performance, we didn’t realize we were dying until we were actually dead! We woke up way too late, when we had only just made the initial entry into selling and revenue generation, resulting in the company being on the brink of bankruptcy by January 2015.

I guess this is what happens when two inexperienced entrepreneurs receive too much unrestricted funding. With too little guidance and supervision, we entered into a-way-too-high burn rate resulting in only one option: go big or go bankrupt.

In perfect hindsight, it’s easy to see what went wrong: we started scaling before we had reached a product-market fit. A wish list did not have a viral loop that was fast enough to meet our goals. When you share something on Facebook it triggers the recipients to share it again straight away. But when you share a wish list, the recipient may like the product, but they don’t need to create their own birthday wish list at that exact moment, which is why the sharing and viral metrics take a lot longer. We were blind to this at that time. If we had noticed it in earlier, we could have changed strategy before it was too late.

Unlike most cases of premature scaling, this one ended well. Before going bankrupt, the venture capital fund sold its shares to a local business angel, Niels Henrik Rasmussen, who injected more capital into the company to keep it afloat. Admirably, the VC initiated and supported these changes in order to help the business survive.
With the new owner also came a new and improved turn-around strategy, now focused on building the B2B segment first. The company was able to become early-stage positive within seven months due to a rapidly growing customer base of 400+ e-commerce businesses.

Kasper Refskou elaborates:

Our turnaround made us focus on what we did really well: approaching the business segment (web shops), and making use of the technology that brings them higher conversion rates and larger basket size. If we were to do it all again, we would do it very much like we do today: “identify – test – adjust”.

Perhaps what you think is a goldmine, might not be. It’s essential to test out every initiative, being truly honest with yourself about the results. It may not be a bad idea, but perhaps the audience is not ready for it, the tech is not there yet or the adoption triggers are not present. But get the right people and make sure they see the vision as you do, and you will eventually find a way. Now that we are mainly focusing on the B2B segment, it’s quite funny to see that our wish list, two years after our big launch and missed KPIs, has gotten more air beneath its wings. This time, without any marketing-related initiatives, we can see that the 100,000 users have more than tripled, and that social sharing is slowly becoming our main acquisition channel for wish list users. Now we have also included the wish list data in our intelligent data analysis for even better personalization in our business offering. In some ways you can say that we have gone full circle – just the other way around.

Spoiler: Dragon’s Den isn’t real!

Many first-time entrepreneurs base at least some of their knowledge of business angels on the popular TV show Dragon’s Den (Shark Tank in the US and Australia). Here, a few entrepreneurs pitch their business ideas in front of a group of business angels (typically, famous super angels) who then – based on the pitch – decide if they want to invest or not.

It never works like this in the real world. Ever. Business angels need to evaluate not only the idea but also the people behind it and the traction (how far they’ve come); in other words, all that’s needed to build the necessary trust in the business and founders, on which all angels build their investment decision. This can’t be covered in 15 minutes. It makes great TV, but it’s not real!

I am not suggesting the deals made on TV are fake – they are real, and it makes sense for the angels to do the deals on stage, given the huge publicity it gives them which more than pays for the additional risk of investing in unknown companies. But in the real world you can’t get funding after a 15-minute meeting with the business angel!

Dilution – Splitting equity in startups

Many entrepreneurs are chasing investors but the real question any entrepreneur should ask yourself is, do you really want the investors’ money?

Why shouldn’t you? Well, first of all because no investor will be giving you the money for the sake of your blue eyes – except your mum and uncle, of course. The rest want something in return – a share of the company. In startup jargon this is called ‘dilution’, when your share of the company is diluted by investors.

The example below illustrates a typical dilution for a company that receives funding from the usual suspects at the different stages of the company. It starts with you getting a co-founder, and having friends, angels and accelerators invest in the company. Next you give shares to the first employee and later employees in the form of an option pool, and then you receive huge investment from a local venture capital fund and later an international venture capital fund.

So is going from 100% of a very small cake to 17% of (hopefully) a large cake worth it? This depends on your specific situation and what you really want to do with your startup. Is it more important for you to be in control of your company, even if it’s a small one, than to grow it into a world-leading company? Then you certainly shouldn’t go this route! But if you have a startup where you need funding to grow, or grow fast enough, VC and other types of investors might be exactly what you need!

You should ask yourself: Do we really need the money? Will the money really make a tremendous difference for our company – or could we achieve what we want without it? And if we need money, do we need it now or could it wait till later?

It’s hard to find entrepreneurs who regret they didn’t take in external investors earlier in the journey, while it’s easy to find entrepreneurs who regret taking in investors too early when (they know with hindsight) they would have been able to bootstrap longer.

Startup Funding in Norway: WeClean – Drag investors into your universe

Norwegian startup WeClean provides on-demand home cleaning services via a convenient app. After bootstrapping for two years, WeClean received five rounds of Angel funding in 2016. Founder Kim Haagensen explains:

I have been an entrepreneur my whole life – a high school dropout, a hustler, dreamer and a rebel. So when I found myself driving Uber after a public and ugly divorce, it didn’t take much for my brother Sindre to talk me into starting a new venture, providing home cleaning the ‘Uber way’.

In Norway, there are maybe five to ten thousand people cleaning on the black market. This intrigued me because it shows a group of people who want to work and deliver their services in a legal way, and it also verified a market which we now suspect to be worth €500 million.

We’ve been pretty laid back about funding, so when we won the Angel Challenge in May 2016, we’d already been through absolute hell. It’s not easy to find hippie investors! It was actually an Uber passenger who introduced us to our first investor, Emil Pete, who shared our values and became a good friend.

Emil’s investment gave us our first 300,000 NOK in January 2016 and we received a further 250,000 NOK investment from his father, Frank Pete, the following month. By March 2016, we were pitching on a 15 million NOK pre-money valuation and were at the final stage with many of our bids. We were still bootstrapping but we were confident in the market and watching the business grow every day.

The Angel Challenge was a great achievement. WeClean beat 19 other strong startups to win 1.3 million NOK in the form of a convertible loan. It felt fantastic and also incredibly scary that someone believed enough in us to give us their savings; there was a real feeling we had to prove ourselves. We did, winning 100,000 NOK in the Telenor Digital Challenge the following month.

Throughout all of this, we’ve stuck to our values of Peace, Love and Good Times. We wanted to change the world and shamelessly claim that we’ve already made a start. Our weapon is our service (cleaning) and our altruistic mindset – our cleaners receive a portion of our profits and not one of us is above cleaning ourselves. Our big goal is sustainability which means we avoid huge administration costs. We say if you’re too cool to clean, you’re too cool for us!

We did look for funding from a corporate partner and this didn’t go well. As we entered into discussions with Lilleborg, who had their own range of cleaning products and could train our cleaners, it looked like an exciting collaboration. But after some talks about partnership and possible investment, their parent company Orkla launched a concept very similar to WeClean. According to them, this project had been active for over a year, long before we entered discussions with them!

This kind of behaviour does happen, but Orkla won’t succeed because they don’t know how to live our values, even if they copy our ideas. My advice to entrepreneurs would be that no matter who you are pitching to, you have to drag them into your own universe. Never let anyone drag you into theirs. It’s important to have faith in your product and not accept funding from just anybody.

Our first investors believed in us and our values. Since Orkla, we’ve received a further investment of 500,000 NOK from Frank Pete, who will soon convert the loan on a ten million NOK valuation because of the good faith he showed early on.

Funding your startup in Sweden

Tomasz Gidzgier, has written this cool introduction to getting startup financing in Sweden.


Below I provide a brief introduction for the Swedish market that I have been researching while collecting materials for the book.

Public support

Sweden is quite unique as a country when it comes to supporting the Startup Ecosystem. The government does a lot of work to support local initiatives and opens up many government backed funding programs to entrepreneurs whose Startups are not necessarily linked to academia or other types of research. The institutions every entrepreneur should contact are:

  • ALMI – offices in every part of Sweden. ALMI provides the first initial grant which is not needed to pay back if the funding is used in the right purpose. Besides ALMI founds through convertible loans, helps with incubation and introduces to venture capital.
  • Vinnova – Sweden’s official innovation agency based in Stockholm. Vinnova provides funding through a range of grants aimed at different industries. Recently they have opened up for more non research based projects.
  • Tillväxtverket – Swedish agency for economic and regional growth.
  • Specific local funds – every local municipality announces funding for local innovative companies/ideas.
  • Specific industry funding – if you are in a particular industry check your industry’s trade organization and see what grants they offer.
  • Industrifonden – Sweden’s official industry fund. Despite the size, sometimes they invest in smaller companies with global potential. If not investing they can open up for other contacts in their network which can provide initial investments. Representatives across whole country.
  • Universities – check the local university near your location. Universities, especially those with Entrepreneurship master programs provide with initial funding possibilities or financing in form of free office space at an incubator or simply access to a broad expert/investor network. See for example Lund University Innovation System, Krinova or Chalmers Innovation.
  • Venture Cup – nationwide business (plan) competition. It is widely discussed if business plans are needed or if one should only use a Business Model Canvas but the bottom line is that every Startup should have a short “steer document” laying out the foundations. If not for the prizes the competitions will give you media exposure and provide some structure to your organization.

In general we advise entrepreneurs or wannabe entrepreneurs in Sweden to take a deep look around your local environment as there is guaranteed for sure a publicly backed support platform for entrepreneurs. There are so many local initiatives in Sweden but that it is beyond the scope of this article to present them all.

Business Angels

While investing Business Angels want to minimize their risk and therefore like to invest in groups, consortia or pair together with other investors. Sweden is no exception to that. If you are looking for business angels you should reach out to:

  • Connect – the biggest Business Angel Network in Sweden. Besides being a network with nationwide offices, Connect has many international partners and organizes every year investment themed conferences across Sweden. Connect organizes as well a very important event for entrepreneurs – Språngbräda – during which entrepreneurs are invited to pitch their ideas for an investor panel. Check with your local office how you apply for events.
  • Coach&Capital
  • Framtidslyftet – works similarly to crowdfunding.
  • SeedfundIt – coming soon, works similarly to crowdfunding.
  • Partners for Development investments in Life Sciences – organization for investments in Life Sciences for both entrepreneurs and investors.
  • Partner Invest Norr – network for Business Angels and entrepreneurs.
  • Roslagens Affärsänglar – Business Angel network.
  • Spiltan – network of professionals from different industries who invest together in different ventures.
  • Stockholms Affärsänglar – Stockholm Business Angel Network.
  • Västkustens Affärsänglar – Business Angel Network on the west coast of Sweden.

Besides the official Business Angel networks some of the Business Angels invest their own private equity in different Startups which have products specific for their area of expertise. To name a few, they are:

  • Hampus Jakobsson (TAT), Pierre Elzouki (Scalado), Ludvig Linge (TAT), Car Silbersky (PolarRose), Jan Erik Solem (PolarRose),

The good thing about Sweden is that in most cases the Business Angels are very active and open to being contacted via mail or social networks. They all feel urgency and commitment for enhancing the Startup ecosystem. Before contacting any Business Angel make sure you will find out enough to see what a particular individual is interested in and what his background is. You can easily find information online about the recent acquisitions or events organized by private Business Angels. Besides the Business Angels there is a second category of so called “Superangels” who invest together with Venture Funds.

Incubators, Accelerators, Science Parks, Crowdfunding and other support organizations

Organizations mentioned in this paragraph usually do not invest huge amounts but they provide the entrepreneurs with valuable advice, networking events, contacts and some grants. Make sure you check out the following organizations:

Again, make sure that you check your local environment for all kinds of organizations that can provide you with valuable information.

The reason while we gathered Incubators, Accelerators, Crowdfunding and other support organizations is that all of them have things in common and their areas of expertise overlap. The ecosystem in Sweden is enough welcoming that each of those organizations are open to visit for every entrepreneur.

Venture Funds

Sweden has many active Venture Funds that have invested in the big well known successes and even some of them are running second “editions” of their funds.

Swedish Venture Funds are generally open-minded and eager to help out in all Startup ecosystem building activities or initiatives. As for contacting them sometimes it might be as simple as looking up the contact details of a specific individual at a specific venture fund’s website. They will not make a decision quick but if your case is legitimate and you feel that you have something to say they will be able to advise you.

Final Note

If you decided to place your Startup in Sweden, you’re making the right choice for many reasons. One of them is that the common effort and commitment of everyone involved in the Swedish Startup Ecosystem is proving to be fruitful. Sweden based Startups are “hot” and draw the attention of foreign investors to great extents. At the same time as the initial company valuations tend to be low, it attracts foreign investors as they are getting more out from their investment.

I know that the above list is brief and therefore not comprehensive, but hopefully a good starting point for entrepreneurs looking for funding in Sweden.


Startup Funding in Denmark

Where do I find Danish investors for my startup?

I am often asked by both Danish entrepreneurs and foreigners moving to Denmark about the different options for startup financing locally. Below is therefore a very brief introduction to that subject.

Business angels

Many business angels prefer to invest together in consortia. Denmark is no exception and there are four regional business angels networks with which entrepreneurs can get in contact and in front of which pitch to their members:

Many business angels are for all sorts of reasons not a member of any of the above formal networks, in many cases because they already have large personal networks and therefore do not need the exposure/deals arising from the BA networks. Finding these is a bit trickier, but try:

However there are also many angels who are not even member of the DVCA. This goes for example for a lot of the successful IT entrepreneurs who are now investing part of their fortunes in new startups:

The best way to find these is to look into who funded previous startups within the same segment/industry you are in. This you can find via news articles but also via company databases like

Public innovation centres

To bridge the Valley of Death for startup financing the Danish Government has decided to run public innovation centres. These act and think almost like venture funds, but invest much earlier than a regular VC. The normal initial investment round is typically around 3–4 million DKK. Until 2014 there were six centres spread across Denmark who invested mostly regionally, but these were merged this year to just four centres. These are still located around Denmark, but invest across the country:

Venture Funds

Of course Denmark has real venture funds. Below are listed some of the most active:


A startup accelerator typically does not invest huge sums directly, but participation in a startup accelerator has for many startups been pivotal in their future fundraising via access/exposure to business angels and venture funds. There has been an explosion in the number of active accelerators – also in Denmark , but the two leading accelerators in Denmark are:

Debt financing

As any entrepreneur will confirm, banks in general don’t like to lend money to startups with an unproven business model. Vækstfonden (the Danish growth fund) has two options that can help bridge this gap and are therefore relevant for startups:


I know the above list is brief and therefore not comprehensive, but hopefully a good starting point for entrepreneurs looking for funding in Denmark.

Feel free to e-mail me ( if you think something is missing.

Best regards,

Nicolaj Højer Nielsen

Why I’ve written The Startup Funding Book

Startup Funding Gab – or Knowledge Gab?

There is a lot of talk about the funding gap that early stage startups risk falling into. Personally I think that this gap is way smaller than most entrepreneurs believe, and there has never been so much “risk capital” available from venture funds, business angels, crowdfunding and other sources.

Instead we need to address the understanding gap that exist between how founders and entrepreneurs think. It’s this understanding gap which most startups fall into. If entrepreneurs understood better how banks and investors think, they would know not to spend time pitching their early stage project to them and when the time comes to actually pitch, they would be much better prepared and have much better chance of success in securing funding.

I’ve been involved in startups for almost twenty years, as a founder and an investor. I’ve seen it from both sides. I’ve made the mistakes, looked for funding in the wrong places, counted the money before we had it. I know how it feels to be you, an entrepreneur with dreams and a great idea. I also know how it feels to be approached by you as an investor. I know that unless you send investors like me the right materials, at the right time, with your great idea derisked and bootstrapped, we won’t fund you. I know how entrepreneurs like you think and I know how investors think.

I’ve therefore written The Startup Funding Book.  This book is about building that understanding and preparing entrepreneurs for if and when the time comes for pitching their project to funders (venture capital, business angels, banks, public funds, co-founders, employees).

Most importantly this book is about what needs to happen, and what entrepreneurs need to do in the meantime in order to develop and derisk their startup project enough for it to become attractive to professional investors.

I want to help you think like an investor, so you can be successful as an entrepreneur.