The State of the US Tech Ecosystem and its Relevance for Nordic Startups

December 20, 2022
Interview with
Lene Schulze
Venture Partner
In this interview, we asked Lene Schulze, our Venture Partner in San Francisco Bay Area, to share her perspective on current trends and the post-covid state of the tech ecosystem in Silicon Valley, why Nordic startups should look to the United States, and what is important to consider when expanding business across the Atlantic.

1. What has been your journey of working with tech entrepreneurs?

I grew up in Denmark, studied mechanical and industrial engineering at Aalborg University, and have now lived and worked in the San Francisco Bay Area for nearly 20 years. I consider myself mission-driven and thrive when working on solutions that positively impact people and the world.

In the early stages of my career in Silicon Valley, I helped establish the first Innovation Centre Denmark and Nordic Innovation House. I co-founded an early startup boot camp and accelerator called SCALEit and worked with hundreds of aspiring and established entrepreneurs. At a time when Denmark had very few entrepreneurial role models and when technology startups and hair salons were considered similar, I also spent time educating on the importance of creating a conducive environment for tech startups. Later, I turned my attention to advising corporations on innovation and digitalization, helping them understand their important and mutually beneficial role in the innovation ecosystems.

In recent years, I have focused on promoting digital and financial inclusion, particularly in Africa and India. More than 3 billion people worldwide still lack affordable and accessible connectivity, and solving this problem requires collaboration between a multitude of stakeholders, including large corporations, startups, NGOs, and governments. By creating the necessary models, partnerships, and projects that enable access to the digital economy, we can empower entrepreneurs in more parts of the world and ensure that everybody benefits from the easy access to information and digital solutions that many of us take for granted.

Now, being part of the team at Scale Capital brings me back to my early mission. In recent months I have had the opportunity to connect with old and new friends, realizing how much I have missed bridging the Nordics and the US startup ecosystems. I am excited to see the talent and great startups coming out of the Nordics, and I believe much work lies ahead to ensure that more of these startups also successfully tackle the US market.

2. What brought you to the San Francisco Bay Area?

I first came to California during my gap year between high school and university. I was immediately drawn to the natural beauty, the endless opportunities for outdoor activities, and, not least, the many positive and open-minded people I met from all corners of the world.

It wasn’t until I returned to the Bay Area for a semester at UC Berkeley that I discovered the vibrant and dynamic tech community here. Surrounded by entrepreneurial-minded people working together to create solutions that change the world, I felt right at home.

After that experience, it wasn’t easy to imagine starting a career at one of Denmark’s industrial giants, as my industrial engineering degree would have naturally led me to. Instead, I chose to pursue my new-found passion for technology and innovation by moving back to California and starting my career in Silicon Valley. It is a decision I have never regretted. It has given me many unique opportunities to collaborate with some of the world’s most innovative and forward-thinking people and companies.

3. What are the advantages of being in Silicon Valley?

Despite the changes that have occurred in recent years, the unique concentration of startups, industry-leading companies, investors, and experienced individuals with entrepreneurial minds continues to make Silicon Valley a special place for fostering innovation and developing the relationships and opportunities that lead to successful companies.

Networking is a crucial part of doing business in Silicon Valley. Although remote work and interactions have become more common, it is still important to have in-person interactions when developing and advancing relationships. During these encounters, we often come across serendipitous opportunities that may not be unique to Silicon Valley but likely occur more frequently here than anywhere else.

The networking culture in Silicon Valley, combined with a fast-paced and action-oriented nature, a collaborative approach, and the embracing of the concept of paying it forward, or helping others without expecting anything in return, continually fosters an environment in which innovative solutions and partnerships emerge.

Furthermore, having a Silicon Valley address and area code in your email signature or on your website can be beneficial because it immediately conveys recognition across the United States and much of the world. The local presence can also be helpful when tapping into resources and opportunities in Silicon Valley.

(…) the unique concentration of startups, industry-leading companies, investors, and experienced individuals with entrepreneurial minds continues to make Silicon Valley a special place for fostering innovation.

4. What does the tech industry look like after Covid?

The tech industry has been experiencing rapid growth for many years. As software is eating the world , more and more companies and industries are competing with digital native startups. This has led to a surge in investments, which in turn has fueled an explosive rise in the valuations of startups. The pandemic has only accelerated this trend, as the increased demand for digital services has further fueled growth in the industry.

Currently, the global economy is slowing down due to geopolitical and macroeconomic factors, also causing a significant slowdown in the long growth cycle in the tech ecosystem. In Silicon Valley, we are used to boom-and-bust cycles. However, the current cycle has been going on for so long that many in the tech industry have never experienced a market correction. While these corrections can be uncomfortable, they are necessary for maintaining a healthy tech ecosystem, much like a controlled forest fire can clear old vegetation to make room for new growth. In the past, market corrections have given rise to industry leaders, such as Google, out of the dot-com bust, and Airbnb, Uber, and Dropbox emerging after the 2008 downturn.

Another question is where in the US the tech industry will be post-pandemic. Even before covid, some founders and companies were choosing to locate outside hubs like Silicon Valley or New York to avoid high costs and competition for talent. With covid restrictions in place, technology companies, even more so, have been able to grow and acquire talent from anywhere.

I predict that tech startups will continue to prioritize investing in talent over office space in the future. While remote teams are becoming more popular as they allow for proximity to a broader range of customers and partners, I believe many startups will still establish a primary location in a leading hub, such as Silicon Valley. Entrepreneurs will find it beneficial to spend time in this location to develop the network and relationships that can contribute to their success.

5. Why should Nordic startups look to the United States?

Today, the Nordic startup ecosystems are maturing. Companies in these ecosystems can attract funding from experienced investors and establish a strong product/market fit in their home markets. However, many will eventually turn their attention to the United States as it is often considered essential for global success and market leadership.

The question then becomes of timing for entering the US market. Some decide it is beneficial to do so early on in their expansion efforts, as the United States offers a more homogeneous market with one language and a more similar culture than Europe. It is also often easier to find early customers and partners in the US, especially in Silicon Valley, as corporations here are generally more willing to engage with startups and test new products and technologies than their European counterparts.

However, entering the US market can be challenging and complex. Attempting to do so with inadequate resources, network and experience will likely lead to failure. For most Nordic startups, the right time for US market expansion is not until they have raised multiple rounds, built a robust team, and gained some traction in their home market and potentially in other European markets. In these cases, US market expansion is often triggered by demand from organically onboarded US customers or partners who want to expand their cooperation to the US market.

(…) many will eventually turn their attention to the United States as it is often considered essential for global success and market leadership. The question then becomes of timing for entering the US market.

6. What is your advice to Nordic founders who want to expand to the US?

There is no one-size-fits-all approach to expanding into the US market, as many factors must be considered. However, building a strong network and conducting thorough market research and planning is crucial to success.

Rely on your existing connections to get a strong start as you expand to the US. Your current investors, partners, and other entrepreneurs who have previous experience in or are based in the US can provide valuable advice, introduce you to helpful service providers, such as lawyers and banks, and help you build your network.

Consider the potential impact the US market will have on your global success, and on that basis, evaluate the best approach for setting up operations. In the past, many chose to flip their company and make their Delaware corporation their headquarters. However, nowadays, most companies initially set up a wholly-owned subsidiary and maintain their base at home. As a founder, determine whether you should eventually move to the US or establish a presence by relocating other executives, frequently visiting, hiring locally, or combining these options. In most cases, at least early on, R&D will remain at home. However, dedicated support for adapting your product to the US market is critical.

There is no silver bullet to entering the US market. It’s often a lot of trial and error and learning as you spend more time in the market.

Read also
Why Should European Founders Go West?

Lene Schulze
Lene has spent 15+ years in Silicon Valley working for and advising founders, corporate executives, and investors and connecting them and their organizations to attractive business development opportunities, capital, and the latest technology and innovation trends. Today Lene works mainly with building partnerships with some of the world’s largest tech companies and driving new global revenue opportunities.
Scale Capital
Scale Capital is a Danish venture fund from 2012 investing in Nordic B2B tech startups at Seed/Series A and helping them win in the US.