Tracxn, a leading global SaaS-based market intelligence platform, has released its Geo Annual Report: Nordics Tech 2023. The report, based on Tracxn’s extensive database, provides insights into the Nordics Tech space.
The Nordics Tech startup ecosystem experienced its highest funding in 2021, making it the region's highest annual VC funding in the past decade. From that point forward, funding in this region started to decline steadily, making 2023 the least funded year since 2019.
Prevailing macroeconomic conditions and geopolitical issues across the globe have influenced the decrease in activity in this region, making it challenging for investors to make investment decisions.
The funding secured by the Nordic tech startup ecosystem amounted to $4.2 billion in 2023 YTD (till December 6th, 2023). This reflects a 54% decrease compared to the $9.09 billion raised during the corresponding period in 2022 and a significant 72% drop from the funding in the same period in 2021.
The drop in funding is primarily attributed to a decline in both late-stage and early-stage investments. Late-stage investments stood at $2.3 billion in 2023 YTD, a decline of 54% from $5 billion raised in the same period in 2022. The number of late-stage rounds also fell 33% to 34 rounds in 2023 YTD from 51 in the same period last year. Early-stage funding fell 52% to $1.6 billion from $3.34 billion in the same period in 2022. N8
Seed-stage investments, too, witnessed a 47% decline in funding to $340 million in 2023 YTD, marking a 47% decline from $644 million raised in the same period in 2022.
The Nordic tech space attracted funding worth $713 million in Q1 2023, making it the least funded quarter since 2019. However, Q3 2023 witnessed a growth of 150% in funding, from $775 million in Q2 2023 to $1.9 billion in Q3 2023, making it the highest-funded quarter of the year. This funding growth in Q3 2023 is primarily due to the $1.4 billion raised in August, making it the highest-funded month of 2023.
The number of $100M+ rounds fell to two in 2023 YTD, as against 18 such rounds recorded in the same period in 2022. Lithium-ion battery tech company Northvolt raised $1.2 billion in Aug 2023 and $150 million in November 2023 both under Series D rounds. Northvolt has also become the highest-funded company in the Nordic Tech space to date with a total funding of $9 billion and is also one of the top 5 valued startups in this region.
Energy Tech, Enterprise Applications, and Life Sciences were the top-funded segments in 2023. The Energy Tech segment witnessed total funding of $1.96 billion in 2023 YTD, 7% lower than the $2.11 billion raised in the same period last year.
The Enterprise Applications space attracted investments worth $904 million in 2023 YTD, a sharp decline of 64% compared with the $2.54 billion raised in the same period in 2022. Funding in the Life Sciences segment fell only 7% to $493 million in 2023 YTD from $531 million in 2022.
In 2023, there were no new unicorns in the Nordics Tech space, compared to seven in 2022. However, there was some activity on the exit front. A total of 156 acquisitions were recorded in this sector in 2023, a drop of 16% and 27% compared with 186 and 214 acquisitions observed in the same period in 2022 and 2021. Three companies went public in 2023 YTD, compared with two in 2022. One of the notable companies to go public in this space was Mandatum, a Helsinki-based life insurer and asset manager.
Among cities in the region, Stockholm, Copenhagen, and Helsinki took the lead in terms of funding this year. Companies based in Stockholm secured funding worth $2.1 billion, accounting for 52% of the total funds raised in this region. Startups based in Copenhagen and Helsinki raised $415 million and $265 million, respectively.
Almi Invest, Seed Capital, and Vaekstfonden were the overall top investors in this space in 2023. EIC Fund, PreSeed Ventures, and Byfounders were the most active investors in seed-stage investments, while Novo Holdings, Industrifonden, and Atomico were the most active investors in terms of early-stage investments. Nordic Secondary Fund, Vitruvian Partners, and LUN Partners Group were the leading investors actively involved in late-stage ventures.
Nordic governments have implemented several programs and initiatives to accelerate startup funding, and actively support startups and small businesses through various policies. The 'Finland as Female Tech Founder Frontrunner' program by Tech Nordic Advocates (TNA) supports growth-stage tech startups led by women and non-binary individuals. The initiative offers workshops, coaching, and access to networks and capital over two years.
Additionally, the Impact StartUp Nordic program accelerates the Nordic economy by supporting entrepreneurs and investors. All these initiatives will encourage the growth of startups in the sustainability forefront.
