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Silicon Vikings sail against harder winds

Nordic venture capital firms are filled with cash, looking for the next Skype or MySQL.

The Vikings sailed in small open wooden ships to discover America long before Columbus. Their 21th century counterparts, the Silicon Vikings, prefer business class when they travel the Atlantic.

The $2.6 billion acquisition of the Swedish IP phone company Skype by eBay in 2005 and Sun Microsystems' recent purchase of Swedish-Finnish open-source database company for $1 billion has raised hopes among Nordic investors that more big deals for VC-backed Nordic companies could be in the pipeline in the U.S.

Silicon Vikings logo
Silicon Vikings

And the Vikings have a lot of cash. Venture capital firms from Sweden and Finland-- the Norwegians prefer to drill for oil and gas instead--had a record year in funding in 2007.

"The venture capital in Finland is growing very fast--2007 was the best year ever for fundraising," said Krista Rantasaari, secretary general of the Finnish Venture Capital Association (FVCA). She participated in a panel Wednesday of Nordic VC experts organized by the Silicon Vikings business network.

Together, Finnish venture capital firms collected new funds to the tune of $2.44 billion, most of it pension fund money. In Sweden, the sum was much larger, as the country belongs to the top slot for venture capital in Europe--$6.11 billion was raised for new investments. This means a lot of fresh money has to be put to work, despite fears that a downward business curve also will affect Europe.

Says Blomquist: "This recession will not be a solely U.S. phenomena." According to surveys, Swedish and Finnish VC companies are prepared to invest as much as in 2006 and 2007. Their eyes will be set on the horizon for later exits and for companies that might be ready for IPOs or buyouts when the credit crisis has blown over.

The venture firms are putting their bets on entrepreneurs with global ambitions. "We would never invest in a company that only has a Nordic strategy," said Daniel Blomquist, associate at Creandum Advisor in Stockholm, Sweden, during at the meeting at Stanford University.

With deep dark clouds gathering in the financial skies, people in the VC business still believe Silicon Valley is the place to be. There is very little Nordic capital invested directly in the Valley, where at this moment there is no shortage of capital available for start-up funding. The general trend is that Nordic VCs help start-up companies establish themselves in the U.S., preferably by setting up their head office here.

"Our best cases have had an aggressive entrepreneur who took the step and brought family and bags over," says Linus Lindberg of Vision Capital, which is based in Geneva and Burlingame, Calif.

One of the few funds bringing in Viking capital is Nexitventures, with offices in Saratoga, Calif.; Stockholm; and Helsinki, Finland. Nexitventures has a new fund with a first closing of 50 million euros ($76 million) and hopes to bring in as much as 150 million euros ($230 million) in the final closing stage. The capital is earmarked for early-stage companies in mobile and wireless technology.

According to Nexitventures partner David Aslin, economic troubles can actually help start-ups as big layoffs make it easier to hire new people and service providers, such as lawyers, will be cheaper.

"It could get easier to build, easier to start a company," Aslin said.