As a Danish venture capitalist representing NorthCap Partners I agree with Martin that it makes a lot of sense for the top tier of Danish entrepreneurs to seek out international VC funding. This is especially true if you are planning to relocate your company headquarters and the entire operation abroad. However, this is seldom the case.

In most cases we still see a substantial part of the business being operated from Denmark – even in cases where headquarters and CEO is relocated to a major market like the US. R&D, product management, European sales and marketing, support etc. is often kept in Denmark and these parts of the organization can easily be “left behind” if there are no local investors and/or powerful founders still involved in closely managing the remaining Danish operations and representing their interests in the Board and management.

It may sound trivial, but relocating headquarters and CEO often causes some serious borders internally in an organization that can be fatal to the company’s long term survival.

Most top tier international VCs are fully aware of this and that is one of the main reasons it is often a prerequisite to have a local Danish investor on board in order to attract international venture capital. Only very few Danish start-ups are in a situation where they can choose to go 100% with international VC financing. In most cases the international investor will require a Danish VC that they trust to participate in the financing. There are examples of top tier Danish start-ups where this has not been the case, but they are indeed very rare.

No doubt it is hard to find Danish VCs with a network and connections in the US that can compete with those of a top tier US VC. Most Danish VCs are aware of this and as a consequence we at NorthCap Partners do always syndicate with leading international VCs when taking our portfolio companies to the US or UK.

Just to share some experiences in this respect that can be of interest to entrepreneurs is that we quite often see better company valuations when international investors invest and parts of the business are relocated to the US or a green field establishment of e.g. a US sales organization is done. There are some obvious reasons for this. First of all, the company gets close to the largest technology market in the world. Secondly, the company increases the exit potential by a significant factor. It is indeed many times easier and less risky for a large US technology company to acquire a local US company than a Danish company located with 9 hours time difference to the Silicon Valley and with a quite different company culture.

To sum up – in my opinion it makes best sense for most Danish entrepreneurs to initially contact a Danish VC that has the trusted network to international VCs, and have the Danish VC assist in attracting international venture capital financing from VCs in their network. It is rarely a choice between either/or but rather a matter of finding the right combination of Danish AND international VC funding that leverage the full potential of the start-up business.

Jacob Bratting Pedersen