24 June 2011, I participated in a refreshingly informal event in a cafe in the former Red Light District of Copenhagen. The event was Summer Break Coders’ Camp, a fresh initiative by the Danish National IT Agency (NITA). As part of this initiative, NITA offers students at Danish universities opportunities to develop and improve on open source software released by Danish public authorities. The admitted students receive some monetary compensation for their work, and the public institution is in return provided with a fresh look and new ideas for further development and use of their software solutions.

This event points to two promising trends in Copenhagen. First, the last couple of years have seen a huge rise in events and networks aimed at developers, entrepreneurs, and start-ups within social media, open source, Internet, e-commerce and so on. I think that a lot of people would agree with me that Copenhagen has increased its status as, if not the only, then an important hub for start-ups – not just for locals but indeed also for young people from other parts of its region (usually defined as Northern Europe).

I have been active on the Danish start-up scene since the mid-nineties. I was founder of the Danish chapter of First Tuesday, the much-hyped but also pioneering network for web entrepreneurs. In my opinion, there has never been so much activity, so many interesting events and so much talent around in Copenhagen as has been the case in the last couple of years. Copenhagen is buzzing these days. Maybe we are part of a bubble but I sense that the trend is to a large degree sustainable.

Second, there seems to be a growing recognition in at least in some parts of the Danish government that, in order to promote innovation, entrepreneurship and so on, it is of little use to devise big and largely bureaucratic schemes involving a lot of public employees trying to advise the entrepreneurs on how to be entrepreneurs. There seems to be a growing confidence in some government offices that if not the only then an important way to foster growth, innovation, entrepreneurship and so on is to provide seeding. Government money is far more efficiently used by funding smaller initiatives with less money, smaller bureaucracy, fewer formalities and so on.

Government would be well advised to channel some of its funds away from a venture capital industry that is in many instances kept artificially alive by direct or indirect public subsidies. At least in my experience, unfortunately, many of these VCs – maybe most of them – provide little value to their investments outside of the cash that they bring.

Hopefully, these trends will grow into directions. Hopefully too, government will increasingly understand that a way to foster innovation, create jobs and tax revenues in Denmark is to provide the framework and support for creative minds at a relatively “lower level” or initial stage, rather than by setting up cumbersome bureaucratic funding schemes and institutions where the primary beneficiaries are the people working in those institutions and the consultants, including the lawyers and accountants providing services to these institutions.

In addition to increasingly making Copenhagen (and possibly other Danish cities) more fun and liveable places, the Danish state should increasingly “nudge” young entrepreneurial and innovative Danes and foreigners who want to stay here by providing seeding in the form of small stipends or the like that are easy and inexpensive to administer. In many cases such stipends could easily replace other public payments to students or welfare recipients thus making it legal for them to work as entrepreneurs.