From KEEPR, which raised less then € 1 million (6.5 million DKK) in small rounds while prioritizing stability over explosive growth to Landfolk, which tripled revenue in 2024 and secured over € 10 million (77.5 million DKK) Series A after proving its scalability, the guide uncovers the high-stakes choices founders face.

“We are not a 100x case. Our strength lies in lower risk and more stable growth — and that requires investors who understand that,”.

shares Emma Lindroth CEO and co-founder at KEEPR

Other insights are from startup such as Labster, started with EIFO loans instead of equity to maintain control before later raising over € 90 million (700 million DKK) in venture capital. Others, like Worksome, the initial decision was to decline venture capital, and CEO and shares how this choice could otherwise have been fatal for the company.

“We were offered valuations of 50-60 times our revenue. But we would be dead today because those valuations were so astronomically high. (…) The type of investors we brought on board did not have the same eager urge as venture funds to scale quickly and ultimately push for an exit.”

shares Worksome co-founder Morten Petersen.

Different ways to Exit

The guide also talks about how different strategies apply for making an exit. For someone like Michael Stadi, CEO and founder of FOM Technologies, an IPO was the only right choice.

“For us, as a small Scandinavian tech company with a global customer base, being listed on Nasdaq became a mark of quality. It removed several obstacles for us and was one of the main purposes of going public.”

shares Michael Stadi

Another route is an acquisition strategy. In the case of Cookie Information, this involved Kirk Kapital, which had the patience and confidence in the project.

“The acquisition of Piwik Pro was made possible partly because we sold 40% in a secondary transaction to Kirk Kapital, and partly because we secured a loan from EIFO for the acquisition of Piwik PRO — a company that was more than twice our size,”

shares CEO and founder Karsten Rendemann.

This isn’t about one-size-fits-all advices. It’s about timing, strategy, and the bold or cautious moves that define a company’s journey. Which path would you take? Check out the Funding Guide for Founders over at Bootstrapping.dk to see how different founders navigated the journey.

The post Funding Guide: Real Stories from Startups That Chose Different Paths appeared first on Øresund Startups.

In the interview Sophie emphasizes the importance of early and direct engagement with potential customers and experts to validate startup ideas. She highlights the value of learning from founders who have faced similar challenges, particularly those who have had to shut down their ventures. This approach provides invaluable insights into potential pitfalls and industry nuances.

She also focuses on strategic financial planning: understanding whether a startup idea is suitable for venture capital (VC) funding or not. Sophie advises entrepreneurs to carefully analyze their business models to determine if they align with VC expectations or if bootstrapping might be a more viable path.

“One of the major ‘aha’ moments I had after Undo was when I went out and spoke with other startups that began around the same time as us (Undo was founded in 2017). In half of the cases, their investment ended up becoming a burden for the company because, in reality, it wasn’t a case suited for VC funding. Often, their business simply wasn’t geared to meet the multiples and return expectations that venture capital required.”

Sophie Bohr Grønbæk shares in the interview

She also stresses the importance of setting up vesting agreements that reflect the current startup landscape, where exits may take longer than the traditional four-year vesting period.

Read more about her insights at: bootstrapping.dk.

The post Sophie Bohr Grønbæk Shares Insights on Startup Journey and Financing appeared first on Øresund Startups.

With the end of the ZIRP era, it is now more than ever critical for founders to understand the implications of the financing terms they agree to – especially the opaque and complex ones.

The most opaque clause of them all? The antidilution clause. 

It’s the lovely mix of law and math. It’s the part where your lawyer might just say “it’s complicated”. Or where your investor will mutter something about “the term sheet template”.

What is antidilution protection?

A mechanism for compensating investors in case of a future down round, where shares are issued at a lower price than what the investor paid in the earlier round. Shares held by the investor are “re-priced” based on the terms of the downround.

Re-pricing can be based on a ratchet or a weighted average calculation, and can be done by either an additional issue of shares for free (common in Europe), or by adjusting the conversion rate between preferred and common shares (common in the US).

Anti-dilution rights are a standard feature in VC financing. There are arguments both for and against the inclusion of antidilution clauses (but let’s stick to the mechanics here). The clause can be combined with a limitation in time, pay-to-play requirements and/or waiver rights for the investor majority holding AD rights.

It should be assumed that the down round investors will not agree to be diluted by the AD clause, so share price calculation in the down round will include the antidilution shares.

Examples

Here are some examples of mechanics (for the antidilution clause calculations – see the link for some simple examples that you can play around with)

Assumptions:

• 100k founder shares + 10% ESOP (post-seed) = approx 114 750 shares. 
• Seed round of 2M raised at 7M pre-money = 32 786 new shares. 
• Downround of 1.1M raised at 4.5M pre-money
• ESOP dilution = 12,85%
• Seed round dilution = 22,22% (2M/9M post money)
• Founder ownership post seed = 67,78%

1. Downround w/o antidilution protection
   • round dilution = 19,64% (1,1M/5,6M post money)
   • Founder ownership post downround = 54,46%
2. Downround with broad based weighted average AD (share price in the seed round is repriced to the average “price” of all the company’s shares)
   • AD dilution = 2,48%
   • round dilution = 19,64%
   • Founder ownership post downround = 53,12%
3. Downround with narrow based weighted average AD (share price in the seed round is repriced to the average price of all the shares issued in the seed round and downround)
   • AD dilution = 8,56%
   • round dilution = 19,64%
   • Founder ownership post downround = 49,80%
4. Downround with full ratchet (share price in the seed round is repriced to share price in the downround)
   • AD dilution = 28,57%
   • round dilution = 19,64%
   • Founder ownership post downround = 36,96%

spreadsheet with calculations

https://docs.google.com/spreadsheets/d/1vwLwZo4Uw4rHfd8vrSQc7GwGNby-k8FnnpPNbEI18Yg/edit

The post VC Financing Terms: Antidilution appeared first on Øresund Startups.

TL;DR – keep your eyes on the upside!

Legal and financial DD is usually the one step during the investment process that founders find burdensome and borderline meaningless. So investors (and their advisors) should be crisp and clear on what information they ask for and why.

At the seed stage, investors invest based on the company’s future potential, not on its current assets or customer base. So DD should focus on risks regarding the former, not the latter.

Here are the essential questions that should be asked (and for the founders, why the investor is asking):

1. Is the cap table true and robust? Will the investor receive the intended ownership?
   • If the cap table is incorrect, the valuation is incorrect. VCs are looking for multiples on invested capital and normally follow strict fund models on ownership in portfolio companies.
     
2. Has the company signed license agreements, exclusivities etc that limits the potential to grow and/or enter new markets? Does the company own and protect its IP?
   • Limitations to the commercial strategy of the company, or reliance on IP licensed from third parties and/or with unclear ownership, can severely limit the possibilities for the company to grow and expand into new markets.
     
3. Are there liabilities or law suits that will materially affect runway?
   • If the company needs to raise new money sooner than expected this will have dilution effects on the cap table, and may not fit investors’ fund models.
     
4. Are the founders withholding information? Or are there double agendas (excessive salaries, fundraising fees, related companies involved)?
   • Alignment and the ability to build trust is critical to create a working relationship with investors and scale the company.
     
5. Is there fraud or money laundering involved?
   • Contrary to what was said above, this one is indeed downside focused. But also quite obvious, no one wants to invest in a non-existing company or be part of a mondey laundering scheme. The investment will be worthless and a potential net negative/legal liability for the investor.

Stay tuned for more insight and perspectives from Rickard in the future.

The post What’s the point of due diligence (DD) in seed stage companies? appeared first on Øresund Startups.

Let’s take a startup with the two founders holding 2,000,000 shares, raising €500,000 through a convertible note with a 20% discount (ignoring interest, which if applicable would just get added to the conversion amount).

A new investor enters with €1.5 million at a pre-money valuation of €10 million. The price per share (“PPS”) for the new investor would w/o the convertible be calculated as:

(Pre-money valuation/number of Outstanding shares) = 10,000,000/2,000,000 = €5

This would give:

• new investor (Investment/PPS) = 1,500,000/5 = 300,000 shares
• the noteholder (conversion amount/(PPS*(1-discount)) = 500,000/(5*((1-0.2)) = 125,000 shares

Meaning that the ownership would post-round be:

• founders 2,000,000 shares = 82,47%
• noteholder 125,000 shares = 5,15%
• new investor 300,000 shares =12,37%

Only this is NOT what you can expect to actually happen.

The new investor will almost certainly ask that their post investment ownership is equal to investment/(pre-money valuation + new investment), or in other words that existing convertibles are “included in the pre-money valuation” (and so does not dilute the new investor).

In our example, this would be €1,500,000/(€10,000,000 + €1,500,000) = 13,04%.

To effectuate this, the calculation for the new investor’s PPS would therefore instead be: Pre-money valuation/(number of Outstanding shares + conversion shares).

As you can see this is a circular calculation, where the PPS depends on the number of conversion shares, and the number of conversion shares depends on the PPS. And a lower PPS is also beneficial to the converting noteholder.

In our example we would get the following result:

• PPS for the new investor: €4,69
• New investor shares (Investment/PPS) = 1,500,000/4,69 = 320,000
• Noteholder shares (conversion amount/(PPS*(1-discount)) = 500,000/(4,69*((1-0.2)) = 133,333

Meaning that the ownership would post-round be:

• founders 2,000,000 shares = 81,52%
• noteholder 125,000 shares = 5,43%
• new investor 300,000 shares =13,04%

Stay tuned for more insight and perspectives from Rickard in the future.

The post How do discounts in convertible securities work? And how do they affect the next round? appeared first on Øresund Startups.

Gentle reminder to consider the terms of your stock options. And for European startups to understand rather than blindly follow US market standards.  

Another really great data visualization by Peter Walker and the Carta team on the dubious value of stock options in private companies and the market standard in the US. 

For me this highlights the importance of understanding the origins behind market standards (many which originate from specific tax and/or regulation) and their implications, especially cross-border. 

In short, the standard 90 days post termination exercise period (“PTEP”) for US stock options means that a LOT of (vested) stock options will be unexercised as leaving employees will not be able to exercise in the short time window. Many leaving employees will be under financial stress, and deciding whether to exercise and hope for a future liquidity event can be a very difficult decision. Unexercised options will be lost to the ex-employee and returned to the option pool. While this has positive dilution effects for founders and investors, it is obviously bad for employees.

However – and this is important – the 90 days exercise window exist as a direct effect of US tax. So there is very little reason why this market standard should be applied outside of the US where the same tax rules doesn’t apply (and in fact there seems to be ways for US companies to implement an extended PTEP).

That’s why it’s surprising to come across European startups using 90-day exercise periods, believing that it’s “market standard” and what their investors expect. 

If the US tax issues aren’t applicable, the company is simply choosing to issue low-value stock options — sadly, in many cases, because neither the company nor the employee understands that there are other options (pun intended) available.

Stay tuned for more insight and perspectives from Rickard in the future.

The post Terms of stock options appeared first on Øresund Startups.

Alexey has more than 10 years of experience working with startups in Europe and North America. Currently he is employed as CTO at Clean.io, as well as Managing Director at Sigma Software Inc. in the USA.

This article will be of interest not only to those who are only launching their projects, but also to those who are working with startups.

Read Alexey’s tips below:

The most common pitfalls for startups

Quite often, when we start working with a new startup, I ask a question: What is, in your opinion, the most important thing for your project in the first weeks and months?

I get very different answers:

• to attract clients
• to come up with cool new features
• to do market research
• to build new relationships

In fact, your most critical task at the very beginning is to test your business idea for viability and check whether it’s working or not.

Here is an example.

Suppose, you’ve decided to start a window-selling company. What are you going to do first? Probably, you’ll think about how your windows will be different from the competitors, decide on the materials and colors, order handles that fit your fingers – that is, you will spend a whole year and all your resources on it. All this just to discover that nobody is going to buy your windows because the materials you chose get cracked in the wind anywhere higher than the tenth floor.

What you need is a proof of concept. Using a minimal set of features and spending a minimal share of your resources on it. You have to continually crash-test your project to detect problems, which can fail your product at the very beginning.

Going back to the windows – instead of wasting time and money on choosing colors, handles and other stuff, you should test how one material you have chosen behaves in various conditions. If it gets cracks, you need another one. You test another one, and it proves too costly? Test more, and keep testing until you find the ideal option, which will allow you to work further.

Don’t overload your product

Your business model has to work in reality, not in your imagination. To understand this, you shouldn’t overload your product with extra features. Opt for the minimum. But when you choose, do it wisely. One common mistake of startups is choosing wrong or unnecessary features for the first stage. Your functionality, however minimal, has to provide the full cycle already at the initial stage. If you have made windows, but failed to consider glass panes, you will not test whether your business model is viable. It will not work just because it lacks essential parts. This idea is best represented in the Minimum Viable Product diagram. You have to consider all layers rather than focus on just one of them.

Search for clients and monetization model from the start

Another common misconception is that “Signing contracts is reasonable only when the product is fully ready to use”. It’s wrong. You should look for clients and sell them your product right from the start. Sure, in the beginning its price will be far lower than what you were planning – just because your solution is not quite ready yet. However, it will give you a chance to test your idea in real-life conditions, get some customer feedback and, finally, get some money to invest in refining your product.

By the way, it’s best not to linger with monetization either. You can often hear, “We’ll launch the application for free, win some target audience, and then start charging for it.” It’s a mistake. Trust me, the users who have received your product for free will not want to pay for it later on. Some other users will have installed your application exactly because it was free. It’s important to monetize from the very beginning – maybe, at a lower price.

One more thing – don’t overdo with improvement and optimization – this advice is both for those who own a startup and those who work with one. The optimization will improve your product, if you take a balanced approach. But you don’t often see this.

Determine key success factors

No one monitors or analyzes whether your product will really do good, or it will about those ‘good intentions’. Will the refactoring suggested by a developer really be a benefit, or only a setback? 

How can you control this? You have to do research to determine what factors will be important for the business, which improvements will really enable a faster development and which will not, to draw some metrics and define the KPIs. The latter have to bring value to the product and to the business. Improvements like “We used to have 100 lines of code, and now only 90” will not do. Your actions have to cut costs, reduce time, or help to sell the product – only in this case they are worth spending time, money and energy.

About team motivation

If your team is motivated and feels responsible for the product they are developing, it’s evident that each of them will want to improve something, whether in the processes, approaches, the code, etc.

Team motivation doesn’t depend on the project but rather on how the work process is built. Quite often, you get to observe situations where the team members don’t know the concept and don’t understand the specifics of the future product, who it is for and what problems it will help to solve. To fill in this gap, all team members make their own assumptions, which can be very far from the truth. Lack of communication between the business and the team leads exactly to this problem. Sometimes you see how developers are intentionally ‘shut out’ from the customer, where they can only communicate with the project manager. This style of work will inevitably lead to some information loss. The team will not feel involved or committed to the project, they will not understand why certain decisions are made, they will not take pride in the work done – as a result, the team will be demotivated.  

Whether you are a startup founder, a product owner, a project manager, or a developer – you are to be interested in establishing continuous effective communication with one another.

***

Thank you, Alexey, for sharing your tips!

The post Common errors for startups and how to avoid them – by Alexey Stoletny (USA) appeared first on Øresund Startups.

The main aim of the platform is to give startups an easy access to document templates with the help of lawyers from different countries. As a result, startups should spend less time on paperwork and having fairer negotiations with employees, shareholders and investors. Templates include Founders agreements, Warrant guide, Term sheet, Stakeholders agreement, Metrics sheets, Employment agreements and Non-disclosure agreements.

The service is free and available in Sweden, Denmark, Norway and Iceland.

If you are planning to open a startup or already have one – make sure to check out StartupTools.

The post Introducing new platform, StartupTools appeared first on Øresund Startups.

Öresundstartups News spoke with Vanja about women and tech, her own professional journey up to the current challenges of running the startup Qoitech, whose solution Otii helps IoT developers optimize their products for longer battery life and lower environmental impact.

Exploring the world of tech

Vanja’s professional growth took off in 2004, after receiving an education in electrical engineering and technology management at Lund University, when she joined European Space Agency (ESA) in the Netherlands as a trainee within the area of antenna technology. She always believed the space industry would be her “place to be” – but after a year of gaining experiences and knowledge, she realized she wanted to work in a more fast-paced environment to grow further personally and as an engineer.

“You learn your strengths, and in what type of environment they are needed and can be best utilized”, she says. Despite having a rewarding job, she soon realized that she missed digging deeper into technology. She then went on to get an industrial PhD, to fulfill her personal aspirations in combining gained skills in academia and applying them in tech industry and vice versa.

Moving back to Sweden, Vanja got a chance to continue her career at Sony Ericsson in Lund, working with mobile communications.

“It’s fascinating to see research being applied in real products for people to use. For many, research is something very theoretical and distant from everyday tech, when in fact it is an invaluable foundation”

When studying for her PhD, Vanja also gained hands-on experience that she now benefits from as a start-up entrepreneur: profound market research and how to pitch your ideas: “I’ve learned from the best. Academia is all about pitching your ideas and raising funds for your next endeavors.” If you want to build outstanding products and services for your customers, you need a thorough understanding of who they are, what they need, and where their pain points and priorities lie. You may visit the Qualtrics homepage to learn more.

Meaningful tech

“I loved looking into the future, and working with IoT (Internet of Things) and 5G, long before they became buzzwords. Predicting potential challenges and solutions to overcome them is quite exciting and a great responsibility. Being part of a team that does that really well, really keeps you on your toes. Our vision for that future lead to the creation of Qoitech.”

In her work with researching 5G at Sony, Vanja was exploring how new, cellular IoT connectivity impacts the battery life of connected devices. She needed a simple yet comprehensive tool to conduct field testing on the topic, but it didn’t exist yet.

This was the moment when Vanja realized there was a gap in the market. She teamed up with company experts on power saving in order to compile, redesign and execute some already existing ideas. This was how Otii, the developer tool for energy optimization now offered by Qoitech, was born. Vanja and her team have a vision to make Qoitech the go-to-place for IoT developers to find tools, services and knowledge on the topic of low energy consumption:

“With the predictions of billions of battery driven devices around the globe in the coming years, we all should focus on product usability, usefulness and energy impact, as well as environmental consequences in the long run. With Otii, we want to empower developers and their companies to create sustainable solutions in an easy and affordable way”

Qoitech’s team is driven by bringing products and services to life in order to improve businesses, people’s approach and environment.

On entrepreneurship

True entrepreneurship is an involved one. It is based on caring about people and the surroundings. As an entrepreneur and a leader, Vanja focuses on providing her team members with a healthy environment of transparency and trust that they need in order to work to the best of their individual abilities, which are then unified as a team towards a common goal. For her it is important to make them feel that they are a part of something bigger, fulfilling the role of contributors and owners, at the same time, with room to learn and progress. Coming from the corporate world, she first needed to adjust to the different pace and high level of uncertainties that you have to deal with when running a startup.

However, despite the high pace and obligations to all stakeholders, Vanja emphasizes how important it is to take a step back and reflect:

“There are always lessons to be learned and you need to pause and revisit the big picture, its best if you can do it on a regular basis”

When asked for tips for aspiring entrepreneurs in tech, Vanja’s advice is to learn to distinguish what is relevant for you personally and your startup – especially in tech, there are many hypes, trends and advice from all sides that you don’t necessarily need to follow. Rather, ask the question for the specific business, listen and learn, but also accept failures along the way. When mistakes are made move on quickly and learn from them, as long as it teaches you and your team something valuable, the mistake was worth it.

Women in tech

Vanja, as a female founder, is still significantly underrepresented in tech, even though the numbers are slowly growing. She reflects on it as an outdated expectations from society on women’s and men’s roles and what girls and boys are expected to show an interest in.

Vanja believes this issue needs to be addressed early, for example in schools, by leading and motivating by example. A mentor herself, through organizations such as Mentor.se and Transfer, more often than not Vanja meets students that envision tech as something too complex, brainy and boring. She wants to show them this perception could not be further from the truth. It’s important to showcase what tech really is; what you can make out of it, and where your imagination and perseverance can take you. The key is to spark the curiosity and inspire children.

One interesting observation Vanja has made is that women in tech are in general more successful than men. The explanation would be that once women enter the field of tech, they tackle it with higher interest, commitment and qualifications.

“I hope we can encourage more young girls and women to get fascinated by tech and to want to take lead. But also to encourage young boys and men to be comfortable with professional choices, roles and titles that traditionally aren’t considered respectable or ‘cool’ for them to pursue”

The times are changing, ever so slowly, and Vanja is glad that the conversation is happening, hoping that we can break the glass ceiling in start-ups, in tech and in general, for women and all who can contribute to a fruitful diversity.

The post From researcher to tech entrepreneur and start-up founder – exploring tech from a female perspective appeared first on Øresund Startups.

Trustpilot was founded in Copenhagen, Denmark and is a platform where businesses and companies get reviews from their customers. Currently, Trustpilot has more than 30 million consumer reviews of 175,000 businesses. Every day, more than 10,000 consumers sign up on Trustpilot.com and every 5 seconds a new review is posted on the community.

“Most people expect there is this bathtub moment, you sit there and you get one magic idea, and that turns into the company,” Mühlmann told Business Insider. “I want to emphasise it’s very rarely like that.”

Read the full article and Peter Mühlmann´s 6 tips to young entrepreneurs at Nordic Business Insider.

Picture: Trustpilot. 

The post CEO of Trustpilot gives 6 tips to young entrepreneurs appeared first on Øresund Startups.