The sixth year of Danish Tech Challenge has just come to an end, and the CEOs of the Danish Industry Foundation and DTU Science Park look back on the results—and towards new challenges.
Coloplast, Grundfos, Danfoss. Denmark is home to a number of large production companies that drive technology development and provide Danish production jobs. But even more are needed—including in the SME category. “Many new companies start up in Denmark every year, which is great. But too few of them become growth companies that generate exports. We need to change this, and this is where Danish Tech Challenge can help,” says Thomas Hofman-Bang, CEO of the Danish Industry Foundation.
It is therefore essential to cultivate the many hardware startups in an accelerator like Danish Tech Challenge (DTC), explains Steen Donner, CEO of DTU Science Park. “Here, companies can get faster and easier off the starting block when we school them in the business aspects of being a startup. Hopefully, we can then reduce a process that would usually last ten years, to only eight years,” he says. Getting ‘your ducks in a row’, as Steen Donner phrases it, increases the probability of making investors more comfortable about dealing with the company at an early stage.
“This way, we help bridge the ‘Valley of Death’ by accelerating them past the point of stopping and dying,” adds Thomas Hofman-Bang.
Moving startups from A to B
When Thomas Hofman-Bang looks at the figures in the recently published status report on the first five years of the DTC program, his reading is that the Danish Industry Foundation and DTU Science Park have launched a healthy initiative and have found the right format. “The program has succeeded in creating a brand that makes it attractive for startup companies. At the same time, the program contents appear to be the right thing to help companies go from A to B,” he says. During the four-month program, companies are introduced to business understanding, capital raising, product development, law, approval needs, marketing, and sales.
The report shows that the companies which have participated since 2014 have seen a job creation of 4-5 employees after five years, and that the companies have raised an average of DKK 6.5 million each. Against this background, Thomas Hofman-Bang believes that the Danish Tech Challenge has proven to be a shortcut to commercializing some of all the knowledge generated at universities.
“Danish universities are home to world-class technology research, which ensures a constant feed line, so Danish Tech Challenge will continue to have a raison d’être,” says the CEO, stressing that participants not only come from universities, but also from e.g. well-established companies.
In the years to come, the sustainability agenda will have particular focus for tech companies, the Foundation CEO says. Because the solutions to many global challenges are found in technology, much of which is related to hardware. “We have a number of strengths in Denmark and knowledge in universities that helps support this agenda. Here, too, Danish Tech Challenge can help ensure that company solutions are launched into the world to create positive change—while creating opportunities for increased Danish exports,” says Thomas Hofman-Bang. Danish Tech Challenge is under continuous development to strengthen program activities that the participants find useful.
One of the current focus areas is creating an alumni community where new participants can learn from previous DTC participants. In this way, participating companies are not abandoned completely when the program is over, but are embraced by an alumni network that can help them build momentum. “It’s hard to extend the DTC process. We already wear out the participants over their four months of participation because the whole thing is so intensive. Instead, we want to offer more focused support according to their individual needs,” explains Steen Donner, who acknowledges that hardware startups have a very long runway and that actual scaling only happens at a later stage—after the conclusion of the program.
“Everyone wants to compare themselves to Amazon or others who are doing an amazing job in terms of scaling, but for the vast majority, the reality is that it takes much longer,” he says. “Therefore, it’s important for us to look at whether previous participants still exist, whether they experience momentum, and whether they are able to raise money. Because then others will also believe in their product.”
The early stage of the participating startups makes it next to impossible to say whether a new Amazon or Grundfos has been hatched through Danish Tech Challenge, or how many of the companies end up succeeding, stresses Thomas Hofman-Bang.
“But you could say that well begun is half done. We’ve given them a boost that makes their survival skills significantly greater than if we hadn’t,” he says.