Why Denmark Is An Entrepreneur’s Goldmine
Denmark’s Entrepreneurial Environment
Taylor Ryan, 06 March 2019
For the seventh time in succession, Denmark has been on the top five spots for Europe’s best countries to start a business, surpassing the United States, China and other Nordic countries like Norway, Sweden, and Finland.
Global Entrepreneurship Index (GEI)
Denmark has made headlines for being one of the most popular places for conducting business. It has taken the first place in Europe, soaring high in factors such as human capital, ease of doing business, product innovation, and competition. Denmark is now Europe’s leading country for entrepreneurs and it ranks number five when compared worldwide, only a few spots behind United States, Canada, and Australia.
The purpose of the GEI is to measure the scale and the quality of the entrepreneurial process in different countries; about 137. This index, however, does not just focus on high growth entrepreneurship. It also focuses on the different characteristics of entrepreneurship which help to bring about innovation, productivity, and market expansion. It takes into account whether or not the conditions in the country are growth-oriented and have an international outlook.
In the Global Entrepreneurship Index (GEI) of 2017, Denmark is ranked number 2 in the sub-index of ‘Entrepreneurial Abilities’. It ranks first when it came to ease of business, having access to technology, having a competitive landscape and access to a highly educated and professional workforce.
Denmark is quickly becoming one of the major startup players in Europe with a growing and active ecosystem. There is a high increase in professional companies with global outreach and risk capital which has made it one of the fastest growing economies in the Nordic region. Some of the industries which are booming include ICT/tech, cleantech, and life sciences.
In fact, Denmark is where you will find the largest number of scalable tech companies in Northern Europe. You will also find opportunities for co-working spaces, incubators, accelerators and many startup companies which have the sole purpose of developing the ecosystem.
Most of the time, when people think about doing business in Denmark, the first thing that comes to mind is the high wages and taxation. Even with this negative image, the entrepreneurial spirit is high in the country. Not only has the Global Entrepreneurship Index rating given the country a much-needed boost, but in 2018 the country also saw record-breaking employment levels.
Are high taxes and high wages necessarily a bad thing?
Business owners might feel reluctant to start their business in Denmark because of the high taxation. Yet despite the high wages and taxes which are imposed by the government, it is considered to be one of the top countries for having your own startup. In order to achieve economic growth and prosperity, the Danish government, communities and the investors have all worked together in a strong collaboration which has boosted entrepreneurship in the country.
The entrepreneurs have realized that there are high wages, but productivity is the key to being profitable. And when it comes to productivity, Denmark ranks fourth in the world, and second for the “fewest hours worked”. In fact, there are various Danish companies that are even trying out 30 hour work weeks in order to further boost employee productivity.
So in order to make the employees productive, Danish entrepreneurs achieve this through resource management and task prioritization. For example, a team may have help from interns and student helpers. This way, they are able to welcome the latest business knowledge in the academic world and the flexibility that they provide with resource management.
The students are provided with valuable work experience, and if they are EU students, they qualify for the state educational grant and loan plan which is often above and beyond what they will be paid in an office. It creates motivation for the community and helps inject the relevant talent into the work environment easily.
How to manage the high taxes?
The taxes are quite high in Denmark. Even so, locals do not find them a burden, as they feel it is justified by the services which are provided by the government. The government pays for healthcare, meaning that the employees do not have to worry about contributing anything extra from their salaries towards a healthcare plan.
The tax revenues also help to support and pay for the local students’ higher education which is free and in turn, provides an educated workforce to businesses. In fact, Denmark is known to have one of the most highly educated workforces in the world – thanks to the free higher education and the modest student SU that students receive, amounting to around €800 in 2018!
How the government is helping
The government plays a key role in helping improve the conditions of the country and create economic growth. Apart from providing higher educational opportunities for the students and welfare to the people, it is also reducing bureaucratic barriers. New entrepreneurs can now establish their own companies online quite easily and receive support from the government.
The tax authorities help and guide such startups in order to ensure everything is up and running smoothly. To give an example of the government support, the Danish government has set up an online forum where entrepreneurs can report inefficient processes or regulations which they find burdensome. The government is then required to follow up on these complaints and clarify their stance about their possible neglect.
Is Denmark good for entrepreneurial expats?
Not only is Denmark setting a great example for the locals who take up the immense challenge of starting a business, but it is also the ideal place for expats to being their entrepreneurial venture. The government has made it easy to run a business by having a basic startup process with simple procedures to help start a new business with decreased cost.
The government also provides a range of schemes and courses aimed at helping individuals to manage their business. They are run by centralized organizations as well as individual communes which assist the foreigners with relevant information and provide them with guidelines in order to set up a new business. There are many online portals for business startups, providing a range of answers to frequently asked questions regarding how to run a business in Denmark, the visa requirements and other relevant information.
There are already numerous businesses which are set up by foreigners, especially in the education sector and physiotherapy.
There is a bright future ahead for those doing business in Denmark. It is no doubt a ‘goldmine’ for entrepreneurs. With relaxed working hours and high labor productivity, people are motivated to work in this country. There has been an increase in the number of new businesses being set up, both by the locals as well as by the foreigners. The government is encouraging and making it easy to start a business venture. With high economic growth, it is also creating employment, which in turn is resulting in higher demand and better purchasing power amongst the people.
Things can, however, improve further if the government relaxes tax schemes which make it friendlier for business, especially for those who have personal investments. The government should work to relax the immigration laws and offer work permits to have easy access to foreign talent. It has taken almost a decade for this positive change in Denmark which has transformed the country into a hub for business. With the right support from stakeholders, it will surely continue to thrive.
Guest Blogger Taylor Ryan
I’ve co-founded 5 startups. Currently the CMO of a venture backed Ai company Valuer.ai.
Published a few marketing e-books. Consulted on SEO/SEM for 3+ years in the Washington, DC area. Grew up in Washington, DC but have been living in Copenhagen, Denmark for the past 3 years. Mentor, startup junkie, technical marketer, and growth hacker.