China is no longer a Dream for Norwegian startups thanks to nHack, a startup accelerator.
Norwegian startups can now find success in the world’s largest economy in terms of purchasing Apower.
It was once improbable, but thanks to nHack, a startup accelerator and investment firm, small ideas from Nordic companies are now growing in China.
There is no shortage of startups in Norway. As Mr Pål Thorvik Næss, Director of Entrepreneurs and Startups at Innovation Norway, pointed out during the Norway-Asia Business Summit 2018, there were more startups created in Norway than babies born last year. And it’s not just Norway. A rapidly increasing number of startups are being established in all Nordic countries.
The key for Nordic startups is getting out into the world. According to Mr Jon Eivind Stø, Co-founder and Partner at nHack, the sooner they look overseas, the better chance they have of thriving.
“There is a great interest for Norwegian and Nordic tech, design and solutions in China and Asia. By coming to this region at an early stage, we believe that the startups will be better equipped to take a larger share of the market,” Mr Stø stated. “It’s about getting to know the market, attracting the best talents and establishing the right partnerships in Asia.”
nHack only invests in Nordic companies with the aim of bringing them to China and Asia. The investment firm’s main focus is on assisting Nordic companies in localising their business, production or development as well as finding paying customers and raising capital in the region.
“We operate accelerators in China and will soon expand to other countries in Asia. Our investment experts and mentor network actively assist the companies selected,” Mr Stø explained. “We are sector neutral, but have a special focus on ocean industries, software as a service, edtech, health & medtech, hardware and gaming.”
In some of these industries, Nordic companies already have an advantage on the competition. For others, the network other firms have already built in Asia can help provide the groundwork for their potential success.
“Nordic companies have an edge in some of these traditional industries while being Norwegian in other sectors will make it easier to do business,” Mr Stø said.
For many Nordic startups, there is some trepidation when entering a market as large as China. Despite these concerns, Mr Stø is bullish on their chances in Asia.
“It is absolutely possible for Norwegian startups to succeed in China. The country has the largest economy in the world if you adjust for purchasing power and the market here is huge,” Mr Stø reported. “We brought our first cohort of Norwegian companies to China last fall and most of the companies took huge steps very quickly. We have companies that have achieved substantial sales in the Chinese market, we have companies that now produce in China and we have companies that have raised capital in China.”
Superficial differences On the surface, there are numerous differences between Norway and China. Language and culture are obstacles that must be overcome, but these can obscure similarities that many companies don’t realise exist.
“The startup scene is booming in China. In many ways, it is similar to Norway. It is now popular to be an entrepreneur and more and more people are starting their own companies in China,” Mr Stø pointed out. “We also see that the best talents now flock to tech and startups. Whilst state-owned enterprises used to be the preferred place to work for Chinese talents, they are now moving into tech and entrepreneurship.”
Once Nordic companies set up in China and other parts of Asia, they are often shocked to find that it isn’t as different from home as they imagined. According to Mr Stø, all most firms need to hit the ground running is a little support and a few connections.
“What I often hear from our companies is that they are surprised how many similarities there are between the Nordics and China. With some good guidance you can thrive in China. However, meeting the right partners is key,” Mr Stø said. “This is where nHack can provide the most important help. With operations in different parts of the country and deep experience and know-how within different industries, we are able to both assist our companies in setting up production with qualified partners and accessing customers, clients and capital within a wide range of industries.”
As great as this sounds, not everything is sunshine and rainbows. China and several Asian countries can be difficult to navigate for foreign companies. As Uber, Groupon and many more overseas firms have found out, it is impossible to simply show up in China and think success will follow.
“There are many challenges in China whether you are a startup or an established business. We like to say that ‘everything can be difficult’ but ‘anything is possible’,” Mr Stø noted. “There are, of course, language and culture barriers and there is the challenge of navigating the share size of the country which is more like a continent with different cultures and business traditions.”
On the fast track Speed has been one of nHack’s calling cards. Despite formally launching in 2017, it has already hosted its first group of startups and now has offices in Beijing, Shenzhen and Shanghai. Plans are in the works to open another office in Alibaba’s hometown of Hangzhou later this year with other cities in Asia also on the firm’s radar.
While Mr Stø is quick to admit that nHack is a fairly young company, this hasn’t prevented it from helping several Norwegian startups find success in China.
“We have seen some of our companies entering into sales and distribution agreements with major players at Chinese companies. We have also seen companies entering into partnerships with local business and firms within our cohorts co-developing products with industry leaders in Asia,” Mr Stø detailed. “In a very short time, we have seen some of our companies develop production ready prototypes and roll out production with specialised manufacturers in China. We’ve had businesses raise capital in China on substantially higher valuations than what they had previously done.”
All of these success stories are connected by speed. Everything was done quickly. This is something nHack stresses to the startups it accepts. Ultimately, there is no time to waste.
“We believe speed is critical for a startup to succeed. We are not great believers in spending month after month in an office perfecting a business plan,” Mr Stø proclaimed. “We believe that the quicker you get your product to market, the quicker you will learn what the market wants.”
This isn’t different from many other startup accelerators. nHack urges the companies it accepts to get going quickly. With a deep roster of mentors and support staff available to help, it isn’t as daunting as it sounds.
“Since speed is the focus once a company is accepted to nHack, we expect them to have meetings with potential customers, clients and partners with a strong focus on getting the first paying customers in the market,” Mr Stø said. “We naturally assist them in this process and our network of mentors in various industries plays a key part.”
Norwegian startups sitting at home shouldn’t be slow in making a decision on coming to China, according to Mr Stø. With nHack’s assistance, they can tap into a market that they may have thought was unreachable in the past.
“Beijing is the unicorn capital of Asia. Shenzhen is the ‘Silicon Valley’ of hardware. In Hangzhou, we’re setting up a landing platform for Nordic health and medtech companies. There are a lot of exciting opportunities to enter the Chinese market if you act quickly,” Mr Jon Eivind Stø urged.
Above left: The China Knights event is a free tech and VC festival organised by nHack. Above: A view across Shanghai’s Huangpu River. Shanghai will host Norway-Asia Business Summit from 24 to 26 October 2019.