Steen Donner is the Managing Director for Copenhagen Capacity, the official investment agency of Greater Copenhagen.  As such, he’s got a fantastic vantage point over what is attracting foreign investment to Copenhagen.  Copenhagen Capacity, contrary to what you might expect, also helps Danish startups.  Skype interview held in Oct. 2008.

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Copenhagen Capacity’s mission; supporting startups; the three kind of investments companies make in Copenhagen

Alex Farcet (Q):  Why did you take the job as leader of Copenhagen Capacity?

Steen Donner (A):  I have been working with Foreign Direct Investment for many years, but always from a Danish companies investing abroad point of view. When offered this job, I thought it was a good opportunity to work with the same things from the “other side”.

(Q):  Can you describe Copenhagen Capacity’s mission in a few words?

(A):  Our mission is to promote the capital region internationally and advise and support foreign investors who are contemplating investing in the region.
 

(Q):  Can you describe your structure?  And do you have a steering committee or a board and who sits on it?

(A):  We are 28 employees and have offices in central Copenhagen. We have agents/consultants in a number of countries – England, Germany, US Netherlands, Japan and China and India. We focus on these countries as they account for more than 75% of all investments into Copenhagen.
 
Copenhagen Capacity is a fund and as such a self-governing institution. Our board of directors consists of 13 people – 6 politicians and 7 business people from the region.  You can see the members of our Board on the website.

(Q):  Do you work with only a certain size of investor or would you support a small startup as well?

(A):  We have no limits to size at all. For a foreign company to invest abroad it does however often have a certain size. Most of the investments we attract to Copenhagen are initially relatively small – in average the start with approx. 10 people. Fortunately most of them grow to become larger after a number of years.

(Q):  But in your experience, do individual or small team of foreign entrepreneurs turn to Copenhagen Capacity for help?  And if so, what kind of help?

(A):  Overall we work with three types of investments:
 
1. ‘Market-driven’
2. ‘Competence-driven’
3. ‘Expansion’
 
The ‘Market-driven’ are companies motivated by accessing the Scandinavian market. The ‘Competence-driven’ are those where the foreign investor wants to utilise some of the competences that we have in the region. These investments are primarily concentrated around life sciences, ICT and clean tech. In relation to these business areas, we do support small startups – also Danish. If we are to attract foreign investors in relation to competence driven investments we need strong clusters. Copenhagen Capacity is therefore also, to a limited extent, engaged in strengthening the clusters.
 
Finally, ‘Expansion’ represents all the foreign companies that are already here – we call the teams working in this area Growth. What we do is try to help companies that have invested in Copenhagen to grow their business here.

(Q):  Interesting!  I receive your newsletter and frequently look at your site – so you have, for me at least, an information value.  Concretely, what other services do your offer?

(A):  We help foreign companies from initial contact, all the way to the actual investment and registration of a local company and even after that. We provide information, help them with benchmarking and feasibility studies, introduce them to local network of lawyers, accountants, recruitment consultants, business partners, etc. Furthermore, we take them around to help identify the right location within the region for their local company. Most of our services are quite practical and are intented to make the start-up in Copenhagen as easy as possible. When you enter a new market, there are always a lot of practical things which you are quite acustomed to.

(Q):  Do companies compensate you for all these services?

(A):  All services are provided free of charge and under full confidentiality.

(Q):  How are you funded?

(A):  We get our funds from various sources, but the majority of our funds are provided by the Capital Region and the Region of Sealand. Together these two regions provide almost 90% of our budget today. The Capital Region being by far the largest funder.

[pagebreak] (Q):  One challenge with approaching a new market – especially for a startup with limited resources – is gathering quality market research.  Do you support in this area as well?

(A):  We certainly do. We provide foreign investors with what we call mini-market-reports. These are small market reports that are meant primarily as a teaser. Some companies find these sufficient. Others use them to determine whether it will make sense to have a local consultant prepare a thorough market study.

(Q):  Are the partners you mentioned (lawyers, accountants) pre-selected? And do they compensate you for being in your network?

(A):  No – we are not biased in that way. We do have some “partners” that we know are good, but in principle we can work with everyone.

(Q):  Which cities do you see yourself competing with?

(A):  Depends on the business, but primarily Stockholm and Amsterdam. But also London-Cambridge and Basel when it is life sciences and even Hyderabad in India when it is clean tech.

(Q):  Given your position, you must have a good view of which areas are ‘hot’ right now; can you give me some examples?

(A):  The hottest area at the moment is clean tech. The venture capital available for clean tech investments in Silicon Valley has now exceed what is ever was for IT.  Copenhagen and Denmark have the potential of becoming one of the strongest clean tech clusters in Europe. We are working hard together with many other local and international organisations to make this happen.

(Q):  Are you involved with next year’s conference?

(A):  The clean tech forum – yes we are partners in that and we have been instrumental in getting it to Copenhagen

(Q):  You mentioned confidentiality.  Let’s say a young Danish startup is looking for funding from a specific type of foreign company, would you tap into your network and put them in touch with the right companies?

(A):  We often do but it depends in the company. We do try to attract foreign VC´s to Denmark, but in other cases we work with local startups that will need to be taken over by foreign companies in order to grow further.

(Q):  Do you help foreigners with softer aspects such as culture and business practices?  How would you describe doing business with a Dane to an executive from China for example?

(A):  There are a number of Danish consultants providing courses and advice on the cultural aspects of doing business. We very often refer to these. I would say that doing business with a Dane for a Chinese would seem very straight to the point, very open, often based on a large degree of trust but not so much on establishing personal relationships.

(Q):  In your mind, what are the key factors for CPH to attract more FDI?   And do you take on a lobbying role with the region or capital to influence some of these factors?

(A):  The competition is very fierce. Many cities and regions in Europe are very active in promoting themselves towards foreign investors. Denmark has one of the best business environments in the world. The Economist Intelligence Unit has rated Denmark Best Business Environment in the World for four years in a row. We have to continue improving on the business environment and its flexibility and quality. Furthermore we will have to improve on our ability to attract talent. Only by having the right talent and enough of it can you compete in the knowledge industries. In this relation creating strong clusters with critical mass becomes very important.

(Q):  No lobbying?  And the reverse, what are the least attractive factors?

(A):  We do lobby to get the best business conditions, but quite frankly – Denmark is a very good place to do business as I said.

(Q):  How do you measure your success and what has been the trend in the last couple of years?  Is Copenhagen winning?

(A):  Our success is measured by the number of projects/investments we attract to Copenhagen and the number of jobs created. The purpose of Copenhagen Capacity is to create jobs and growth through attracting foreign investments. Our main measure is therefore these figures. Over the past four years we have attracted 123 foreign investments to the region with a combined total investment of 2,2 billion Danish Kroner.

(Q):  What / who would be the right entry point into Copenhagen Capacity for a young DK based startup?

(A):  The right entry is our website. There you can see whom to contact depending on which business you are in.

(Q):  Do you have any events, networking for example?  How does one get to meet you or your staff?

(A):  We participate in a large number of events in Copenhagen, but the majority of the events we plan and execute ourselves are abroad. That is where our primary customers are.