Europe's Migration Policy Faulted by Nordic Startup Backers

(Bloomberg) -- The best way for Europe to stop its biggest tech startups from leaving for the U.S. is to ease restrictions on importing skilled foreign workers.

Europe's Migration Policy Faulted by Nordic Startup Backers

That’s the opinion of Tommy Andersen, the co-founder of ByFounders LLC, an early-stage venture fund for the Nordic and Baltic regions backed by entrepreneurs who helped create companies like Skype and Zendesk.

“A skilled workforce is the fuel of technology startups,” Andersen said in a telephone interview in Copenhagen. “There’s an unhelpful discussion around migrants and refugees versus talented foreign workers.”

His comments come against the backdrop of a heated political discussion on migration levels taking place in the run-up to the European Union’s May elections. Countries like Denmark, in particular, have been tightening the screws on foreigners in the wake of the 2015 migration crisis, prompting local business to complain of labor shortages.

ByFounders has just launched a 100 million-euro ($112 million) fund designed to help tech startups expand globally while staying at home.

Big Backers

Founded by Andersen and Eric Lagier, it has raised cash from the Danish Growth Fund, Isomer Capital LLP, Draper Esprit Plc, Digital Garage Inc., as well as Danske Bank A/S and a number of “prominent family businesses from the Nordics.”

While “there’s a general understanding in the ecosystem that the Nordic and Baltic regions are very interesting from a technology point of view,” Andersen said, “we see a lot of strong companies that leave the region too early.”

ByFounders has so far invested in 11 companies, including potential unicorns like Corti SA -- a Danish software house that uses artificial intelligence to quickly detected cardiac arrests -- and Cobalt -- a cyber security firm that hacks its clients on demand to expose their vulnerabilities.

It plans to make a further 30 investments over the next three years, selecting companies according to what it calls its “7 Ts” (which includes criteria like timing, traction and tech).

Although northern Europe has spurred plenty of now world-famous tech companies, thanks in no small part to a highly educated population, most of them have been forced to relocate to places like Silicon Valley in order to achieve the unicorn status that’s granted to privately held startups with valuations of at least $1 billion.

The relatively small size of the Nordics (the population of its biggest country, Sweden, is just above 10 million) and a lack of funding are mostly to blame, but Andersen says that governments could also play a role by attracting, rather than repelling, talent from outside the European Union.

“One of the biggest problems at the moment is recruiting people locally,” he said.

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