Denmark first, then the world

Danish online accounting vendor e-conomic posted 60 percent growth last year with revenues of $5.6 million, making it one of Europe's fast-growing band of indigenous SaaS stars.
Written by Phil Wainewright, Contributor

As confirmation that Europe has its own indigenous SaaS stars, allow me to introduce e-conomic, a Danish online accounting vendor (UK site here) that's been posting 60% annual growth rates for the past two years and is projecting up to 40% growth for the current year. With 2008 revenues of $5.6 million (32 million Danish kroner), the company is typical of a new generation of SaaS startups that are beginning to find their feet now across Europe (more Europe stories here), and will be one of many taking part in this June's OnDemand Europe conference in Amsterdam, which I'm helping to organize (see disclosure).

Unlike in the US, private companies in most European countries are legally obliged to file public accounts each year. E-conomic has made a virtue of this by announcing its 2008 results in a press release (PDF) last week, along with its projected revenues for 2009 — an estimated DKK43-45 million, or just over $7.5 million. Its subscriber base stands just shy of 18,000.

I've written before about the difficulties European vendors face when expanding beyond their home country. The Nordic region is a microcosm of that challenge, with each country retaining its own currency, language and statutory framework. "It is by no means easy," said Torben Frigaard Rasmussen (pictured), CEO of e-conomic International, when we spoke a week ago. "Denmark, Sweden and Norway are competely different countries." But the flipside is that it's far easier to get established in that home market and then use what's been learnt there to expand elsewhere. E-conomic says it already holds 25 percent of the Danish market, and the profits being generated there are funding expansion elsewhere. It's the equivalent of a US company getting established in, say, metropolitan Baltimore, without being exposed to competition from bigger, out-of-state rivals — but with the advantage of a digitally switched-on population.

"Trends coming out of Nordics and especially Denmark get taken up elsewhere," said Rasmussen. "That's not to say we start the trends, it's just that we are a small, adaptive population with an extremely high broadband and mobile penetration."

That eases expansion from Denmark into Norway and Sweden, which despite the linguistic and cultural differences, have similar technology adoption patterns. "The demographics and user behavior tend to be on the right track and in the same matrix," said Rasmussen. It also augurs well for the future as, having built a presence in the Nordics, e-conomic is now aiming to expand its footprint in the UK and elsewhere.

"We think the Internet is here to stay," he said. "We're just keen to be there, to be ready when the market moves." Like other SaaS vendors, e-conomic has seen the current economic uncertainty helping rather than hindering sales. "I think we'll see a steady growth rate in the countries we've gone to. I see 2009 and 2010 as a period of opportunity."

Another difference from the US is a greater willingness among European companies to establish solid revenues first, and then seek venture capital later. Rasmussen — whose CV includes experience at a venture-funded and later publicly listed Internet business — is pleased not to be looking for capital in the present climate. "I am extremely happy that we are fully self-funded and we have complete freedom to resource now," he said. "Then we can decide what to do before taking in potential venture capital to fund the growth even further."

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