Nasdaq Nordic & Baltic — Can Small Markets Build Big Companies?
Northern Europe has relatively small economies. Its capital markets suggest that size may not be the only thing that determines whether companies can scale
Sweden, Denmark, Finland and the Baltic states are small compared with Europe’s largest economies. Yet across the region, Nasdaq operates an unusually connected public-market ecosystem, ranging from established exchanges to First North, where smaller growth companies can access public capital earlier in their development.
That makes the Nordic and Baltic markets an interesting European test case. Perhaps the question is not simply how large a national capital market is, but whether companies can enter it early enough, find investors and continue using it as they grow.
🟦 CAN A SMALL COUNTRY HAVE A LARGE CAPITAL MARKET?
At first glance, geography should matter. A company in a large economy has access to a larger domestic market, more investors and potentially deeper pools of capital. Northern Europe starts from a different position.
Sweden has around ten million inhabitants. Denmark and Finland have around six million each. Estonia, Latvia and Lithuania are smaller still. Individually, these are limited domestic markets. Financially, however, they do not have to function entirely as separate islands.
Nasdaq connects exchanges across the Nordic and Baltic region, using shared technology and increasingly common market structures to make it easier for investors and companies to operate across borders.
That changes the meaning of scale. A company may originate in a small country without its financial horizon ending at the national border.
Perhaps the size of a country matters less when its capital market does not stop at the border. But connecting markets is only part of the story. Companies also need somewhere to enter them.
🟦 WHAT IF THE STOCK EXCHANGE IS NOT THE END OF THE JOURNEY?
The traditional image of an IPO comes relatively late in the life of a company. An entrepreneur starts a business. Private investors provide capital. Venture capital may help it expand. Eventually, once the company has become sufficiently large and mature, it enters the stock market.
Nasdaq First North Growth Market suggests a somewhat different route. Designed for smaller and growing companies, First North provides access to public markets under a framework adapted to businesses that have not yet reached the scale normally associated with a main exchange. That changes the role of the stock market.
Instead of being only a destination for companies that have already achieved scale, a public market can become part of the process through which scale is created.
Companies can gain access to new investors, greater visibility and potentially additional rounds of capital as they develop. Some may eventually move towards the Main Market.
The exchange becomes less of a finish line. It becomes another stage in the company’s financial development. And that matters because Europe has a particular problem in the stages between starting and becoming large.
🟦 CAN PUBLIC MARKETS HELP CLOSE EUROPE’S SCALE-UP GAP?
Europe does not suffer from a shortage of ideas. Its universities produce research. Entrepreneurs create companies. Venture investors finance promising technologies. The difficulty often appears later. A company that needed millions to develop a technology may eventually need tens or hundreds of millions to commercialise it internationally.
Semiconductors, biotechnology, clean technology, advanced manufacturing and artificial intelligence can require even larger amounts. This is where European companies can encounter a familiar problem. Starting is possible. Scaling becomes harder.
The United States offers much deeper pools of growth capital and enormous public markets. Successful European companies can therefore eventually feel a financial pull across the Atlantic.
Public growth markets cannot solve that problem on their own. But First North raises an interesting possibility. What if public markets become available earlier in a company’s development, providing another bridge between venture capital and the much larger pools of capital required at industrial scale?
That requires more than an exchange. It requires investors willing to participate.
🟦 DO STRONG CAPITAL MARKETS ALSO REQUIRE A CULTURE OF INVESTING?
This may be the less visible part of the Nordic story. Capital markets are usually discussed as systems of rules. Listing requirements. Disclosure obligations. Investor protection. Trading infrastructure. Taxation. All matter. But markets are also social institutions.
Entrepreneurs must be willing to open their companies to public investors. Households must be willing to own shares. Institutional investors must be willing to finance growing companies. Analysts, advisers and financial institutions need to follow smaller businesses. Investors must be prepared to accept that growth involves risk.
The Nordic markets have developed within societies where participation in equity markets is relatively established, including through both retail and institutional investors. That cannot simply be reproduced through European legislation.
Europe can harmonise rules. It can connect exchanges. It can reduce barriers to cross-border investment. But it cannot legislate an investment culture into existence. And without investors willing to provide capital, even the most sophisticated exchange remains an empty marketplace.
🟦 COULD THE NORDIC MODEL TEACH EUROPE HOW TO SCALE?
There is an obvious temptation to turn the Nordic experience into a blueprint. Europe should be careful. Stockholm is not Madrid. Helsinki is not Rome. Tallinn is not Paris.
Financial systems reflect decades of institutional development, taxation, pension structures, corporate governance and social attitudes towards investment and risk. The Nordic model cannot simply be copied. But it can challenge some assumptions.
Europe often discusses its capital-market problem primarily in terms of fragmentation. If rules become more harmonised and capital can move more easily across borders, a deeper European market should emerge.
Nasdaq Nordic & Baltic suggests that integration may be only one ingredient. A functioning growth ecosystem also needs companies that can enter markets relatively early, investors willing to finance them, institutions capable of supporting them and pathways that allow businesses to continue raising capital as they expand.
Common technology + accessible markets + growth pathways + investors + investment culture.
None is sufficient alone. Together, they begin to look less like a stock exchange and more like an ecosystem for turning relatively small companies into larger ones.
Final Signal
Northern Europe contains some of Europe’s smaller economies. That should make building deep capital markets more difficult. Yet the Nordic and Baltic experience suggests that national size does not have to determine financial ambition.
Markets can be connected. Smaller companies can gain earlier access to public capital. Investors can participate across different stages of growth. Businesses can move from one part of the market towards another as they mature.
None of this means the Nordic model has solved Europe’s scale-up problem. Nor does it mean that every European country should reproduce First North. But it changes the question.
Perhaps Europe does not simply need a larger capital market. It needs a better journey through capital markets — from the first external investment to the enormous financing rounds required to compete internationally.
That would give the stock exchange a different role in the 21st century. Not simply somewhere successful companies arrive. But somewhere companies can continue becoming successful.
The 20th-century exchange waited for companies to become large enough to list.
The 21st-century exchange may increasingly have to help companies become large enough to compete.
This Signal is part of Phase II — The Operators, exploring the companies behind Europe’s financial markets and the changing role they play in Europe’s economic future.
Credit
AI-generated illustration by Altair Media
Caption
Can small markets build big companies? Nasdaq Nordic & Baltic shows how connected markets, earlier access to public capital and an active investment culture can create a pathway from local entrepreneurship towards international scale — even in Europe’s smaller economies.
