Financing the startup J-curve

High-growth startups often lose money before they make it. This column examines whether differences in financing capacity are reflected in the cash flow and growth trajectories of startups in Sweden, where US and non-US venture capitalists invest in the same institutional environment. The authors find that US VC-backed Swedish startups experience deeper operating losses, receive more follow-on capital, and achieve higher subsequent sales. The test for the Scaleup Europe Fund, intended to support growth-stage investments of €100 million or more, is whether it mobilises additional private capital and provides credible continuity of finance, not simply whether it deploys its initial commitment.