Spotify Technology SA and Mojang AB, the creators of Minecraft, placed Sweden on the map for billion-dollar startups, and spawned a new wave of entrepreneurs. According to a tech industry survey by venture capital company Atomico, the Nordic nation ranked first in Europe in total capital invested per capita over the last five years, ahead of Ireland and the United Kingdom.
Technology and its intersection with a wide variety of sectors, from music streaming and gaming to how we pay for things and increasingly charge our vehicles, are all part of the secret sauce. Early tech pioneers and investors are allocating some of their considerable resources to the new crop of entrepreneurs, which is changing the dynamics.
Trustly Group AB, a payments company, became the latest in a long line of Swedish startups to see its valuation rocket into unicorn territory earlier this month. Its CEO claims the fact, that so many are appearing on his home turf is no accident.
In an interview, Oscar Berglund explained, There is an environment here where Swedes are fast to test new services and products.” “It’s as if there’s a funding and knowledge ecosystem in place.”
Niklas Adalberth, the co-founder of payments platform Klarna Bank AB, which is valued at $31 billion, launched the venture capital fund Norrsken, Swedish for Northern Lights; Niklas Zennstrom, the co-founder of Skype Inc., founded Atomico in 2006 with the goal of investing in “Europe’s most ambitious tech founders;” Martin Lorentzon, co-founder of Spotify, is placing some of his $6 billion fortune into Cervantes Capital AB, an investment fund.
“With the exception of Silicon Valley, Stockholm has the largest number of tech unicorns per capita in the world,” Sarah Guemouri, co-author of Atomico’s State of European Tech survey, said in an interview, citing data for cities with more than one unicorn and 500,000 residents.
Lorentzon said in an interview that he sees great potential to invest in Swedish small and medium-sized businesses, Sweden has great entrepreneurs and a strong corporate governance system. The Wallenberg and Stenbeck families, who still control a large portion of Sweden’s stock market, has a long history of investing in the region. EQT AB, which is funded by Wallenberg, has recently risen to become one of Europe’s largest private equity firms.
According to consulting firm Copenhagen Economics, Sweden’s sum of private equity funding, including venture capital, collected as a percentage of GDP, is second only to Luxembourg in the European Union. The Swedish economy has grown by 4.7 percent since 2007, according to private equity investment.
The country’s fintech market, where Tillväxtanalys reports there are up to 450 active firms, has seen a surge in fundraising. Foreign fintechs such as Klarna and Trustly have made Sweden their home for a variety of reasons, according to Eva Alfredsson, who recently authored a study on the industry.
In an interview, Alfredsson said, “Sweden is one of the most creative countries in the world and a place where it is easy to start and run businesses.” She went on to say that the country was “early to digitalize,” citing a government-sponsored home computer programme in the 1990s that “spread IT-competence to the entire population.”
Sweden has created a forum for fintechs and innovative payment methods to flourish, according to Swedish Financial Technology Association Secretary General Louise Grabo. Sweden is one of the world’s most cashless societies, combined with a tech-savvy population.
“New regulations, such as the Payments Services Directive, have allowed for more innovation and competition in the financial sector,” Grabo said. Other aspects of the economy are also benefiting from technological advances. People familiar with the matter mentioned last month that vegan drink manufacturer Oatly AB is exploring a $10 billion valuation in a US IPO.
David Sonnek, CEO of Industrifonden and one of Oatly’s early-stage investors, said, “The business investment scene in Sweden has become much more exciting than maybe 10 years ago.”
