Bloomberg
From Spotify to Minecraft, Sweden Proves Fertile Ground for Unicorns
(Bloomberg) — Sweden’s capital has bred extra tech unicorns per capita than some other area on this planet save for Silicon Valley.Spotify Technology SA and Minecraft maker Mojang AB put Sweden on the map for startups valued at greater than $1 billion and spawned a brand new technology of entrepreneurs. The Nordic nation ranked first in Europe in cumulative capital invested per capita prior to now 5 years, forward of Ireland and the U.Ok., in accordance with a tech trade report by enterprise capital agency Atomico.The secret sauce consists of know-how and its intersection throughout a broad vary of industries, from music streaming and gaming to how we pay for stuff and more and more cost our vehicles. The dynamics are additionally evolving as early tech founders and backers allocate a few of their huge wealth to the newest crop of startups.Only this month, funds agency Trustly Group AB turned the newest instance in a protracted line of Swedish startups to see its valuation soar into unicorn territory. Its chief govt officer says it’s no coincidence so many are rising on his dwelling turf.“There is a few form of local weather right here the place Swedes are fast to check new companies and merchandise,” Oscar Berglund stated in an interview. “It’s like there’s an ecosystem of funding and experience.”Examples embrace the enterprise capital fund Norrsken, Swedish for Northern Lights, launched by Niklas Adalberth, the co-founder of funds platform Klarna Bank AB that has been valued at $31 billion; Niklas Zennstrom of Skype Inc. fame began Atomico in 2006 with a mission to spend money on “Europe’s most formidable tech founders;” and Spotify co-founder Martin Lorentzon is placing a few of his $6 billion fortune into funding car Cervantes Capital AB.“At 0.8 per 100,000 inhabitants, Stockholm presently has the best variety of tech unicorns per capita on this planet apart from Silicon Valley,” Sarah Guemouri, co-author of Atomico’s State of European Tech report, stated in an interview, citing knowledge for cities with a couple of unicorn and 500,000 inhabitant. The San Francisco Bay Area, together with Silicon Valley, tops the worldwide checklist of most unicorns with 1.4 per 100,000 inhabitants, in accordance with Guemouri.“I see nice alternatives to spend money on Swedish small and medium-sized firms,” Lorentzon stated in an interview. “Sweden has implausible entrepreneurs and good company governance.”Investors seem to agree, with the nation already attracting 1.8 billion euros ($2.2 billion) in enterprise capital thus far this yr, in contrast with 2.9 billion euros for the entire of 2020, in accordance with researcher Dealroom.co.Entreprenaurial RootsSweden has a protracted historical past of investing going again to the Wallenberg and Stenbeck households, who collectively nonetheless management a lot of the nation’s inventory market. More lately, Wallenberg-backed EQT AB has grown into one of many largest personal fairness corporations in Europe.As a share of GDP, the quantity of personal fairness capital, together with enterprise capital, raised in Sweden is second solely to Luxembourg within the European Union, consultancy Copenhagen Economics stated. Private fairness funding has boosted the Swedish financial system by 4.7% since 2007, it added.The fundraising is especially evident within the nation’s fintech sector, the place the coverage company Tillväxtanalys estimates there are as many as 450 lively firms. The company’s Eva Alfredsson, who lately authored a report on the trade, factors to a number of causes worldwide fintechs corresponding to Klarna and Trustly have made Sweden their dwelling.“Sweden is likely one of the most modern nations on this planet and a rustic wherein it’s straightforward to start out and run firms,” Alfredsson stated in an interview. She added the nation was “early to digitalize,” citing a government-subsidized program for dwelling computer systems within the Nineties that “unfold IT-competence to the entire inhabitants.”As one of many world’s most cashless societies, mixed with its tech-savvy inhabitants, Sweden has offered a platform for fintechs and new fee strategies to flourish, in accordance with Swedish Financial Technology Association Secretary General Louise Grabo.“New rules such because the Payments Services Directive have opened up the monetary sector for extra innovation and competitors,” Grabo stated.Technological components are driving successes in different elements of the financial system too. For instance, vegan drink-maker Oatly AB is contemplating a $10 billion valuation in a U.S. preliminary public providing, individuals acquainted with the matter stated final month.“The enterprise funding scene in Sweden has develop into far more attention-grabbing than perhaps 10 years in the past,” stated David Sonnek, the CEO of Industrifonden and certainly one of Oatly’s early-stage traders.Digital AdvantageOne of the perfect issues in regards to the area’s funding prospects is its individuals, in accordance with early-stage investor Par-Jorgen Parson, who backed Spotify over a decade in the past. “Employees are far forward in digital improvement, in comparison with many different nations,” stated Parson, whose Northzone holds Klarna and iZettle AB in its portfolio.Sweden advantages from a “low value of expertise and loyalty to enterprise objectives slightly than the self-serving, worldwide mindset of most startups,” Parson stated, including {that a} lack of hierarchy and a great stage of schooling “implies that you’ll come a good distance with restricted capital.”The schooling system additionally displays the nation’s worldwide outlook, in accordance with Bo Becker, the Cevian Capital Professor of Finance on the Stockholm School of Economics.Despite a Social Democrat-led authorities and continued assist for a welfare state, the system “is constructed to work for big firms,” Becker stated, citing schooling, favorable rules and the tax system.Startups that thrived have additionally spurred on others. There’s “a vibrant ecosystem of profitable entrepreneurs, executives, and traders who’ve been a part of generational firms, corresponding to Spotify,” stated Cameron McLain, who co-founded and runs Giant Ventures in London. “These successes produce function fashions, skilled expertise, and capital which then generates additional successes, and the flywheel continues.”McLain stated Swedish shoppers care deeply about societal and environmental points. Combined with favorable authorities laws “it’s an incredible place to launch influence firms.”For Trustly’s CEO, who plans to lift virtually $1 billion via an IPO in Stockholm quickly, all of those components add as much as “some form of cross-fertilization.”“It has been an essential a part of our journey that we’ve got grown up in Sweden, completely.”(Adds Silicon Valley comparability in seventh paragraph.)For extra articles like this, please go to us at bloomberg.comSubscribe now to remain forward with essentially the most trusted enterprise information supply.©2021 Bloomberg L.P.
