Sweden is something of a fintech mecca, which has created such as Klarna, Tink and iZettle. And now the country is setting up a new generation of fintech stars.
Among them is Juni, the neo-bank built for e-commerce traders, which today announced a $ 52 million Series A extension from EQT Ventures.
June, which was founded in June 2020, wants to be the financial companion to the thousands of e-commerce companies that sell via Shopify and Amazon. The startup has rapidly expanded to the Netherlands and the United Kingdom, which is its largest market, and offers a range of products from lending to investment return tracking features.
June is part of a new wave of so-called vertical neobanks focused on a specific demographic. In August XPO, a neobank for influencers, launched in the UK and on Monday Cure, a German neobank for doctors and dentists, knocked $ 1.4 million in funding.
This makes June a critical addition to the market, says its founder and CEO Samir El-Sabini.
“What is missing today is a vertical solution that goes into depth to solve [ecommerce businesses’] pain points, ”he tells Sifted. “In the long run, [we hope to] create a solution where we can help e-commerce entrepreneurs to survive, grow and win and be an amplifier in their success. ”
The new funding will be used to triple the size of June’s team from 75 to 225 by the end of next year and also to launch its own credit product for small internet companies.
This follows its initial $ 21.5 million Series A in July, with the support of DST Global, Felix Capital, Cherry Ventures and others. Sifted nominated the start as one of breakout fintechs from 2021.
All eyes on Sweden
June’s financing round tops a banner year for Swedish fintechs. So far this year, the country has financial startups raised the record 1.8 billion euros, as well as making high-profile outputs of such as Tink.
Stockholm is now ranked second only after Silicon Valley for the number of unicorns per capita, a new study by Atomico showed. More may be on the way, with fast-growing fintechs like Dreams, Willa and Hedvig rising in values.
It may seem like an unlikely destination given that the country has a population of just over 10 million.
But being small has been the key to Sweden’s conveyor belt of strongly growing startups, explains Mikael Hussain, the founder of debt financing startup Anyfin. Hussain, who has received from top investors such as Accel, claims that Sweden’s size has made startups think internationally from day one.
“We are a fairly small domestic market. So it makes your plans more grand, and it is recognized by investors, he tells Sifted after Anyfin’s recent entry into Germany.
“For many companies, the market size and opportunities are elsewhere. You think about things differently from day one. ”
“For many companies, including us, the market size and opportunities are elsewhere. You think of things differently from day one. While you are in France, you create a product for quite a lot [large] tailor-made market. This makes internationalization more difficult. ”
He’s right – June’s new credit product will initially be launched in the UK, not Sweden. In the same way, Qred lending for small and medium-sized companies will start Nordic Capital, is active elsewhere in the Nordic region and in the Netherlands – a testament to the export power of Swedish B2B fintechs.
“There are no serious fintech companies starting up, just aiming for the Swedish market “, says Qred’s CEO Emil Sunvisson to Sifted.
The maturity of Sweden’s fintech sector also has political roots, including two decades of pro-tech governments. In the 1990s, a groundbreaking government policy made computers available in every home – a policy that Klarna founded Sebastian Siemiatkowski recently told Reuters brought his own success.
June is among a league of new borrowers who have historically dried up the majority of Sweden’s VC financing. In 2020, Lendify, Klarna and Anyfin made the country’s largest financing rounds, apart from Tink.
Magda Lukaszewicz, who oversees Nordic investments for Balderton Capital, tells Sifted that Sweden offers several advantages in the lending area.
– I do not think it was random that Klarna was founded in Sweden, says Lukaszewicz. “There is a public consumer data and technical infrastructure, a relatively uncomplicated application process, penetration of e-commerce [is] high … These factors combined made fintechs like Klarna more creative. ”
Lending and the start of e-commerce continue to catch the attention of investors, in Klarna’s footsteps.
Among them is Zaver – a P2P payment solution that increased EUR 5 million earlier this year – and Briqpay, a B2B payment company founded by Klarna alumni. Another to look at is Minna Technologies, a subscription management solution for retail banks that has charmed investors like Visa up to EUR 15 million.
“It definitely feels like there is a new generation of Klarnas”, founder Tink Daniel Tells Kjellén about Sifted.
A bright future?
Although Sweden may enjoy its fintech advantage, it must look back.
France just reached Sweden as the third most favored destination for fintech investors. The French government is also aggressively trying to make Paris a fintech hub by offering a giant funding pool, something that the Swedish government has failed to do.
Lukaszewicz also admitted that the financing is “very skewed” towards Klarna: “There is more capital but it does not necessarily go into more companies.”
Dreams founder Henrik Rosvall agreed. “Our VCs are really careful and we do not have the huge funds here … I absolutely feel that it would be easier [to be a founder] in London, ”he told Sifted.
Despite the country’s reputation for gender equality, Swedish technology is also far behind. Only 1% of the capital went to Nordic women-free startups year 2020.
Nevertheless, Sweden has a strong pipeline of entrepreneurial talent – trained at Europe’s largest fintechs. Case in point is the wave of former Klarna employees become founders themselves. This makes Stockholm an obvious destination for foreign investors, they tell Sifted.
“Sweden is definitely on the map for fintech investments in Europe … there is a very strong fintech talent pool there”, says Julia Andre from Index Ventures and notes the country’s “lead” in this sector.
“Even if you look at the new B2B payment wave, there are now a number of new players from the region, no doubt we will see big companies in the coming years.”
Junis El-Sabini adds that the upcoming departures – both Klarna and Trustly are rumored to be planning public offerings in the near future – could also trigger a new era for Swedish fintech.
“I find it very difficult to reach a critical level of capital, talent and support structure to really be an engine for new large companies,” says El-Sabini. “But I would really say that Sweden has come to that place.”
Tom Matsuda is an editorial intern at Sifted. He tweets from @_tommatsuda.