More than meatballs: Stockholm is a world-class technological hub in Europe
By Kirstie McDermott
Abba, IKEA and Volvo are just three of Sweden’s most enthusiastically received global exports.
But another area where Sweden is achieving global recognition these days is in the tech sector.
Its capital Stockholm has been called “the true jet engine of the Nordic tech scene” and at first glance it’s not hard to see how it has earned the title.
The city has already produced many billion dollar companies; in fact, it is home to 35 unicorn companies, several of which have disrupted so much of how we live now.
They include buy-now-pay-later fintech Klarnaand Spotify, the audio streaming service that has revolutionized the way music is consumed. Other unicorns born here include King, Mojang and iZettle.
Sweden is also flagged as having the fifth largest pool of potential future unicorns in Europe.
More recent tech startups here include LEIA, a post-pregnancy health app. And let’s not forget climate fintechs Doconomy and ClimateView, which are helping cities around the world reach net zero through their ClimateOS platform.
In computer technology, Validio has the backing of Swedish soccer legend Zlatan Ibrahimović.
Which sectors to look at
Impact startups are the big ones to watch here. As the name suggests, it is a company that focuses on creating a business to solve a major societal problem and create measurable positive change.
The most valued Swedish startup companies in 2021 include Polestar, an electric car brand; Oatly, the hugely popular plant-based milk; Northvolt, a manufacturer of lithium-ion batteries; Voi Technology, which makes electric scooters, and Re:newcell, which provides recycling and biodegradable raw materials for fashion.
Dealroom reports that the combined enterprise value of Swedish impact startups has grown over 20 times larger than it was in 2017 – faster than any other European hub.
Another large cluster here is gaming and musicech.
The latter is perhaps not so surprising: Sweden has a long history in rock and pop music. Robyn, The Cardigans, Avicii, Europe, Roxette and many more all hail from this Nordic country.
The aforementioned Spotify reigns as the most popular streaming platform globally, and Stockholm was also the birthplace of Soundcloud, now headquartered in Berlin.
Another music technology company founded here is Tidal, created in 2014 and later acquired by Project Panther Bidco Ltd. (owned by Jay-Z).
When it comes to games, Candy Crush Saga is one that everyone knows. Created by King, in November 2015 it was acquired by the gaming behemoth Activision Blizzard for 5.9 billion dollars (5.6 billion euros).
Mojang, creator of the hugely popular Minecraft game, was sold to Microsoft for 2.5 billion dollars (2.4 billion euros).
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What led to Stockholm’s success?
So why is Stockholm such a fertile environment for these incredibly valuable technology companies? There are a number of reasons.
A government policy in the late 1990s to put a computer in every home – the “Home PC reform” – made it possible for one million Swedes to get their first computer. This, along with an early government investment in internet connectivity, sowed the seeds for many future tech entrepreneurs to thrive here.
Sweden also has a generous social safety net for its citizens, which includes national access to free education and mostly free childcare.
There is also good welfare support in place, including income insurance funds that can kick in if your business fails or you lose your job. Swedish workers are guaranteed up to 80 percent of their previous salary during the first 300 days of unemployment.
All of this helps remove the fear of starting a new business and helps foster a culture of innovation.
In addition, Sweden’s government invests more than one percent of its GDP on research and development.
But all is not positive, despite the provision of social support. Diversity is a challenge according to Dealroom, which reports that less than one percent of venture capital funds go to all-female founding teams.
Taxation is also high: capital gains are taxed at 30 percent and income tax can be as high as 60 percent.
Adapting to Stockholm
As a place to live and work, Stockholm is one of Europe’s cooler capitals. One third water, one third green space and one third buildings, the city is spread over 14 islands and is a clean and safe place to live.
However, it can be an expensive place to move to for work. The country’s finance ministry recently raised its inflation outlook, forecasting constant-price consumer price increases of 7.9 percent this year and 5.2 percent in 2023.
Like many other European capitals, rent in Stockholm is also expensive, but here the quality of life and sense of social responsibility provide a balance.
Those moving from other parts of Europe can expect access to Stockholm’s excellent infrastructure as well as education and healthcare.
And the transition is not as difficult for many as it may seem: almost every Swede speaks English, and Sweden comes in seventh place out of 111 countries in EF English Proficiency Index (EF EPI) 2022.
This is a nation full of recycling companies: in 2019, Swedes recycled 2.15 billion cans and bottles, saving around 180,000 tons of Co2.
Plus, “plogging” started in the city: a walk or jog combined with picking up trash to recycle, it started in Stockholm in 2016 as a response to plastic pollution.
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