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Stockholm prospers as tech hub as perceptions of entrepreneurs changes
Stockholm has thrived as a tech startup hub after out-of-date attitudes to entrepreneurs changed
Over the past 20 years, perceptions of the entrepreneur in Stockholm have gone from being almost an enemy of the state to a heartthrob of the city’s business ecosystem.
As a result, over the past 10 years, Sweden’s capital has become one of the world’s most renowned tech startup hubs.
Bonnie Roupé, CEO of digital health company Bonzun, said: “When I was growing up, an entrepreneur would be something of a shady person – a rebel against the traditional socialistic mentality we have here in Sweden where you should strive to work for a big economic contributor, or in the public sector. That’s certainly not the case now though.”
Roupé is a businesswoman and entrepreneur, and in bucking this now outdated notion, she firmly fits within Stockholm’s thriving second generation of startup founders.
The first generation – the unicorn generation – helped set the tone for Roupé and many others to flourish. The likes of Spotify and Klarna put in motion a chain of inspiration that is continuing to this day, from these, through to the scaleup Bonnie Roupés of this world, and further down to the next swathe of tech innovators.
“The speed of progression has rapidly increased over the past six or seven years because of these influential role models that have gone before,” said Pär Hedberg, a man who remembers Stockholm’s startup ecosystem at birth around 20 years ago, and who continues to nurse the next batches of digital companies via his incubator, Sting.
“Ten years ago, people still didn’t understand the potential of startup companies, but with seven unicorns to speak of, everyone understands now.”
It’s not just budding entrepreneurs who have been inspired either. As interactive presentation company Mentimeter’s CEO, Johnny Warström, added: “It’s the talent pool too. In the 1990s, companies like Ericsson were the foremost hirers of tech and engineering skills.
“Even when a few startups started coming through, people would have been mad to leave Ericsson and take this gamble. After the Spotify/Klarna generation though, it’s become not only cool, but mainstream to work for startups like ours.”
Graduates of the unicorn generation
A roadmap has been laid out across Stockholm and the simplistic family tree of unicorns, down to current multinationals and through to new startups, has blossomed into a cyclic network whereby workers from the tier above become C-level protagonists at the startup level below.
“This critical mass of global success stories and role models has undoubtedly resulted in a new generation of startups largely built by ‘graduates’ of these companies,” said Henrik Grim, an Associate at Northzone, one of Europe’s longest serving venture capitalist funds and the first investor in Spotify back in 2008.
“If you look at how Silicon Valley evolved, Stockholm is going through that now,” added Lisa Kennelly, chief marketing officer at Fishbrain. “There was the so-called ‘PayPal mafia’ out there who left that company to initiate their own startups, and we have the same here from the unicorn generation.”
Fishbrain CEO Johan Attby has seen first-hand how startup communities can progress in this way, having served the majority of his apprenticeship in San Francisco.
“Success breeds success, and trailblazers like Niklas Zennström [Skype] are vital to the ecosystem here, even now,” he says. “I would say that many startups that have succeeded over the past six or seven years have emanated from one of the big guys or from Stardoll, which gave the ecosystem the likes of Daniel Ek [Spotify], Henrik Torstensson [Lifesum], and Johannes Schildt [Kry].
“There are more success stories in Stockholm than anywhere else in the Nordics, meaning more money and more people are attracted here than to anywhere else. It’s no coincidence that the city is therefore further along.”
But just like the fate of many small companies who lose their flexibility as their size increases, there has been a similar concern surrounding Stockholm’s ecosystem becoming too big to retain its renowned nimbleness.
However, this is where diversity is seemingly saving the day. Diversity of industry sectors, diversity of business models, and – most importantly – diversity of personnel.
“At Fishbrain, we currently have 20 nationalities working here and it really is representative of the diversity that exists in the city. If your target markets are international, it makes sense to have an international internal structure too,” said Kennelly, herself an American.
More than being a quota adherence or ethical statement, ensuring varied representation of genders, outlooks and ethnicities is pivotal to business success.
Mentimeter’s Warström recalled: “It had to become one of our core strategies. As four founding white guys in their 30s from the same university, we had an uphill battle on this front, but from day one, we looked to form a gender balance and a culture balance.”
Surprisingly, many conglomerates, consultancies and banks still only operate in Swedish, something which Warström and his startup comrades have stringently veered away from, so as to tap into the wealth of international talent that exists within the capital.
From his incubator vantage point, Hedberg said: “The gender balance in the Nordics is often lauded, and ethnic balance has been the next step. A lot of people move here from all over the world and it makes sense to champion and normalise that diversity within tech startups.
“As a result, and as Stockholm’s tech industry has grown, unicorns, startups, big corporations and large consultancy firms are all now fighting for the best talent, and it means that more and more skills keep getting lured to these opportunities from other countries.”
Incubating startup stability
Over the coming years, key spokes in the startup cycle would like to see Stockholm match the likes of London, Berlin and Barcelona in regard to expos and events to further showcase these global capabilities; being careful not to veer off-course from the tightknit and feelgood startup roadmap that has been built.
This is where the role of incubators and venture capitalist funds like Sting and Northzone come into their own, and perhaps are the biggest indicators of how far ahead Stockholm is compared to its Nordic counterparts.
Not only are there role models, but there is guidance and a team of professionals on hand who have seen the ecosystem develop since day one.
“The encouragement here in Sweden is so helpful, even when our target markets aren’t domestic, which they often aren’t,” Roupé said.
Bonzun bypassed Sweden entirely in favour of launching in China first, with the full backing of the Swedish government and embassy contacts overseas. “The investment community here is so active and has helped me raise more than €2m just through networking essentially,” said Roupé.
“Now, it’s also time for me to give back to the next generation of startups, and I make time to meet with at least one budding entrepreneur or startup leader every week,” she added.
A decade ago, back when entrepreneurs were “shady”, everyone was competing for the same small pot of money. Now though, the amount of venture capital available equates to the amount of talent and support that exists in Stockholm, to ensure startup cycle stability for many more years to come.
From unicorn, to scaleups, to a never-ending wave of new startups, the chain of inspiration continues.
Read more about the Nordic startup scene
- Nordic bank is shifting some of its workforce closer to fintech activity in the Swedish capital.
- While Stockholm is a recognised hub for tech startups, Malmo, in Sweden's south, is attracting increasing numbers of digital entrepreneurs.
- The Nordic tech startup scene is attracting funding from a variety of sources, with private equity firms, banks and traditional IT companies all keen to put money in.