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Nordic startup scene can rival Silicon Valley

Sweden is emerging as one of Europe’s competitors to the US’s Silicon Valley as a hot location for tech startups

There was a time when Silicon Valley was the only place to ensure success for tech startups.

San Francisco’s Bay area attracted the top talent, lured the most significant investors, and fostered the globe’s foremost incubators and venture capital funds.

But in the 21st century, that dynamic has shifted, and the Nordics are challenging.

In particular, Sweden’s two largest cities are staking a claim to rival Silicon Valley, with Stockholm arguably further along in its quest at present.

Johan Attby, CEO of globally thriving fishing app Fishbrain, has worked in Stockholm and Silicon Valley, having built his reputation, contacts and industry vision in the US in the mid-late 2000s.

The decision to launch Fishbrain in Stockholm, rather than Silicon Valley, was “not an easy decision” at the time, said Attby. “There are pros and cons with all tech hubs, so it wasn’t as simple as deciding to move back to Sweden,” he said. “However, while it wasn’t obvious to move to Stockholm at the time, five years later it would have been completely obvious.”

To the south, in Sweden’s second city, Gothenburg, Equilab is an app for the equestrian community and its co-founder, Adam Torkelsson, shares many similarities with Fishbrain and Attby, including the CEO’s entrepreneurial journey.

“Prior to launching Equilab, I worked as an in-house business developer in an incubator in Silicon Valley,” he said. “It was an amazing opportunity to get that responsibility right out of school.

“The main thing I took away was the strong belief in visionary ideas that exist there, and how no idea is too crazy to pursue. You get exposed to a lot of talented and interesting people and that really made me realise the importance of the team when it comes to starting a company.”

Torkelsson moved back to Sweden because of the cost of living at the time, but also saw a developing scenario of Silicon Valley growing too big for its agile startup intentions.

Read more about startup hubs in Sweden

“There are more resources, but the demand in Silicon Valley is much higher,” he said. “Going forward, I think you will see more and more companies allocating their offices in smaller cities just to be near the talent, rather than making them move to you.”

So, is Stockholm or Gothenburg the next solution for aspiring entrepreneurs? Torkelsson is already anticipating a similar trajectory for Sweden’s capital, but alternative startup options such as Gothenburg and Malmo will also be attractive.

Attby, meanwhile, has never been surer that Stockholm offers the perfect middle ground between traditional tech behemoth and young pretender. “Over the past five years, things have inflated even more in Silicon Valley,” he said. “It is ridiculously expensive to find developers out there – four times as expensive as in Stockholm – and even if you do pay them a lot, they end up getting poached by Apple or Google.

“For a company like ours, with a complicated back end and a need for talented developers, retention of talent is vital and you are far more likely to achieve that level of loyalty, while still being attractive as an established hub, in Stockholm.”

When Attby left Sweden for the US in 2006, there wasn’t really a venture capital community to speak of in Stockholm, but the growth of this ecosystem is testament to the Swedish capital’s evolution and subsequent appeal to leading tech innovators.

“There is more than enough capital in Stockholm now, and with the help of the unicorns, there is also a lot more attention from investors – even US investors,” he said. “The same goes for talent. We already employ around 10 Americans here at Fishbrain, which says a lot, not just about the company, but about the appeal of Stockholm as a city.

“It’s a friendly, attractive, relatively cheap [compared with Silicon Valley] place to live and work, where we share learnings and collaborate rather than brutally try to outdo others in a race for the top.”

Perfect extension of Stockholm

So what about Gothenburg? Well, Attby can certainly foresee a similar trajectory to that of Stockholm, but doesn’t consider the city to be a natural alternative to Silicon Valley just yet.

“It takes time to get to a critical mass of capital and talent,” he said. “Stockholm didn’t happen overnight – however, that can change off the back of a couple of successes.

“I actually went to university in Gothenburg and there’s definitely nothing wrong with the development of talent, the people there, or the city itself. It just needs time to reach critical mass, which will, in turn, have a positive effect on the diversity there, which overall will make it more attractive to international talent. It’s all a process that Stockholm has already gone through.”

Torkelsson, in Gothenburg, has every right to disagree, of course, having already taken Equilab’s proposition around the world, while playing an active role in the burgeoning startup ecosystem around him.

“I think many forget that the time to travel between Gothenburg and Stockholm is not that much longer than the trip between San Jose and San Francisco,” he said. “I therefore think Gothenburg is the perfect extension of the Stockholm startup community, just as San Jose is to Silicon Valley. You get many of the benefits but have less competition for talent, while the cost of living is also less than in the capital.

“In the coming years, I think more companies will realise the benefits of setting up their business in Sweden’s second-largest city and start their companies in smaller cities such as Gothenburg.”

Equilab’s CEO has already spoken to companies in Stockholm that are looking into the potential of moving to Gothenburg in the future, and says this is evidence of the city’s rapidly emerging status on the global scene.

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