An estimated 65% of Swedes 18-64 years old believe there are good opportunities to start a company where they reside compared to just 47% of Americans in the same age bracket according to an Organization for Economic Cooperation and Development (OECD) report. It’s no wonder that Sweden has become the Silicon Valley of Europe with its capital, Stockholm, boasting of the second highest number of unicorns or startups valued at over $1 billion per capita. In addition, government support for innovation and tech is quite high. Furthermore, the historical connection between Sweden and the US has helped facilitate business relationships between the two countries. Silicon Valley’s entrepreneurial ecosystem is attractive to Swedish startups seeking investment, expertise, and access to global markets.
Stockholm’s Story as a Startup Capital
Sweden’s capital city experienced huge success in birthing startups like Skype, Spotify, and Klarna putting Stockholm on the global startup map. The success of unicorn companies can be attributed to several factors including heavy government investment in digital infrastructure providing widespread high-speed Internet access. Another factor that contributes to the success of startups in the capital is educational excellence. Stockholm hosts prestigious universities like the KTH Royal Institute of Technology and the Stockholm School of Economics, two educational establishments that are renowned in producing a highly skilled workforce.
Furthermore, the Swedish government implements various programs and initiatives to support startups, including funding and tax incentives. For example, government contracts in Sweden form part of the economy and it may include procuring goods and services to support small and medium enterprises (SMEs). However, the focus of the government is to create a favorable environment for startups to succeed. Therefore, the government provides funding including loans, grants, and resources to help companies grow and innovate. To illustrate, Vinnova is Sweden’s Innovative Agency offering grants for novel projects particularly in tech, sustainability, and digital transformation.
The government also prioritizes innovation and invests heavily in research and development (R&D) creating an environment where startups can thrive especially those that focus on cutting edge technologies. Moreover, the Swedish government has a very supportive ecosystem promoting the development of incubators and accelerators. Its commitment to sustainability is reflected in government funding priorities with a strong emphasis on supporting green technologies and solutions.
Success Across the Atlantic
Historically, there has been significant emigration from Sweden to the US which has created strong cultural and economic ties. Hence, this historical connection has facilitated business relationships between the two countries. Silicon Valley’s entrepreneurial ecosystem has been a magnet for Swedish startups seeking investment, expertise, and access to global markets. Conversely, Swedish innovation and technology have found interested audiences and investors in Silicon Valley. Although it is difficult to pinpoint the exact number of startups in Silicon Valley, existing studies by Silicon Vikings indicate a significant Nordic presence in the Bay Area. A survey indicates that Sweden leads in the number of companies that started in the Nordic region and subsequently began operations in the US. Start-up businesses are attracted to Silicon Valley because for one, it is the world’s leading hub for venture capital boasting of a network of investors willing to take chances on promising startups. While Stockholm’s investment scene is growing, the sheer scale of capital available in Silicon Valley is unparalleled. We are talking about $178 billion of US venture funding of which $90 billion was grabbed by startups located in the Bay Area last year, says a TechCrunch article. Thus, for startups looking to scale rapidly, access to this funding is crucial.
Furthermore, establishing a presence in Silicon Valley can significantly increase a startup’s visibility and access to potential customers and partners. Another compelling reason why Swedish startups are attracted to Silicon Valley is that it is a melting pot of talent, experienced entrepreneurs, and industry experts. Stockholm startups can benefit from networking with these individuals, gaining valuable insights and mentorship. It goes without saying that the concentration of knowledge, expertise, and experience in Silicon Valley is a major draw.
In essence, Stockholm has a thriving startup scene, but Silicon Valley offers unique advantages in terms of funding, market access, and networking. For Stockholm startups looking to achieve rapid growth and global success, Silicon Valley remains a highly attractive destination.
