Local hero Spotify, like previous standard bearer Skype, has certainly inspired Swedish entrepreneurs, but Stockholm’s flourishing tech cluster is down to an mixture of forward thinking and talent, says Monty Munford
Cash is certainly not king in Stockholm. The shock of cash being refused when trying to buy something innocuous from a street food restaurant is an uncomfortable feeling, but an emotion that Swedes no longer register as normal.
According to a recent study from Stockholm’s KTH Royal Institute of Technology, Sweden is quickly becoming the first country in the world to eschew cash. It says there are now less than 80 billion Swedish crowns in circulation (£6.7 billion), a steady decline from six years ago, when the total circulation was 106 billion crowns (£8.9 billion).
The reasons for this culture are manifold. A widespread Swedish culture that is tough on corruption and potential terrorist/criminal cash transfers has also been revolutionised by Swish, a direct payment app that came about as result of a collaboration between Danish and Swedish banks.
Swish is an example of the type of innovation coming out of the country. Everybody knows Skype, and what Spotify is even if they prefer vinyl to streaming and their Stockholm base has undoubtedly energised young Swedish entrepreneurs. But there are other factors behind Stockholm’s emerging tech hub.
In a country where taxes are sky high, it would seem unlikely that such a hub could exist. Other European cities are more competitive when it comes to salaries, but Swedish entrepreneurs are not fleeing their country to Silicon Valley, they are staying put and growing in stature and confidence.
Stockholm is a place to walk around, not travel by cab. Everywhere seems to be within a 15-minute orbit and it is this proximity that may explain why Stockholm is prospering. The number of schools in Stockholm are relatively small and everybody not only knows each other, they were brought up with each other… and now probably work with each other.
Moreover, Swedish Government support in the late 1980s and early 1990s when PCs were heavily subsidised to encourage computer use has created a strong matrix, rather like subsidised Southern Californian universities in the 1970s was one of the reasons behind Silicon Valley.
Throw in great transportation links into the city, a well-linked international airport, a strong seam of talent coming out of the KTH Royal Institute of Technology and other campuses, as well as successful exits means an archetypal cluster is emerging that is beginning to rival London and Berlin.
One interesting company in the city is Universal Avenue, with offices in Stockholm, London… and Thessaloniki, apparently an excellent city to source talent while Greece is undergoing its current difficulties.
The company is a SaaS offering that trains sales teams to become ‘global Brand Ambassadors’’ and an instant direct sales force that can be activated instantly in any global location, but not that anybody would know when entering reception. A lone candle and eerily placed lights makes the visitor feel as if they are entering a Banksy installation or a four-star hotel spa.
“Multiple Swedish startup success cases are fuelling money back into the ecosystem and also making top talent chose a startup career rather than a traditional path of investment banking or management consulting.
“Business-minded people here are complimenting an already existing talent pool of top performers within design, user experience and tech. Strong teams, access to VC money for growth and a global perspective from start will continue to create Swedish unicorns,” said Johan Lilja, chief executive and co-founder Universal Avenue.
These potential unicorns are everywhere in Sweden. Companies such at Trucaller, Klarna and Lifesum are following earlier exit King in creating huge equity. Others such as the podcasting monetisation genius that is Acast and fishing social network FishBrain also have huge potential.
But the most important supporter of this ecosystem is undoubtedly Sting, an institution that is all things to all entrepreneurs since its formation more than a decade ago.
It is an incubator, accelerator, a co-working space, investor, business angel and a network of business coaches that supports its carefully picked companies for up to two years, a lifetime in entrepreneurship, but a refreshing commitment of time.
“Last year, Stockholm was rated as the world’s second-fastest growing market for VC investment in technology. It now has the most billion-dollar startups in Europe. There is no question that we are the startup capital of Europe,” said Pär Hedberg CEO and founder, STING.
No shortage of confidence there, then, but Hedberg’s assurance is being matched by the entrepreneurs in Sweden. They may be short of cash when they enter the city’s increasingly digital and cash-unfriendly emporia, but may be rolling in it if they continue their current rate of progress.