Exploring the Swedish Innovation- and Startup-Ecosystem
Get insights into the thriving Swedish startup and innovation ecosystem and enjoy some impressions from my Stockholm trip.
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If you've been reading my publication for a while, you know that I like to explore innovation and startup ecosystems (e.g. just recently of Finland and Estonia). Last week I was in Sweden at the TechArena conference in Stockholm (read more) and I used the time to educate myself about the Swedish startup and innovation ecosystem.
Swedish startup and innovation ecosystem
Admittedly, Sweden wasn't initially on my radar regarding innovation and startups. However, upon delving into the data during my research, I found myself doing a double-take in astonishment, when reading an interesting study published by Dealroom this month:
“The key takeaways this year are that despite an unstable global economy, Swedish startups continued during 2023 to raise investments amounting to €4.7B. Close to 75% of the total venture capital investment was raised by impact startups, making Sweden #2 in Europe. With a staggering combined worth of €239B, Swedish startups have not only doubled in value over the last five years but have also created 41 unicorn companies, solidifying Sweden as a powerhouse and the place to be in the global tech scene.” - Dealroom (2024)
Wow, 41 unicorns in the last five years (!), that's remarkable considering the size of Sweden (approx. 10.4 million inhabitants). For comparison: According to Dealroom, Germany has 69 unicorns (out of a population of 83.2 million). The USA tops the unicorn list with 1554 unicorns per 331.9 million inhabitants. In the unicorn ranking Sweden is in 9th place worldwide and I guess on a per capita basis Sweden would be in the top 3.
Top 15 countries for number of unicorns & $1B+ exits:
The fact that almost 75% of the total venture capital was raised by impact startups impresses me and now offers me an explanation in retrospect why the topic of sustainability was so central at the TechArena conference in Stockholm (read my review on the TechArena conference in Stockholm here).
In the future, we can certainly expect more from Sweden in terms of startups and innovation, because large exits often have a snowball effect on the startup scene in a country (see PayPal Mafia). This is illustrated very nicely in the following graphic using selected examples of Swedish unicorns.
Dealroom currently counts 7867 startups in Sweden (February 28, 2024). But why is Sweden so successful in terms of innovation and startups? From the conversations I had, I couldn't really identify a clear (causal) reason. Some believed the good Swedish social system to be the cause, which also offers protection in the event of entrepreneurial failures and makes it easier to take risks. Others referred to the "professors' privilege" in Sweden, which I personally found highly appealing:
Professors Privilege means that professors at universities can own and commercially exploit the intellectual property (IP) of their research, which is a great opportunity and a real asset when starting a venture. This approach is in contrast to most university systems in other countries where the university owns the IP.
During my visit to Stockholm, I had the pleasure of engaging in a thought-provoking exchange with Professor Kathrin Reinsberger at the Stockholm School of Economics’ House of Innovation. This experience left me with the impression that Sweden provides very favorable conditions for research.
Whatever it is that Sweden is doing to generate this abundance of start-ups and innovation, its success proves the country right. But instead of continuing to philisophize about the causal conditions for innovation in Sweden, I would like to also give you a few personal impressions of my trip.
Fika
First of all. I always find different cultural aspects that affect innovation exciting. In Finland I discussed the concept of "Sisu" (read more), and in Sweden I discovered the concept of "Fika". But what is fika? I was looking for a good definition for fika and I liked this one:
“Swedes prefer not to translate the word fika. They don’t want it to lose significance and become a mere coffee break. It is one of the first words you will learn when visiting Sweden, right after tack (thank you) and hej (hello).
Fika is much more than having a coffee. It is a social phenomenon, a legitimate reason to set aside a moment for quality time. Fika can happen at any time, morning as well as evening. It can be savoured at home, at work or in a café. It can be with colleagues, family, friends, or someone you are trying to get to know. It is a tradition observed frequently, preferably several times a day. Accompanying sweets are crucial.” - Source
Swedes like their fika and some coffee with it. They consume about 8.2 kg of coffee per person per year, significantly more than their European counterparts, with Germans and Austrians consuming around 5.5 kg and 6.1 kg respectively (WorldAtlas).
I like the idea of coming together and exchanging thoughts, especially in the context of innovation. If the system allows for this and the time for it is available, this can be fertile ground for interesting ideas. After my trip, I thought about how the trend towards remote working will affect the fika culture in Sweden.
Personally, I actively try to extend “my Fika breaks” beyond my organization and existing network, seeking opportunities for regular exchanges of thoughts with people outside my bubble. This approach is incredibly beneficial for broadening one’s perspective and fostering the development of completely new ideas.
In this respect, I really enjoyed the fika with the Advantage Austria team in Stockholm and I was able to learn a lot from discussing and exchanging views. Here are a few impressions from our fika.
Swedish cuisine: Smörgåsbord
Whenever I'm traveling, I also try to absorb the culture of a country through its cuisine. In the past I used to visit travel blogs to learn about the local cuisine, but this time (due to time constraints) I just asked ChatGPT what I should eat. In addition to the world-famous Köttbullar, the answer was Smörgåsbord. That made me curious. I learned that smörgåsbord is basically a buffet of various hot and cold Swedish dishes. That sounded perfect to me, as I like to try lots of different local dishes. So in a second step I asked ChatGPT if it had a restaurant recommendation for smörgåsbord and surprisingly it actually came up with a name: The Grand Hotel in Stockholm. I actually went there and had a damn good, recommendable smörgåsbord experience.
The whole process made me think about how much customer journeys will change in the future. It was already difficult to get your business to page 1 on Google, but there were at least several positions on page 1 on Google. ChatGPT gave me exactly 1 recommendation, 1 place, for the best smörgåsbord in town (in its opinion). And I took it...
On another day, I visited the nice food market Östermalms Saluhall in the center of Stockholm. I tried two different fish dishes there.
Of course, I’ve eaten also plenty of Köttbullar on my trip, even for breakfast at my hotel :D A very nice Köttbullar dish was also served at the TechArena conference...
Having a drink in Sweden
Okay, after so much food, a cold beer is also nice. And it was no surprise to me that alcoholic drinks are quite expensive in Sweden. A small Heineken in a bottle costs 8 euros in a somewhat hipper bar.
What I didn't know is that regular retail stores only sell alcoholic drinks with a maximum alcohol content of 3.5%, while stronger drinks are only available in special, state-regulated stores, the so-called Systembolaget. It intrigued me to learn that the government holds a monopoly on the sale of alcohol exceeding 3.5% alcohol by volume.
The Systembolaget run by their own rules, e.g. discounts, such as “buy 1, get 1 free” are prohibited, or that no product may be given preference over another, which in practice means that the beers are not chilled. Well, the beer wasn't chilled, but then again, I've never seen such a beautifully presented can of beer ;)
Vasa Museum
In addition to culinary highlights, I always try to visit an interesting local museum when traveling. In Stockholm, it was clear to me that this would be the Vasa Museum.
The Vasa Museum showcases the remarkable Vasa ship, which sank on its maiden voyage in 1628 and was meticulously restored, offering a unique glimpse into 17th-century maritime history and craftsmanship.
For example, I learned this (fun) fact: when the Vasa set sail, a monthly supply of 63 liters of ale (= beer) was taken along for each crew member. This considerable amount of beer was not only intended for consumption, but also served a practical purpose. Ale was preferred to water on long voyages, as its alcohol content kept it drinkable for longer, preventing contamination and spoilage. Serving ale was therefore a rational decision to keep the crew hydrated and reduce the risk of waterborne diseases, especially when access to fresh food and water was limited.
The ship is very impressive. I spent a few hours in the museum and could easily have spent another hour just looking at this extraordinary ship.
Swedish Krona
Whenever I travel, I am reminded of the benefits of the European Union. E.g. being able to use data volume free of charge throughout the European Union is simply pleasant (instead of paying 245 euros for 1GB of data roaming in Switzerland, for example).
Unfortunately, Sweden is not part of the currency union, which prompted me to change 200 euros into Swedish krona. However, it turns out that cash is not accepted practically anywhere in Sweden… Bakery: No. Restaurant: Nope. Bar: No way. Souvenir store: You would think yes, but no. That really surprised me. Maybe because I'm from Austria. Here, there is even a debate on the political stage about whether the obligation to accept cash should be included in the constitution.
Sweden is certainly miles ahead when it comes to accepting cashless payments, which I personally think is good (I just didn't know it beforehand). So I'm taking my nice Swedish banknotes back home with me.
Shoutout to Advantage Austria
Last but not least: My trip to Stockholm could not have taken place without the support of Advantage Austria. A big thank you to Martin Glatz, Mikolaj Norek, Joachim Völkle, Simon Oswald, Caroline Mayr, Lisa Arnold, Sandra Lafer and the rest of the Advantage Austria Stockholm team for the excellent care and support before and during this trip. Many thanks also to Martin Fröberg and Kathrin Reinsberger, with whom the Advantage Austria team brought me together for an exchange of thoughts and who shared interesting insights into the Swedish startup and innovation ecosystem with me.
For those who don't know Advantage Austria, it is the trade promotion organization of the Austrian Federal Economic Chamber. With over 100 offices in 70 countries, Advantage Austria supports businesses from Austria in their global ventures. After the United States, Austria has the second largest trade promotion organization in the world 👀🔥
So Austrian companies can rely on the experts at Advantage Austria to support their export efforts. Each organization can take advantage of eight hours of advice per country free of charge. I have already taken advantage of this support for my own startup projects, because it is super helpful to have an expert in the respective country you are aiming for and to get their opinion on your plans. So take a look at Advantage Austria's services if you have a company in Austria and operate internationally.
And if you are still studying: Students have the opportunity to do an internship in one of the Advantage Austria offices abroad.
Many thanks also to my university and our International Office for supporting this trip!
Want to read more about startup and innovation ecosystems? Take a look at my articles on Finland and Estonia.
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Disclaimer: The thoughts published in this publication are my personal opinion and should not be considered as investment advice or a recommendation for any type of action. I am not a financial expert. The startups, organizations or corporates highlighted in this publication have caught my interest. This mention is not an endorsement or recommendation to engage with them. Readers should always do their own research.