Venture Capital Sweden

Venture Capital Sweden

The number of venture capital investors in Sweden has been growing through determined effort and the country is now one of the leading nations for startups, intentionally providing a supportive environment. These investors have funded both non-profit organizations and public organizations there. Things are rapidly changing from the days in Sweden when it was more likely that a company would be funded by a public sector investor than a private one.

These changes have occurred over a generation. Despite Sweden’s efforts in cities like Stockholm, according to the Swedish Venture Capital Association (SVCA), the market had significant room for expansion. In 2012, over 40% of the funding from venture capital n the country came from the public sector and 57% came from private investors. This mean that almost half of the wealth that was used to stimulate growth is coming from private investors.

Investors in Sweden help businesses at different stages of their growth. Some come in at the pre-seed or seed stage and supply the cash needed for the business to grow from the very first step. Others supply funding later on and assist with expansion via equipment purchases or branching out into other areas.

Startups that focused on computers and consumer electronics were able to attract the greatest level of investment in Sweden. However, venture capitalists were also ready to help build companies in other areas, such as life sciences, communication, business, energy and the environment.

The SVCA realized that more work had to be done to attract investors to the market. This was because the Swedish venture capital market had not seen consistent growth throughout the years. For example, in 2012, the amount of investment actually declined as compared with investment in 2011. While investment was occurring in a wide range of companies, traditional venture capital funds were more likely to end up with established companies than those which were just starting up.

Syndicated investments

As less venture capital funds ended up with early stage companies in the earlier years of Sweden’s startup development , venture capital investment in Sweden sometimes looked more like private equity funds than venture capital funds. This trend of syndicated investment often impacted foreign companies, which would not agree to be the leading investor. Previous insecurity in the market caused some companies to be undervalued in the expansion phase but now all of that has changed.

The relative lack of funding options just a few years ago meant that instead of thriving via venture capital, younger companies were finding it difficult to do business in Sweden. They could not access the funds that they needed as easily as more established companies could. These older companies were already more competitive in several ways and by continuing to attract more venture capital, they were able monopolize some sections of the market.

Tax Incentive Schemes Used To Boost Investment

In 2013, a tax incentive scheme was developed to encourage investments in small businesses. This resulted in deductions and tax reductions for the investor. In addition, a foreign resident’s sale of shares in a Swedish company were not taxed. This helped to push investment and growth.

Well-Known Start-ups from Sweden

Ericsson, the networking and telecommunications company, is one of the big companies that was founded in Sweden and is now recognized around the world. There are startups, such as Klarna, which are not always immediately recognized as being Swedish because they are thought of as global brands first. However these startups are making an impact on the way consumers worldwide do business.

Klarna is offered as a payment option by a wide range of retailers, making it easy for shoppers to buy now and pay within thirty days without attracting interest. Spotify is another Swedish startup, known for its impact on the way music is marketed and enjoyed.

Other startups from Sweden include:

  1. Truecaller, which raised EUR 90.8 million in funding
  2. EA Digital Illusions
  3. iZettle
  4. NA-KD

Swedish Unicorn Companies

Unicorn companies in the venture capital industry are companies that have reached the value of $1 billion. If we look at the growth of unicorn companies, Sweden is in the top 10 cities with the largest concentration of dollar billion companies. 

Currently, there are many famous unicorn companies in Sweden, such as: 

  • Spotify – It is astonishing to know how much this music streaming application has grown from 2008 up to now. Spotify has become one of the most remarkable and famous digital music centers with over 70 million subscribers ready to pay to have access to more than 30 million songs. 
  • Skype – When Nuklas Zennstrom and Dane Janus Friis founded Skype, it allowed families everywhere to stay in touch. Their peer-to-peer calling service helped travelers to adjust to new countries. Business people were able to conduct interviews with Skype and children have learned new languages via Skype calls. The application has grown unexpectedly, becoming one of Sweden’s unicorns. In 2011, Microsoft purchased the video chat service and internet voice provider.
  • King – You may not be familiar with King, but you will know Candy Crush, which is just one of the 200 mobile games produced by King. It has over 300 million users that play monthly and has gained a name in the gaming industry.
  • Mojang – Another Swedish Unicorn is the production company that developed the popular game Minecraft – one of the best-selling mobile games with more than 144 million copies sold. 
  • Klarna – This is an online payment process and business founded last 2005 by three brilliant students. Now, Klarna has made over 650,000 financial transactions and has over 60 million members. 
  • Evolution Gaming – For the past years, Evolution Gaming has also evolved its online game sector last 2006. It even doubled the share price it had in just a year. 

Top Start-up Cities in Sweden

There are three cities in Sweden which are widely regarded as having the most vibrant startup ecosystems in that nation. They are:

  1. Stockholm
  2. Gothenburg
  3. Malmo

The Finnish Venture Capital Association has stated that in terms of investment volume in startups, Sweden is second in Europe. Most of these investments are based in Stockholm and that is why this Swedish city is called the Unicorn Factory. Stockholm is the third top startup hub in the world and has one of the highest densities of developers in Europe.

Venture Capital Stockholm

Being the capital of Sweden, Stockholm indeed holds excellent pride for being a great contributor to venture capital. Aside from the fact that it is located at Lake Mälaren and Salt Bay, it is also the center of the Swedish economy.

Aside from having breathtaking landscapes, Stockholm is also known for tech startups and may be the home of the new Silicon Valley. This is reflective of the changes in Swedish society that have occurred in the last thirty years. Entrepreneurs in Sweden are respected, due to the billions that they have helped to generate and the global success of Swedish brands like Minecraft and Spotify.

Venture Capital Gothenburg

Most often, Gothenburg’s investors, banks, and other financial institutions amazingly support startups, especially when they want to stake their growing value. Venture capital ensures that startups with great potential would have the chance to show the market what they can offer.

Gothenburg is the second biggest city in Sweden and it has a great ambiance towards seaside charms and friendliness. Investors in Gothenburg are very versatile when it comes to supporting different kinds of startups and headquartered inside the area of Vastra Gotaland and Sweden.

Venture Capital Exits in Sweden

Billions of dollars have been produced through venture capital exits in Sweden. Most notably, Spotify’s IPO generated 27 billion and iZettle’s acquisition was for 2.2 billion. Stockholm is steadily producing exits at a rate that makes Sweden a leader in Europe.

The returns from all its IPOs and acquisitions have caused a surge in angel investing. The number of exits has also resulted in a rise in the number of serial entrepreneurs in Sweden.

The Swedish cofounder of Atomico has said that the exits create a generation of founders who will go out and obtain funding from other founders. Success generates more success and that’s what is happening in Sweden.