Venture Capital Sweden

Venture Capital Sweden

The number of Venture Capital investors in Sweden has been growing through determined effort. The country is now one of the leading nations for startups by providing a supportive environment. Swedish VC investors have funded both non-profit organizations and public organizations. Things have rapidly changed since the days a Swedish company was more likely funded by a public than a private investor.

These changes have occurred over a generation. 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 in the country came from the public sector. About 57% came from private investors. This means almost half of the wealth used to stimulate growth is coming from private investors.

Swedish investors help businesses at different stages of their growth. Some enter 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 by purchasing equipment 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. 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. The Swedish venture capital market had not seen consistent growth throughout the years. In 2012, investments actually declined as compared to investments in 2011. A wide range of companies got investments. But traditional venture capital funds were more likely to end up with established companies than those that were just starting up.

Syndicated investments

Venture capital investments in Sweden sometimes look 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 meant that instead of thriving via venture capital, young 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 to 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. For example, a foreign resident’s sale of shares in a Swedish company was not taxed. And this helped to push investment and growth.

Well-Known Start-ups From Sweden

The networking and telecommunications company Ericsson is one of the big companies founded in Sweden. It is now recognized around the world. Startups like Klarna are not always immediately recognized as Swedish because they are considered global brands first. However, these startups make an impact on the way consumers do business worldwide.

Klarna is offered as a payment option by a wide range of retailers. The service makes it easy for shoppers to buy now and pay within thirty days without 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 € 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 countries with the largest concentration of billion-dollar companies. 

Currently, there are many famous unicorn companies in Sweden: 

  • 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. They have over 70 million subscribers paying for access to more than 30 million songs. 
  • Skype – When Nuklas Zennstrom and Dane Janus Friis founded Skype, it allowed families everywhere in the world 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 a production company that developed the popular game Minecraft. It is one of the best-selling mobile games with more than 144 million copies sold. 
  • Klarna – An online payment process and business founded in 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. It even doubled the share price it had in just one year. 

Top Start-up Cities in Sweden

There are three cities in Sweden that are widely known for having the most vibrant startup ecosystems. They are:

  1. Stockholm
  2. Gothenburg
  3. Malmo

The Finnish Venture Capital Association stated that Sweden is Europe’s number 2 in terms of investment volume. Most of these investments are based in Stockholm. That is why this Swedish city is called ‘The Unicorn Factory’. Stockholm is the number 3 startup hub in the world. It has one of the highest densities of developers in Europe.

Venture Capital Stockholm

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

Stockholm is also known for tech startups and may be the home of the new Silicon Valley. This is an effect 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 for the global success of Swedish brands like Minecraft and Spotify.

Venture Capital Gothenburg

Gothenburg’s investors, banks, and other financial institutions often 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. 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.

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 co-founder 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.