Stockholm Tech – The Startup Boom and the New Face of Venture Capital (Part 2 of 4)

Part 2: The Snowball Effect

Around Stockholm, startup hubs, activities, spaces and incubators are now emerging, driven by need for access to office space, networks and getting together with other talents to build amazing new things. 

Jonny Strömberg is one of the entrepreneurs behind Startuplocation.com (a map with the most exciting startups in the Nordics) and STHLMStartupHack.com (another meetup for developers and innovators). One of the most well-connected and established events is the quarterly Founder’s Poker, initiated by Pricerunner founders Kristofer Arwin and Magnus Wiberg.

So Stockholmers are busy engaging in activities together. There’s even an app for that. Young entrepreneur Didrik Persson, a student at the hyper-creative hyper-digital school Hyperisland, has started CANU together with two friends from Russia and Spain. CANU aims to be the “Twitter for activities”, making it easy to plan spontaneous events on the go, and is the perfect example of a simple, smart, user-focused and 100% mobile innovation. This app is launching on App Store soon, was developed in the classroom and is still at pre-seed capital stage. “People want to do things, look ahead and don’t like wasting time on planning,” Didrik says.

James Pember is originally from Australia and one of the co-founders of Swedish Startup Space, a meeting place and online community. “The purpose of the Swedish Startup Space is to connect people locally, lower barriers and not care too much about social norms,” he says. Maybe it takes an outsider from Australia to break the ice.

Tyler Crowley, a native of Los Angeles, is one of Stockholm’s busiest promoters, engaged by the city to cultivate the tech scene. According to Tyler, a vibrant tech community needs three important ingredients: 1) a venue for events, new connections and work, 2) documentarians who can put all that is happening online, and 3) a brand. Tyler and friends launched the Stockholm Tech Meetup in February 2013, and from these monthly events the brand evolved from the bottom up. #sthlmtech. Stockholm Tech Meetup is today a very busy monthly happening gathering hundreds of entrepreneurs and founders. And increasingly, SUP46 is now becoming a new place to engage the tech community, with an agenda: “To provide fertile grounds for growing startups and put Stockholm on the map”.

Looking from a US perspective, Tyler thinks that Stockholm is to its better-known neighbours like London and Berlin what Los Angeles was to Silicon Valley and San Francisco. Initially you suffer from having big brothers, but then you find your strengths. Now venture capitalists as well as YouTube are moving to LA, the Content Capitol of the World. So what are Stockholm’s strengths?

“You have world-class gaming and music startups. You have design and simplicity. And you have the mobile DNA. It will not be long before international VCs come here much more often and maybe also US accelerators like TechStars and 500 Startups. Stockholm is the world’s best kept secret,” says Tyler. So don’t leave for Berlin, London, LA or San Francisco. Stockholm is already a home for entrepreneurs and international talent.

Stockholm itself grows fast as a city. The metropolitan area now counts 2.2 million inhabitants, almost a quarter of Sweden’s 9.6 million population, and grows with some 30,000 to 40,000 newcomers every year, the equivalent of a small town. Or a new Gothenburg every ten years. Value creation is clustering in Stockholm and the city is becoming a planet of its own in a globally networked economy. It’s the other parts of Sweden, rural areas and formerly glorious industrial regions, that are now suffering with the exodus to the cities and Sweden’s economic transformation from an industrial society to a services society, leaving ghost towns behind. Sweden’s paper mills are downsizing with the waning demand for printed newspapers. Our original fortunes were built in the mines and forests of the north. The startup scene is urban.

“Stockholm is an accelerating snowball,” says Pär Hedberg, the CEO of STING. “With a critical mass of services and specialised competences, the city keeps on scaling and attracting more talents.”

The other two big cities in Sweden are Malmö in the south and Gothenburg on the west coast. “There are several exciting companies in Malmö, but not close to the amount of startups in Stockholm. Gothenburg, on the other hand, seems much less active in the startups space,” says James Pember.

Can the reason be the industrial dominance of companies like Volvo and SKF in Gothenburg? There are several cool startups in Gothenburg, but maybe they don’t make as much noise as in Stockholm and there is not the same startup community. But things are happening there, too. The incubator Chalmers Innovation launched over ten years ago, and with over 100 companies started it’s a hub for startups in the region.

Malmö can show several recent high-profile exits like QlikTech that was listed on Nasdaq in 2010, Polar Rose and AlgoTrim that were acquired by Apple, and The Astonishing Tribe which was acquired by Blackberry. Malmö is also close to the top-ranked Lund University with it’s own incubator VentureLab, and the more well-known Ideon Science Park with around 350 companies in various industries. Mårten Öbrink is the CEO of Minc, Malmö’s only incubator and owned by the city of Malmö. “We usually have 25 companies running at Minc, and we are pretty much the startup scene here,” he says.

The most, and most well known, of Sweden’s startups are, after all, in Stockholm. The same goes for the venture capital market, which is also mainly in Stockholm – the financial centre of Sweden, and pretty much of the Baltic region. In part 3 we will look at the new face of Swedish venture capital. Stay tuned.

Originally published on Standout Capital.