Jul 26, 2012
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You won’t find any accelerators in Stockholm, but the start-up community here has been thriving without them. Our scene is self-organizing, with informal co-working spaces, Friday beers and ping-pong gatherings, Mobile Mondays, hackathons like 24 Hour Business Camp and Health Hack Day, and Stockholm Startup Day, a conference that brings the academic and entrepreneurial world together each year.
Time and resilience creates momentum, which came in 2011. The scene saw two exits in JayCut and Pixlr, and the founding of Tripbirds by famous solo entrepreneur Ted Valentin. Named by Wired magazine as one of Europe’s hottest start-up capitals, Stockholm has attracted a steady stream of well-known and respected venture-capital firms in the past two years; some, such as Sequoia and Index Ventures, came to town even earlier to spot winners like King.com and Stardoll.
“Those were the days, when the local venture capital firms wouldn’t even have lunch with me,” recalled Stardoll CEO and founder Mattias Miksche, during a breakfast seminar last year on venture funding, as he smiled at one of the locals who had turned him down. Today, Stardoll, a virtual entertainment and social-gaming destination, is more than 100 million members strong.
Funding from Afar
Index Ventures in particular has an affinity for Nordic start-ups, having invested not only in Stardoll, but Rebtel, iZettle, and Tripbirds, as well. Its Nordic family has grown to the extent that it even threw a summer party in town.
Foreign venture capital has undoubtedly boosted Swedish businesses; in Q3 of 2011, 40 percent of all VC investments (excluding buyouts) came from outside of Sweden, according to the Swedish Private Equity & Venture Capital Association. Why do they come here? Scandinavia has a strong track, having produced 33 percent of European tech exits according to most recent statistics, making it an attractive playground for Europeans and beyond.
Despite the positive trend, early-stage funding in Sweden is still highly absent, and the existing private angel investors are not to be found on AngelList. That’s where previous track record, great networking skills, private email lists, and invitation-only poker nights come to play an important part.
Kickstarting It, Swedish Style
To solve seed-stage funding, Sweden has picked up on international crowdfunding trends; it has started government initiatives that support projects that manage to get their first 50 percent of funding from the crowd. Funded By Me, a Swedish version of Kickstarter, is also planning to offer crowdfunding for startups.
Not all start-ups in Stockholm face early-stage funding struggles, though. Take the biggest juggernaut in town, gaming company Mojang. Its hit game, Minecraft, has more than 35 million users, adding approximately 100 thousand users per day with 20 percent conversion rate of its $25 game—the revenue math makes me dizzy. Venture capitalists have tried to throw money at them, but Markus Persson, co-founder of Mojang, is keeping the door closed. They’re doing just swell.
Sweden ranks as the most creative and innovative countries in the world in a survey made by Martin Prosperity Institute, though that survey clashes heavily with another from Global Entrepreneurship Monitor, which reports Swedish entrepreneurs prefer to be safely employed. Though 12 percent of the adult population considers itself entrepreneurial, only 6 percent actually start their own business. So not surprisingly, Sweden ranks highly on intrapreneurship, in which entrepreneurial and creative employees are driving innovation and change within a corporation.
The brightest star in the intrapreneurship sky is Toca Boca, wholly owned by one of the largest media houses, the Bonnier Group. Toca Boca makes digital educational toys for children, and 15 months after launch it has hovered near the top spot in the Education category in the App Store. According to CEO Björn Jeffery, its 13 apps have been downloaded 13 million times.
All Eyes on Facebook
With success stories like Klarna within digital payments, peer-to-peer streaming technologies such as Spotify, and gaming companies Stardoll and King.com, who are the new kids in town? The Facebook generation, of course: 52 percent of the Swedish population have Facebook accounts, making it an attractive place to leverage the Facebook Open Graph. Thus, many of the latest social consumer plays, such as Tripbirds, Wrapp and iZettle (all Creandum-portfolio companies), require a Facebook account to sign in to the service.
Take That, London!
Why move to Stockholm instead of, say, the London Silicon Roundabout? For starters, it’s an ideal test bed, with 52 percent of the population on smartphones, 69 percent using the Internet daily, 49 percent starting on the Internet at age 3, and 50 percent playing digital games.
What you lose in the price of beer, you’ll gain in rent, and dark cold months still beat the endless gray, rainy London days. During good winters, we have snow. And in case you’ve heard you have to pay Swedish value-added tax (VAT) twice for apps, exhale. The motion has been cancelled and put on hold in wait of EU directive.
Got children? You’re in luck; Sweden offers a phenomenal day-care system, so parenting and start-ups can and do coexist here. Just ask two of the co-founders of 13th Lab, a computer vision startup. Parents of two small children, their meetings sometimes have nearly as many baby trolleys as participants. (They just also raised $700K from Creandum, stepping on the gas).
This article is commissioned by Qualcomm Incorporated. The views expressed are the author's own.