Sweden rocks the startup scene! These are the strengths and weaknesses of Stockholm, Europe’s tech startup capital

What are the first things that come into your mind when thinking of ‘Sweden’? Ikea, ABBA, Vikings or meatballs perhaps… How about some of the world’s most successful global tech startups?

Spotify, Klarna and Mojang: once small ambitious startups, now billion dollar companies that started life in Stockholm, Sweden. But how does Sweden, a country of only 9.8m people, roughly a sixth the size of the UK and in fact only half the population of greater London, become the pinnacle of European innovation?

Below we review what Sweden has on offer from a startup’s perspective and especially shed light on its capital Stockholm, strengths and weaknesses.

Stockholm’s biggest strengths for startups

Stockholm’s strengths #1: Fast Growth

When comparing the growth of Stockholm to other popular, worldwide startup locations, you’ll appreciate that the city is only surpassed by two other locations: Shanghai and Sydney.

What’s more, Stockholm continues to climb in rankings, ensuring its startup ecosystem remains a versatile and inspiring location for ambitious entrepreneurs.

Stockholm’s strengths #2: Supportive Government

Sweden’s government is extensively active in protecting and supporting their unique startup ecosystem. To this end, there are many government backed funding programs for entrepreneurs, for example provided by ALMI or the Stockholm based agency Vinnova.

Business-Sweden is a merger between the Swedish Trade Council and Invest Sweden, whose role it is to help Swedish startups penetrate export markets with the correct strategies.

Stockholm’s biggest weaknesses for startups

Stockholm’s weaknesses #1: Rental Fee

The biggest challenge for entrepreneurs in Sweden (especially in Stockholm) is the housing market – it’s massively expensive. This is a serious issue that is drastically restricting affordable staffing.

But, things are changing. The EU Commission listened to the European startup community’s complaints and launched an ambitious initiative to help them scale up in Europe. The local politics show promising improvements as well: The council announced plans to build 140 000 new homes by 2030.

Stockholm’s weaknesses #2: Reserved Culture

It’s not uncommon to hear expats complain that their Stockholm counterparts sometimes are not the easiest people to get on a level with. Even Swedes from outside of Stockholm often stereotype the city as a place where people are less friendly than the rest of the country.

In essence, this can be attributed to the fact that Stockholmers value their privacy. Understanding this trait, we can gladly add it to the list of endearing quirks of the Swedes.

These are Sweden’s special features that lure startups

Sweden’s specialty #1: Market Testing

The successful startup culture in Sweden can be partially put down to the fact that the country arguably has the ideal market to test new products in. Swedes are not only very open to innovation and change, but they also benefit from a well invested technical infrastructure, which ensures mobile and internet usage and reliance remains at a premium.

For tech startups this means they have the luxury of being able to effectively test their product or service with ease and very little risk before scaling internationally.

Sweden’s specialty #2: A World Class Work Force

There’s no shortage of world class technical skills in Sweden, which hail from universities such as the Royal Institute of Technology and the Chalmers University of Technology in nearby Gothenburg. In addition, Sweden has a long established socialist government and culture. Hence, the country is massively appealing to skilled workers from across the world, who benefit from subsidized education and health care.

Sweden’s specialty #3: Small Population

With a population of less than 10 million, Swedish businesses have always had to think outside of the country’s borders. It’s quite normal for a Swedish company to look to expand globally within just a couple of years of inception and there is plenty of help on hand to ensure you achieve such ambitions.

Want to know more about promising tech startup hubs all over the world? See what other cities have to offer and browse through the startup hub series on our blog.