Sweden and Denmark have once again affirmed their status among the global heavyweights when it comes to innovation and ingenuity, and their capitals’ startup success stories have a lot to be thanked for.
After both were named in Carphone Warehouse’s Top 10 World Tech Hotspots for 2021, it would be easy to treat neighbours Stockholm and Copenhagen as one collective ecosystem driving Nordic success. On closer inspection, however, the bridge that connects Sweden and Denmark is also a reflection of the two separate journeys these two cities and countries have been on to reach their respective lofty heights.
Stockholm was named fifth in the index, below the might of San Francisco, New York, London and Boston. Only Singapore separated the Swedish capital from its Danish counterpart.
Inevitably, there are similarities to pull upon – mutual attributes that have taken these two cities towards an unlikely summit. Both performed very strongly in the Access to Tech category in the index, for example, which helped them to mitigate comparatively low scores when in Strength of Industry. They also both scored highly in the Education and Careers category, which reflects the startup ecosystem’s role in each city.
And this is where a vital difference can be found.
“I don’t think many people know this, but there are almost as many unicorns to have come out of Denmark as from Sweden, and certainly as many scaleup successes,” said Niels Martin Brøchner, CEO and founder of Copenhagen-born Contractbook – a contracts management platform targeting SMEs that achieved a $30m Series B funding round in May this year.
“The reason not many people know this is because of the type of company that reaches this level in Copenhagen and Stockholm,” he added. “In Sweden, it is traditionally dominated by names like Volvo or Ikea, and even in the recent tech space, the likes of Spotify, Skype and Klarna are household names.
“As part of their tech startup journeys, Sweden has dominated that lifestyle and consumer brand space – they’re not shy in taking on the biggest consumer brands from the US, and putting their ideas on that level from an early stage.”
In Denmark, companies, innovations and ideas are a little less headline-grabbing, but just as potent, said Brøchner.
“You know Maersk, the shipping company? A huge Danish brand, but if you were to ask the average person on the street to name 10 manufacturers of vehicles or transportation brands, they’d get to Volvo first, I’m sure.
“It’s similar in the tech space. But there is also a mindset aspect to that. Here, we have a culture where it’s not right to say you want to be the best – to say you’re going to win the global market and put yourself out there like that.
“It leads to a train of thought where we see startups that build vital solutions and that gain the same global traction, but that don’t hit the consumer headlines like those out of Sweden.”
A golden generation
This subtle, cultural difference makes it all the more impressive that both Nordic cities are so closely aligned in the global indexes and tech rankings. They are attacking different markets at grassroot, startup level, attaining completely different audiences in terms of uptake and traction, yet are ending up in almost exactly the same position in the global standings.
Brøchner puts this down to a broader “golden generation” of Euro-tech. “I think what we’re seeing across the Nordics is a trend, a leaning and a chain of inspiration,” he said.
“You see it in football – every now and then, a few really good players come together for one country at the same time, and they then inspire a more sustainable and prolonged level of success across future generations too.
“In tech, it’s the same reason San Francisco became the power it is today, and I think we’re seeing the same thing in Sweden and Denmark at the moment.”
As well as gaining regular traction in local markets and inspiring future entrepreneurs, what this “golden generation” has also done is attract long-term attention from the international investment community.
Following so many unicorn successes – both in the public eye out of Sweden, and a little more under the radar from Denmark – eyes from all those cities around them on tech indexes are fixed on the Nordics.
The one-city effect
“It is the same in Sweden, for sure,” said Rickard Bröms, CEO and founder at Stockholm’s Vassla, a micro mobility startup that is redefining the wave of e-bikes and e-mopeds inside and outside the country.
Bröms provides another football analogy: “If you look at Zlatan Ibrahimovic – he has become a global superstar and a household name, and has definitely attracted future generations into the sport here in Sweden as a result.
“But not only that, he attracts attention to the teams he plays for from outside Sweden – just as the Spotifys and Klarnas of this world have done in the tech space.”
This notion of attraction is what Bröms believes has kept both Stockholm and Copenhagen in company with cities in the US.
Not only are all eyes on the two cities because of their tech success, but domestically, they dominate their respective countries from an investment and talent perspective.
“No discredit or offence to cities like Gothenburg or Malmo at all, but there aren’t many other countries that focus their ecosystems quite so solely on one city like we do in the Nordics,” said Bröms. “Even in comparable countries like Switzerland, you have Bern, but you also have Zurich and Geneva. And in larger countries, most have many cities vying for that talent and attention.
“Here in Sweden and Denmark, you have a situation where we have the role models, we have the success stories, we have the international attention, and yet nearly all the internal progress is being channelled through our two capitals, which intensifies their rapid growth even more.”
Global tech heavyweights
Much has been made of the snowball effect that has occurred in these two thriving cities in recent years. Inevitably, there are shared contributing factors to their success, relating to a reduced fear of failure and risk, the ambition among young talent not to work for larger corporates, the role of role models and unicorn inspiration, and the attraction of international communities from both an employment and investment perspective.
However, the commonly stated uniting factor of “culture” or “personality” is what arguably differentiates the two. Their ideas are equally innovative and attractive, but are seemingly channelled toward different forks in the road before coming back together at a point of tech startup success.
Eric Lagier is founder and managing partner at byFounders, a venture capital company that is looking to promote and champion the best of Nordic expression, ingenuity, sustainability and community. He noted that this momentum across the two cities is unlikely to wane any time soon. In fact, the past 18 months may have accelerated development even further.
“It’s no surprise to me to see both cities in the top 10,” he said. “Over the past decade, the Nordic startup ecosystem has flourished and, alongside the booming startup scene, venture capital investments have reached record levels across all stages.
“Today, we see less of a gap between investors and founders, which is leading to more and more unicorns coming out of the region. And, since the pandemic, we’ve also seen more US funds turning up at our doorstep – something that was rare to see pre-Covid-19, but that has been made possible as more deals are being done on Zoom.
“While we still believe that local funds have an advantage due to their market understanding, it definitely makes the landscape even more competitive. And, at the end of the day, more money equals more startups, and more funds just creates more success.”
Thriving as a result of each other’s similarities and differences, Stockholm and Copenhagen are no longer punching above their weight when scoring highly in indexes or rankings. They are now firmly established, global tech heavyweights.
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