The most exciting startup scene you have never heard of isn’t in Seattle, or London—it’s in Scandinavia.
The Nordic countries, particularly Sweden, have the highest percentage of unicorns per capita in the world, and have developed more successful brand name billion-dollar startups—Spotify, Skype, and Klarna to name a few—than any other region besides Silicon Valley and Beijing, which has 17 in a metropolitan population of over 23 people in a greater provincial area of over 100 million.
After speaking to several of the leaders of the regions’ startup ecosystem, I’ve found clear reasons for their startup success.
Startup ecosystems invariably thrive in strong clusters. The Valley, which encompasses San Francisco, Palo Alto, Mountain View, San Jose, and more talented engineers per capita than anywhere on earth, is of course the most famous. What is unique about the Nordics is how their leaders have created a very close cluster despite comprising several different countries. Shared cultural history and affinity, as well as similarities in language and low-levels of border control, are very clear factors in making the region feel like a neighborhood.
“There’s been a rise of startup communities in Finland and other Nordics as well. These communities function at the intersection of municipality, corporations and academia, bridging gaps and opening up exciting opportunities for their startups,” said Panu Keski-Pukkila, founder of Hardware Startup Finland.
“The Nordics have a unique blend of a strong engineering, design, and data culture that goes back many generations, a small tech savvy local market which is a great test bed before going global, and most importantly a product-driven problem solving mindset that starts with the individual and goes all the way up to policymaking. A Nordic startup DNA of sorts is being formed,” said Marta Sjogren, a principal at Northzone.
Like Silicon Valley, the Nordics are home to some of the world’s best universities and boast one of the most highly educated populations in the world.
Sweden, in particular, has a highly entrepreneurial culture. Stockholm has become a cultural hub for startups, soaking up the prodigious engineering talent of neighboring countries such as Estonia; at Slush I sat next to the Chief Technology Officer of Estonia at the Speakers Dinner and his enthusiasm for Finnish companies’ increasing penchant for utilizing Estonian software development firms and freelance talent was unbridled.
“Even though the Nordics account for a significant percentage of ‘unicorns’ worldwide, the actual number of people in the startup scene is not that high—so it feels like everybody knows everybody, and there is a lot of support—right from top schools offering workspaces and business contacts in their own incubators, to investors being easier to reach, to the government making it easy to start a business,” said Ankit Desai, Managing Partner of R&D Labs at Universal Music.
This educational strength is complimented by consistently high quality of life ratings—Norway and Sweden are routinely rated in the top five countries in the world to live—and high social stability. This in turn contributes to building a stable and ballooning ecosystem as local powerhouse startups take advantage of international markets in Europe and the U.S., but local talent feels no compulsion to leave.
Perhaps the Nordics’ greatest uniqueness is the combination of a robust homegrown capital ecosystem but one that is matched with a deeply international outlook—both in terms of regional and global internationalism. Unlike ecosystems such as Israel, which rely heavily on international (particularly U.S.) funding at the institutional level—Nordic startups can depend on their local ecosystem for funding while still developing an international culture.
In this particular way, the Nordics far outstrip any other regions, even Silicon Valley, which has long seen market opportunities in China and Europe but always focused primarily on the healthy U.S. domestic market.