Ecosystem Deep Dives #13: Sweden - Innovate for Impact
Why a discreet Scandinavian country has the second percentage of unicorns per capita in the world.
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A long time coming
Nestled near the unforgiving temperatures of the polar north, Sweden’s success as a global start-up hub is anything but an overnight success. Now boasting the second highest number of unicorns per capita in the world (behind Silicon Valley), Sweden’s start-up ecosystem is one of the most performant in the world. Household names such as Spotify, Klarna and King (the makers of Candy Crush) all contributed to earning Sweden the nickname of “Europe’s unicorn factory”.
A number of economic, political and social preconditions have led Sweden to success. On a societal level first, government policies aimed at digitizing the country in the 90’s gave rise to an extremely digitally-literate population decades later. The CEO of Klarna, Sebastian Siemiatkowski, said he started teaching himself how to code at age 10, on a government-subsidized computer. Similar to Estonia, digital-embracing government policies put in place more than two decades ago led to Sweden’s brightest minds being ready for the plethora of opportunities the internet would end up offering. Today, more than 3/4th of the Swedish population has access to superfast fiber optic broadband, with 90% of the population using the internet.
Taking a closer look at what makes Swedish founders so prolific, one realizes the paradox between the country’s dynamic start-up ecosystem and its heavy welfare state/taxation policy. The politicization of the economic debate has led most people to see such matters in black and white, namely:
Low taxes, small state = Flourishing private sector BUT little public services.
High taxes, heavy state = A lot of public services BUT slow and heavy private sector.
The fact of the matter is that Sweden, as well as other Scandinavian countries, have proven that welfare state and free markets can co-exist. Better yet, they support each other. For example, many attribute Sweden’s start-up success to the peace of mind its social/health safety net provides to its founders. Free, quality higher education also provides the country with a continuous qualified and multi-lingual talent pool.