2024-08-19 05:30:55
The Swedish economy has in many ways suffered the same hardships as the rest of Europe: recent bouts of inflation and recession, and dim growth prospects in a world now divided by geopolitical and economic conflict.
Still, the Nordic country has a collection of high-tech companies that are the envy of its neighbors. Spotify and Skype are global brands. Financial technology company Klarna and video game maker King Digital Entertainment candy Crush Sagaare other examples of local technological strength.
“They have things that other European countries don’t have, especially in the technology sector,” said Jacob Kirkegaard, a senior fellow at the German Marshall Fund.
These entrepreneurial successes have renewed attention at a time when there are concerns about Europe’s ability to compete with high-tech advances in the United States and China.
While the United States gave birth to a generation of companies like Google, Meta and Amazon, China’s tech scene has flourished with companies like Alibaba, Huawei and TikTok parent ByteDance.
Europe certainly has its own tech giants, such as Dutch company ASML, a world leader in semiconductors, but overall the continent is seen more as a bystander than an innovator, known for its heavy regulation of foreign tech companies rather than for creating its own.
The economic impact of this delay is considerable, but it also has important social implications. European policymakers worry about the long-term effects of becoming dependent on foreign companies for communications, social media, shopping and entertainment rather than companies that share what are often called “European values”.
These values include placing a greater emphasis on protecting privacy, preventing the spread of hate speech, maintaining strong labor protections and a better work-life balance.
Critics of European technology policy complain that Europe has more limited access to venture capital and a cultural aversion to risk. European tech workers often emigrate to the United States rather than start businesses at home.
Photo credit: LOULOU D’AKI, The New York Times
Spotify Office Stockholm
But Sweden has had a different experience. According to the European Tech Report by investment firm Atomico, the country has more tech unicorns (startups valued at more than $1 billion) per capita than any other country in Europe, second only to tiny Estonia. It ranks fourth in unicorns, behind only the United Kingdom, Germany and France, which have six to nine times the population.
Mario Draghi, former president of the European Central Bank, who has analysed the EU’s “competitiveness crisis”, recently cited Sweden as an example, noting that its technology sector is twice as productive as the EU average and that it offers strong social programmes.
In interviews, more than a dozen entrepreneurs, investors and economists agreed that one element of Sweden’s success lies in moves in the 1990s to give large swathes of the population access to personal computers and broadband, at a time when most people were just getting used to the grating sound of dial-up modems.
Photo credit: LOULOU D’AKI, The New York Times
Creandum is a venture capital firm that has invested in Spotify and Klarna, with an office in Stockholm.
Fredrick Cassel, a partner at venture capital firm Creandum, which has invested in Spotify and Klarna, said his ability to use the internet at home put him on the path to technology investing.
Mr. Kassel, 50, said Sweden’s desire to equip every home with a computer and develop connected technology had created “a generation of engineers.” “It’s hard for me to imagine that this would have happened without these two pieces of infrastructure.”
Swedish entrepreneur Hjalmar Nilsonne had a similar experience, remembering receiving his HP Pentium II computer in 1998, at age 10: it “changed my life by introducing me to programming and the Internet.”
Photo by David B. Tocci, The New York Times
Hjalmar Nilsonne, co-founder of medical technology company Neko Health
Nilsonne founded and sold Watty and recently co-founded a startup called Neko Health with Spotify founder and CEO Daniel Ek.
“His story is exactly like mine,” Mr. Nelson said of his Neko partner.
We started playing around with computers. We learned how to create websites. When we were teenagers, we started selling websites to friends and family. And all of this was possible because we had early access to the internet.
Hjalmar Nilsonne, Co-founder, Neko Health
Analysts also point to Sweden’s tradition of public and private R&D investment, which currently accounts for 3.4% of total output, one of the highest proportions in Europe. There are also large assets from family foundations such as Wallenberg and IKEA, as well as a government-controlled pension system, which are local sources of early-stage venture capital in this small country.
Åsa Zetterberg, chief executive of trade group TechSverige, said Swedish companies have been forced to look outside a country of just 10 million people for customers.
This requires startups and industry to be “competitive in the global economy”.
Half of the country’s GDP comes from exports, and by 2022, the technology sector accounted for 11% of total exports.
Niklas Zennstrom, founder of Skype and current CEO of Atomico, said startups can get initial funding, but it is much more difficult for them to get the financing they need to expand in Europe than in the United States.
The push for more funding comes as governments around the world seek to more aggressively steer their economies. The U.S. has increased spending by hundreds of billions of dollars on semiconductors, alternative energy and electric vehicles to compete more aggressively with China.
Leading Swedish industrialists and investors have repeatedly stressed the crucial role the country’s large social safety net plays in encouraging entrepreneurs to experiment and take risks, despite the high taxes that fund these projects.
Cassell said that an effective “welfare system” is the best way for the Swedish government to encourage entrepreneurship and innovation.
Free education, free health care, free childcare. “You can afford to take risks, and if you fail, you’re not going to end up on the street,” he said.
This article was published on The New York Times.
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