PRINT THIS PAGE

Venture opportunities in Sweden

The venture capital market in Sweden is now the third largest in the world, according to this report from the Invest in Sweden Agency. With success stories such as Nokia and Ericsson at centre stage, much has been done to make this transformation possible.

Sweden has taken an amazing leap into the 'new economy' in recent times. In only a few years, Sweden has shifted into an entrepreneurial economy. The transformation was initiated by the internet revolution as well as by the nation's very high standards in bioscience. It has affected most parts of society, not least the venture capital sector.

The Swedish venture capital market is now the third largest in the world after the US and Great Britain. The number of venture capital companies in the Swedish Venture Capital Association has increased from 24 in 1994 to 130 in 2000. Many of the new companies work in IT-related fields.

There is a new breed of entrepreneurs, highly motivated to establish new companies, and a recent study by EU Industry Minister Erkki Liikanen, concludes that Sweden is the ‘EU's most innovation-friendly nation'.

Sweden, the country of the Nobel Prize, has a long tradition of strong research, innovation and product development. The strong growth of the pharmaceutical and biotechnology industries in Sweden is the result of unique co-operation between academic research and industry. New technology in bioscience and IT is now being commercialised by new firms backed by venture capital, as well as by large corporations, universities and research institutions.

Many new trends and factors have made these developments possible:

• The internet
  
  
• The success of Ericsson and Nokia
  
  
• Sweden's status as a qualified market, with many ‘early adopters', making it the perfect test market and entry point to Europe
  
  
• Sweden's EU membership creates a perfect entry point into the European market for start-up companies
  
  
• Institutional money pouring into venture capital
  
  
• Many new service companies being established to support start-up firms, creating an increasingly better infrastructure for new ventures
  
  
• A new breed of business angels
  
  
• A well-educated workforce
  
  
• Sweden's status as a world leader in internet and PC usage (the number one world leader, according to IDC)
  
  
• US blue chip companies, such as Intel, Microsoft and Motorola, setting up research and venture activities in Sweden
  
  
• US companies acquiring several Swedish high-tech start-ups at multi-billion dollar valuations, serving as success stories that inspire new entrepreneurs
  
  
• A new Swedish mind-set, prompting many entrepreneurs to spin off on their own after working for large companies
  
  
• Deregulations and a reasonable tax structure establishes competitive cost levels
  
  
• The Stockholm Stock Exchange works well as an exit market for high-tech companies
  

The old perception of Sweden as a high-tax country is quickly changing. US investors are no longer hesitant to invest directly in Swedish start-up companies. This, of course, is partly in combination with the overheated and sometimes overvalued US market, which encourages US venture capitalists to invest overseas. Swedish venture capitalists have been among the quickest in Europe to adopt US venture capital practices, making it easier for American investors to understand term sheets, deal structures, incentive programs and different exit scenarios. ‘Alignment of interest' is a key venture capital rule and the Swedish venture capital industry has matured significantly in a very short time.

This - combined with the very strong general background in R&D in the academic world and in large international Swedish companies - forms the basis for the new dynamism. Sweden is especially strong in pharmaceuticals, biotechnology and telecom/IT. AstraZeneca, Pharmacia Corp., Ericsson and Volvo Ford are only a few of the international companies of Swedish origin with a very high portion of their R&D and development located in Sweden.

According to Ulf Corné, who has worked in Silicon Valley in various periods during the past ten years, US interest in Scandinavia and Scandinavian technology companies has never been greater than today. A critical mass of highly talented specialists, technology, ideas and capital is already in place, forming an entrepreneurial environment as never before in Sweden.

The convergence of the internet and wireless products and services add to the new interest in Sweden as a test market and as a location for research activities and new companies that plan a European roll out. Sweden has a large internet user base and a high wireless penetration - a highly attractive combination when it comes to testing new products and services.Sweden's high level of research and the nation's recent shifts into an entrepreneurial economy are supported by very open and service-oriented regulatory authorities. Sweden has the fourth highest number of biotechnology companies in Europe, exceeded only by the much larger countries of Great Britain, Germany and France.

The Invest in Sweden Agency is a government agency assisting foreign companies interested in investing in Sweden. It offers a wide range of services free of charge, including information about local conditions, contacts, facts and data that can facilitate an establishment in Sweden.

© 2000 Invest in Sweden Agency