In a technology landscape dominated by US and Asian conglomerates, it’s hard to believe that two early tech successes emerged from the northern corner of Europe, in the Nordic region.
Nokia and Ericsson entered the world stage as early players in the mobile phone industry. Nokia’s phones were, at one stage, the world’s best selling mobile phones: at its peak, the company accounted for 4% of Finland’s GDP, 21% of exports, and 70% of market capital on the Helsinki Stock Exchange. Ericsson, meanwhile, released one of the early smart phones, while also pioneering Bluetooth technology.
Both companies were quickly left behind by a fast-moving smart phone revolution—but they left a firm imprint on the Nordic region, and more importantly, what it was capable of on a global scale.
In their wake has emerged a glut of recent tech stories—Skype, Spotify, and Klarna to name a few—which have cemented the Nordics’ reputation as a startup hub able to compete with technological and industrial powerhouses. So why has the Nordic tech ecosystem been so successful?
The scale of Scandinavia’s success
It’s fair to say that the Nordic tech companies are having a moment right now. A region which once boasted giants of traditional industries—like IKEA, Maersk, Volvo, and H&M—has developed a new reputation for technology and software companies.
Spotify is by far the region’s biggest homegrown success, founded by Sweden’s Daniel Ek and Martin Lorentzon. Their brainchild has not just disrupted the music industry but transformed how we consume music and podcasts, going public in 2018. It now rakes in nearly $10B in annual revenue, with a market cap of $32B.
Fintech has been a major focus of talent in recent years. Klarna, once rejected in a university entrepreneurship competition, is now a buy-now-pay-later leader. Last year, they received $639M in investment from SoftBank, valuing the company at $45.6B. They’ve just launched their new physical card, which already has 400,000 people on their waiting list. Pleo, a company card and expenses platform, is one of Scandinavia’s latest unicorns, founded by Danish entrepreneur Jeppe Rindom: it tripled its value over the second half of 2021.
It’s not just the startups that are supporting Scandinavia’s tech ecosystem. Nearly 9000 people descend on Helsinki-based Slush, which has fast become one of the world’s top tech and startup events. There’s also a slew of tech accelerators that have been a huge asset to the region’s growth. Sting, in Stockholm, has worked with 200 startups, investing more than €400M. Oslo is also home to regional outposts of global tech accelerators Antler and Techstars.
Competing on a global stage
One of the most impressive elements of the Nordic success story is how quickly they’ve established themselves, and been able to attract fundraising from around the world.
Part of this is the financial success of companies like Klarna, and Spotify—all quick to reach unicorn status and to become major players in their respective industries. For investors, this showed what the region was capable of, and why Nordic startups should be considered with the same admiration as those hailing from Silicon Valley and the like.
The success of Nordic unicorns has also fed directly back into the ecosystem. Skype founder Niklas Zennstrom set up prominent venture capital fund Atomico, which as well as its global investments has funded Nordic companies like Klarna and Rovio (developer of the Angry Birds franchise). Other unicorn founders—like Klarna’s Sebastian Siemiatkowski and Niklas Adalberth, as well as Spotify’s Daniel Ek—have followed suit, helping the Nordic ecosystem to grow while attracting global attention to the Nordic fundraising market.
There are also a number of tax incentives in place to encourage private individuals to invest in startups. In Norway, for example, you can claim an income deduction on personal investments up to NOK 1 million (around £84K).
The speed of the Nordic success story has certainly caught the attention of investors. Oscar Hetting, Director at Corporate Finance advisory firm NOR Capital, has seen the transition in how Nordic companies are perceived by the global investor and buyer community. At NOR Capital, he works with businesses in the telecommunications, media, and technology (TMT) sector, helping advise across the many financial decisions that his clients have to make.
NOR Capital’s financial advisory service can prove crucial to founders looking to reach a broad range of investors, or even acquirers, across their startup journey. This is particularly important for Nordic companies: the market, while blooming, is still comparatively small, so Nordic companies will look to go international much earlier than other European or US companies.