Denmark will lose the startup race without political support

The startup ecosystem in Stockholm will have the backing of both local politicians and large companies – and this is among the reasons why Stockholm’s startups are ahead of their Danish counterparts, according to Tim He of Northzone.

The Swedish startup scene blooms in Stockholm, and the Business Region Stockholm, which is part of the city council, supports and boosts positive development. Among other activities, representatives from Business Region Stockholm help bring startups to tech conferences around the world.

“Business Region Stockholm, Vinnova [the Swedish Innovation Authority] Business Sweden, and the Stockholm city government are making great efforts to promote the Swedish startup ecosystem. For example, they brought a delegation to the big tech conference Slush in Finland in November, where they made a decidedly ‘Swedish Corner’,”says Tim He, a Stockholm-based investor from the venture capital fund Northzone.

Tim is referring to  Scandinavia’s largest startup event, Slush, a 15,000-strong festival and conference held in Helsinki that includes networking meetings, knowledge sharing, and debate. At last year’s Slush in November,  Finland, Sweden, the Netherlands, France, and Estonia participated with large state-sponsored booths at the conference, but no Danish flag was to be found.

“Besides Slush, Swedes are also present together at CES, Mobile World Congress, and SXSW. On the political side, there are promotions, but also a willingness to make Sweden more attractive as an entrepreneurial country from a tax policy perspective through better conditions, such as option compensation,” explainsTim.

He also points out that when politicians focus on promoting the startup ecosystem, it is something spreads out to investors, and it is precisely this type of commitment from the political side that attracts capital into both Stockholm and Swedish startup ecosystem.

Swedish startup successes will be in Stockholm

In recent years, Denmark has accelerated at an impressive pace, with both more startup-business centers, major investments, and interest organization such as #CPHFTW and Startup Village Copenhagen, which hosts the largest cluster of startups in Northern Europe.

Also Europe’s largest tech community, Startup Village Copenhagen was initiated by the founders of Founders House,  Scandinavia’s first startup tech community, which opened it’s doors almost five years ago.  Last year, Denmark’s annual tech conference TechBBQ attracted more than 1,000 entrepreneurs and investors, as well as more than 20 foreign VC funds. All these things point to the fact that Denmark has great potential.

That said, Stockholm is a few years ahead in the development of startup ecosystem than Copenhagen. But it’s hard to pinpoint a single explanation of what makes Stockholm flourish faster than Denmark.

It may be linked to several parameters that make it attractive to both entrepreneurs and investors to be part of the Stockholm startup scene,  explains Tim.  Alongside political support, the support from previous startups that have grown into large companies has been integral.

“There are several major companies that choose to maintain Swedish headquarters – such as Spotify, Klarna, and King. And those big companies have chosen to give back to startup ecosystem by introducing new startups that they believe in to investors.”

In Denmark, several of the Danish startup successes as Just Eat, Momondo, and Unity Technologies decided to move overseas, while others like Trustpilot, Falcon Social, and Vivino retain larger offices in Denmark, and others like Endomondo, and Podio has been acquired by tech giants . However, despite a few examples (the football platform Tonsser or the planning tool Planday,)  it is too much a much lesser extent that Danish entrepreneurs return to Denmark again as private investors who actively engage with young startups.

“There has been a culture created for it in Stockholm, which does not yet exist in Denmark. It’s coming, but we are not there yet, “said Tim.

Attractive cities and online work

10 years ago, it was also common for Swedish startups to move abroad, but several circumstances contributed to startups deciding to stay in their hometown. Tim points out that digitization is not an unimportant factor, as it has resulted in more opportunities to work long distance.

Besides digitization and the ability to work online, the concept of clustering is also important.

“Now, if you are a talented programmer and are offered a job in Stockholm or Dubai for that matter,  you will always assess what else you will get from working in that region.  Therefore, it means a lot for the attraction of talent to an area that there are many of the same types of businesses. This is really helping Stockholm take off,” says Tim.

According to Tim, the ecosystem in Stockholm was created gradually, through a combination of attracting talent and retaining startups and investors.