IT Start Up, IT Trends

Why are startups so popular in Scandinavia?

When people want to start up a company they dream of having something like such global giants as Microsoft, Apple, Google, etc. but it isn’t easy and a lot of factors should be taken into account, including the country traditions, the government general policy in the field of entrepreneurship, the public attitude towards the innovative ideas, the existence of the precise set of tools to stimulate innovation, human capital and research, infrastructure and many others. Why is it easy to set up new companies in one country and difficult in another? To answer this question I investigated the experience of Scandinavian states in this field. Why precisely Scandinavia?

Nordic countries seem to be in the forefront of this development. Having given us Ericsson, Skype and Spotify Scandinavia has become a global leader in IT, mobile and multimedia development, and the pace of innovation shows no sign of slowing. The list of prosperous start – up companies itself is inspiring: Spotify, iZettle, SoundCloud, Klarna, Uber, Fishbrain, Sticky Wrapp in Sweden.  I needn’t even mention such giants from Denmark as the app developer Podio and Unwire, a mobile platform provider which enables the hosting of TV content on mobile phone. Or let’s take Bird Step from Norway which continues to bring a raft of leading-edge mobile connectivity products to market. By the way, Sweden is currently No.1 in the world for IT, according to the latest Global Information Technology Report. In fact, all three Scandinavian countries are among the top 10.

I think, the reasons why start ups are so popular in Scandinavia are the following:

-political and economic factors play a key role.  Scandinavian strong welfare system makes people feel safer and enables them to take risk to start their own company. Government support for tech innovation is evident in basic conveniences such as free Wi-Fi, and each administration has introduced specific measures to encourage tech development;

-clustering– the pooling of ideas by a group of organisations for common gain. Vivid example of this is creation of the Movation innovation partnership by 7 Norwegian tech companies in 2006 and the Nordic Tech Five linking universities in Denmark, Norway, Finland and Sweden. It has become possible due to the compact nature of the region which encourages a shared sense of purpose and a willingness to help each other out.

 – tech culture and general positive attitude of Scandinavians to innovation is the biggest factor in Scandinavian supremacy.  Scandinavian people pick up trends quickly. The same goes for new markets and technology. Common people are willing to embrace new technology, specifically regarding IT and communication. In 2009, a survey in Denmark found 72% of the population used the internet every day, people are not afraid of the internet in Scandinavia, everyone buys online. Isn’t it a dream for any country when old Nordic grannies surf the net, school children use laptops in exams and parents allow their kids online without fearing for their safety? It is a nation embracing IT.

history and tradition play a crucial part in start-up trends, too. This enthusiasm for innovation, particularly mobile innovation, goes back decades. Sweden, for example, is very strong in engineering, from building the first telephones, to the global expansion of Nokia. Engineering has always been sought after, and tech is just the latest manifestation of that.

strong support of tech talents and fierce competition for talents. All top-ranked Nordic universities enclose student incubators that offer everything from free working space to specific courses and mentor programs to encourage and foster virtuous entrepreneurship. To start a company Scandinavian entrepreneurs could find world class engineers and designers.

 – scale advantage. The small scale of the Scandinavian market is used by Nordic start-ups to their advantage. They are more organized, disciplined and mobile.

nation’s infrastructure – telecommunications, education and institutions – has helped deliver high broadband and mobile penetration and a tech-savvy population. The Internet in Scandinavian countries is pretty ubiquitous, affordable, and the average speed for both down- and upload is good.

– rapid globalization of Scandinavian start-ups. Nordic people have got more international quickly which makes it an advantage. Moreover, most Swedes, Norwegians and Danes are skilled English speakers which is a big advantage for start-ups to become international.

great informal network which unites experienced and new entrepreneurs. The amount of knowledge sharing among community members is huge. The advice websites for start-up businesses are really popular. People help each other and share best practice information.

availability of Venture capital helps start-ups make a good start, too. The amount of Venture capital available in relation to the GDP is higher in Scandinavia than in the rest of Europe. 

–  accelerator programmes for startups developed in Scandinavian countries are a relatively new, ‘modern’ breed of business incubators which attract small teams and provide a number of technology companies with seed funding, mentoring, training like SICS and Bonnier’s Accelerator in Sweden, beta FACTORY in Norway, Startup boot camp Mobility and Accelerace in Denmark.

–  long, dark, and cold Scandinavian  winters encourage people to stay inside and noodle away at creative endeavors, such as programming or gaming. So, when Scandinavians don’t chop wood they sit in front of the internet and consume. 🙂

As a conclusion, I’d like to say that there are probably many more aspects. And we don’t deny that Scandinavia has its challenges as well. Not everything is perfect, and there are exceptions to every rule. But simply judging from the quantity (and quality) of its entrepreneurial outcome the climate for starting your own company seems to be pretty good there in the north. Ladies and gentlemen, that’s why Scandinavia is winning. Feel free to add your thoughts in the comments!

Kate Kviatkovskaya

Kate Kviatkovskaya

Business Development Manager

Skype: kate.kviatkovskaya
LI Profile: Kate Kviatkovskaya

7 thoughts on “Why are startups so popular in Scandinavia?”

  1. Hi! Great post! However I think you missed one important factor and that is the social safety net that people have in scandinavian countries that allows them to dare taking risks without ending up in a financial disaster.

  2. Oh i just realised I missed the section where you address the welfare system factor. I guess that’s the downside of reading through a small phone screen:-)

  3. As I have been living in Sweden for the past 23 years, I have noticed that entreprenieural minds have always been part of this amazingly innovative people, but as you partly said they have a social net that allows to become litte bit more risky, but also and another factor that is not to be forgotten. It has become more socialy accpeted to have your own company and they encourage youngsters from high school to even younger age to stand up for their ideas, and companies as well as entrepreunerial organizaions organize competitions with a mentorship included to encourage this kind of thinking. So entrepreneurship is encouraged at every level of the society , that is a sucess key.

  4. Katarina,
    Interesting article summing up the benefits (and the yoopee!, helluva luck!) to be borne and raised in Norway – one of the praised entepreneurial Scandinavian countries. For a curious person who is not baound by the core of main education (MBA)
    Some points of view:
    1. To understand what’s going on, one has to distinguish between the Entrepreneur and – the Inventor. The two roles have different focus, knowledge requirments and takes different personalities. Very seldom you find a genious inventor who also is a successfull entrepreneur.
    F.inst. the Entrepreneur has to focus om the Market, the Conumer/user and their needs/requirements. On the other hand it is difficult to make the Inventor change his focus from from his (mostly men) baby, the Invention (Product focus).
    You have sort of mixed the two roles in your article. However, I know it is difficult not to mix them even for the participants.
    2. Entrepreneurs have to base their concept on an invention and add a concept to make the consumer, buyer open her/his eyes and heart to change habits to utilize the new product/consept to have a better simpler life (many new products complicates the normal life – the new simpler life has to be learned).
    3. The national culture has strong influence on what shall take place: There is a widepread myth that according to culture there should be a working division between the Nordic countries. Roughly:
    – The Norwegian shuold invent (Happy,go lucky, Jump on the train, let’s see where i takes us). We us little time between decision and action.
    – The Finns should design it (Kalevala, Aricitect/designer Aalto)
    – The Swedes should produce it – national inborne attitude to caring for the details, patience for thinking through, organizing and waiting for the result, Long view. IKEA.
    – And the Danes should sell it! The Danes are the Traders (East Asian Trading Company), the business people. The everyday Dane is open, extrovert, lots of inborne humour, eaysgoing until the Agreement is going to be negotiated – and signed. Tough negotiators – great signing festivities.

    Broadly laid out.

    I have worked for many years for and with inventors. They are great people until someone tries to alter their product. Interesting and great fun. Needs a lot of leverage and persuation – or the other way round.

    Helge E Dalseg

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  6. Facts can be boring, but when com to the Nordic country’s company structure it can be interesting to study compared to innovation and entrepreneur culture. The 20 biggest global Swedish exporters are older than 50 years and they mainly produce products.

    The 20 biggest global Danish exporters are much younger and have a different structure with Mærsk counting for more or less 50 % of the Danisch export.

    The 20 biggest global Norwegian exporter’s are even younger with Statoil counting for more the 50 % of the Norwegian export.

    When come to producing of products there are rigorous regulated, so most new innovations are made inside those Nordic giants.

    When come to services and knowledge the regulations are not that rigorous and here we see new innovations and entrepreneurs but these company’s are less willing to remain Scandinavian at least several of the new Swedish great innovations.

    Sweden compare to rest of Europe have low start up of new company’s but the new Swedish companies will survival among the best in Europe. England have high startup and high survival culture among start up companies.

    So yes IT, Services and knowledge are areas where the Scandinavian culture for encourage individual & private initiatives come into its own

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