Follow Julie’s Travels as she builds EntrepreneurCountry. She writes a regular monthly column, Adventures in EntrepreneurCountry, for British Airways Business Life magazine. Here is one her columns:
Whenever I think of Stockholm, I think of its great entrepreneurs: Daniel Ek of Spotify, Niklas Zennström of Skype and Jan Stenbeck of Millicom, to name just a few who have changed Europe — and indeed changed the world.
Howard Hartenbaum, now a partner at August Capital in Palo Alto, first introduced me to Zennström in August 2003. Howard was working with the legendary Bill Draper in Silicon Valley and scouting for deals in Europe. The yarn goes that he said, “Find me the guy who disrupted the music industry with Kazaa. He’ll be up to something else.” And he was. He was causing a trillion-dollar freefall in the telecoms industry. When I first met Zennström in my conference room in our old office, he didn’t look like the sort of guy who would sell Skype for $2.5bn less than two years later. But they never do.
At my company we never underestimate the entrepreneur who is early in his/her journey. We assume that their vision might be correct, so we pay attention, and seek to understand whether we believe it, and how we can help execute it. For Skype, that meant outsourcing four of my colleagues to Skype to become their early team. We worked very closely with them, and watching them grow from five people to being sold for $2.5bn was like an addiction. Nothing in life is better than watching a startup hit its stride and become successful — nothing.
Similarly, I was introduced to Daniel Ek of Spotify early. Shak Khan, one of Daniel’s closest confidants, says that I was the first investor that he introduced Daniel to. Both Daniel and Niklas have that subversive streak that makes them capable of very, very big dents in the universe.
Jan Stenbeck of Kinnevik, who died in 2002, was a major European (and Swedish) industrialist and entrepreneur. He founded businesses in the media and telecoms space such as Millicom, and his daughter Cristina has gone on to back ambitious entrepreneurs such as the Samwer brothers of Rocket Internet fame.
But you can’t help but think about the so-called Nordic miracle when you reflect on how many of the big entrepreneurs from Sweden have had to leave Sweden to build their businesses. Sure, the Nordic region only has 26 million people, and Sweden just under ten million, so as small markets, they need to export. But it’s more than that. Despite the creature comforts, Sweden has become a somewhat harsh environment for wealth creation.
But it wasn’t always that way. In the years following the market liberalisation and industrialisation of the late 19th century, Sweden enjoyed strong economic growth.
In 1870, Sweden’s GDP per capita was 57 per cent lower than in the UK. In 1970 it had risen to become 21 per cent higher.
Its wealth creation slowed down following the transition to a high tax society and a large public sector in the 70s. Only recently has the tide turned, and the Swedish government is tacking to the right, lowering tax and reducing the role of government in people’s lives.
But Stockholm’s entrepreneurs are breaking through regardless of the role of the state. The Swedish capital accounted for 18.3 per cent of all fintech investments over the last five years. The three biggest fintech deals in Stockholm in 2014 were Klarna ($100m), iZettle ($55.5m) and Trustly ($28.8m). In the past two years alone, Intel Capital, MasterCard and American Express Ventures have invested in fintech companies based in Stockholm. Meanwhile, local investors have also come to the fore, such as NFT Ventures, a speciality venture capital firm focused on fintech in the Nordics with Stockholm as its base.
My own firm’s last Swedish deal was in fintech as well with Seamless, a listed mobile payments firm. Peter Fredell, the CEO, raised €36m landing the jet even as they were running on air. Great entrepreneurs can do that, and Seamless, which provides mobile technology to retailers globally, has a tiger by the tail. It is one to watch.
The final word is that the best of Stockholm and the enterprising Swedes is yet to come. These are a disciplined people with enormous capacity to create wealth, and an ability to create the right kind of system for themselves. Watch this space, and visit Stockholm.