* Sweden got most tech venture funds per capita in Europe
over last 5 yrs
* Sweden was no. 2 after Germany in tech venture capital
investments Jan-Sept 2012
By Mia Shanley
STOCKHOLM, Feb 4 Spotify, Mojang and Wrapp,
respectively music, games and gift services winning online
markets worldwide, are among tech start-ups that have made
Sweden Europe's hottest spot for investors hunting the next big
Attracting more venture capital relative to the size of its
economy than any of its European neighbours over the past five
years, Sweden is benefiting from a strong heritage in design and
engineering as well as a wired population keen for innovation.
Par-Jorgen Parson, partner at Nordic venture capital firm
Northzone and a board member at Spotify, the Internet streaming
juke box service, used to have to twist arms to get his American
counterparts to fly in to meet Swedish start-up entrepreneurs.
"Now, they schedule that regularly, no problem whatsoever,"
Parson, whose credentials also include playing in a heavy metal
band, said in at his offices in downtown Stockholm.
In the first three quarters of 2012, data from the European
Private Equity and Venture Capital Association show Sweden took
in almost a fifth of all venture capital invested in the
European Union, only just trailing Germany in absolute terms.
Its track record includes open source database MySQL - sold
to Sun Microsystems in 2008 for $1 billion - and business
intelligence software firm QlikTech, which listed on
the NASDAQ in 2010 and is now worth almost $2 billion.
The list goes on: video game firm DICE - now owned by gaming
giant Electronic Arts - internet marketer Tradedoubler
, Mojang, maker of the compulsive online game
Minecraft, and the one on everyone's lips, Spotify, which today
boasts 20 million users.
BJORN BORG EFFECT
Investors and entrepreneurs say that Sweden's deep
engineering roots, its savvy, Facebook-obsessed population and
sleek design sense are helping it win the battle for venture
capital in Europe.
Many believe the long, dark winters may actually boost
productivity as developers and programmers are more likely to
stay indoors, though a common complaint is that attracting
overseas talent is harder than getting them to hot spots like
Berlin or London.
Its small, highly connected society - long an early adopter
of technology - makes for good testing grounds too.
"It has high Facebook penetration - twice as high as Germany
- good broadband and good consumers," said Michiel Kotting, a
principal at venture capital firm Accel which manages over $9
billion. "I'm very bullish about Sweden."
That has helped businesses such as social media gift voucher
provider Wrapp prepare to tackle a far bigger U.S. market, where
it is now growing rapidly, signing on brands including Gap and
"Sweden is a test market, not home market," said Wrapp's
Chief Executive, Hjalmar Winbladh, just home from a near 20-hour
commute from a second office in the Silicon Valley.
Winbladh likens Sweden's success with tech start-ups to what
he calls the "Bjorn Borg effect" on the country's tennis courts.
Borg dominated world tennis in the 1970s, inspiring a decade of
young tennis players such as Mats Wilander and Stefan Edberg,
who both won several grand slam titles.
In the same way, Sweden's big tech successes have also
inspired a new generation of eager entrepreneurs.
Winbladh, who sold Sendit - a developer of mobile internet
application server platforms - to Microsoft in 1999
for 1.3 billion crowns ($200 million) cash, is himself inspiring
A handful of start-ups crowd into cubicles in the brightly
lit, buzzing Wrapp office space.
Other hot Swedish start-ups include Klarna, an online retail
payments firm, and iZettle, which sells a device that allows for
credit card payments on mobile phones and has backing from the
likes of Greylock Partners.
Swedish investments have a history of paying off. Northzone
says Sweden alone has produced more than one-third of the
returns in the European market in the past decade, far higher if
one includes Skype, which many countries lay claim to.
Kotting points to the success of QlikTech: "It went global
and was probably the largest venture return in European history.
It returned $400 million on a $17 million investment."
Niklas Zennstrom, a Swede who co-founded Skype and sold it
to Microsoft for $8.5 billion, now runs London-based venture
capital firm Atomico.
He believes half the traffic for big online companies will
come from mobile phones this year, and expects Sweden will fare
well in the shift away from desktops.
But some Swedes don't even need help.
The 25-person staff at Mojang, makers of the popular video
game Minecraft, can often be found playing pinball, board games
or Lego at their plush Stockholm office.
Mojang, with a turnover of more than 1 billion crowns ($155
million) last year, has never had any external financing.
It has had takeover approaches from nearly every major
gaming firm in the world and even Sean Parker, one of Facebook's
earliest investors, has tried courting them, flying the
founders to London for a party.
"They are just huge, and they are 25 guys having such a good
time doing what they are doing, and they don't even have to
bother about investments," Zennstrom said.