Why is Sweden the “hotbed of impact” for startups?

While 2021 has undoubtedly been a record year for VC around the world, investment in impact startups has grown exponentially. This is especially true in the Nordic countries, which raised $5.5 billion (26% of all seed funding) in impact startups – more than three times the amount in the United States.

In Sweden, specifically in Stockholm, the figure is much higher. From €1.3 billion in 2020 to 3.6 billion euros in 2021Sweden even overtook the UK and Germany.

As a result, Stockholm was crowned the house for impact startup investment. But how did it get there?

Political origins

Impact startups are defined as companies that address one or two of the 17 United Nations Sustainable Development Goals (SDGs) at the center of its activity. These goals provide a “shared blueprint” for peace, social inclusion and sustainability for people and the planet.

“Open and accessible data can create a healthy and level playing field that benefits all players”

Rather than seeing impact as an add-on to business goals, impact should be at the core of their goals. For Invest Stockholm, “if you remove the impact, you remove the business”.

At the end of last year, there were 460 impact startups in Sweden. This year, Stockholm launched an official campaign to recognize the city as the “home” as opposed to the “capital” of impact – a change in terminology that could explain why impact startups are such a priority.

Informally governed by the concept of folkhemmet or ‘the people’s house’, Swedish politics finds itself in the balance between socialism and capitalism. Since the public’s right of access to nature is mandated by the concept of allemansrättenthere is also a respect for the environment that predates the emerging global recognition of the climate crisis.

This legacy is compounded by universities and research institutes like the Stockholm Resilience Centre, which have been developing key ecological theories since the 1960s.

Swedish patent laws also mean that the intellectual property belongs to the researcher, rather than the university they work at. Jenny Berthling of Invest Stockholm reports on the industries warm relationship with public agencies for “how openness and accessibility of data can create a healthy and level playing field that benefits all players”.

Act for the climate

Since last year, 158 of Sweden’s impact startups achieved the “Climate Action” SDG, followed by 119 in “Good Health and Wellbeing” and “Industrial Innovation and Infrastructure” at 112.

“Ttalent attracts talent. We are seeing incredible spin-offs, like one of our first interns founding Volta Greentech, which produces livestock feed from seaweed”

The Swedish car industry is the backbone of European industry in terms of job and wealth creation — and it needs climate innovation. It produces around 20 million vehicles a year and employs between 13 and 14 million people.

“Assuming that all of these cars will one day be electric, our founders quickly realized that Europe would be in big trouble if we didn’t have large-scale battery production here,” says Jesper Wigardt, Head of Communications at corporate and public affairs at Northvolt green battery producers. Founded in 2017, Northvolt objectives hold 20% of the European market for the production of green batteries by 2030.

Northvolt’s head office is in Stockholm and their first (of three) gigafactories were in Skellefta, Northern Sweden. Wigardt says the company looked at 1,020 sites in the Nordic region.

“We looked at everything from logistics, infrastructure, proximity to ports and airports, political climate, workforce, universities and of course energy access,” says -he. “Making these batteries is a very energy-intensive process, and it’s important to consider both cost and carbon footprint. The site has optimal access to wind, solar and above all hydraulic energy.

Last year, Northvolt raised $2.75 billionbecoming one of the world’s most successful business cases for impact investing.

Ultimately, “talent attracts talent,” says Jesper, adding, “We’re seeing incredible spin-offs, like one of our first interns who founded Volta Greentech, which produces livestock feed from algae”.

Was 2021 a unique year for impact?

But the impact sector doesn’t just mean climate tech. Swedish company Kry, by far the largest digital healthcare operator in Europe, has raised €262m in venture capital Last year.

If you improve resource consumption in healthcare like we are doing, the impact on society is enormous”

“Health is the most important sector of any westernized economy. This represents between 12 and 18% of GDP in all countries,” explains Kalle Conneryd-Lundgrens, COO of Kry.

“It’s safe to say that, as we’ve seen over the past couple of years, and with an aging population, that number is going to increase,” he continues. “If you improve resource consumption in healthcare like we are doing, the impact on society is huge. I can’t think of any other more impactful area in which to operate.

But was 2021 a banner year for impact investing, following a severe accumulation of assets during the pandemic? For Conneryd-Lundgrens, that was the start.

“Everything stopped in many countries during Covid and no one hesitated to do it. I think it made a number of people, including investors, realize that it is very important to know where you put your money and where you focus,” he says.

Although financial markets are under serious pressure, recent world events namely Covid and the energy crisis caused by the Russian invasion of Ukraine suggest that impact startups will be increasingly in demand.

Upcoming challenges

However, there is still work to be done. The gender balance of the founding teams of Nordic impact startups is slightly better than that of non-impact startups.

People who come here to work should be able to stay and contribute, if that’s what they want.

12% of Nordic impact startups have all-female founding teams, compared to 77% with all-male founding teams and 11% with mixed-gender founding teams. Of the startups with no impact in the Nordic countries, only 5% are founded solely by women.

For others, despite Swedish social benefits, it is difficult to attract foreign talent.

“Our company is too small to navigate our hostile immigration regulations,” says Susanne Segeblad, CMO of tech startup Peafowl Plasmonics, explaining that recent applicants from India and Brazil both dropped out of their recruitment process. because it was taking too long.

“It’s frustrating,” she said. “People who come here to work should be able to stay and contribute, if that’s what they want.” Earlier this year, Peafowl Plasmonics raised €4m work on the commercialization of transparent solar energy to replace batteries and cables.

A previous city

Nonetheless, Sweden continues to invest significantly in impact startups – both through nonprofits and industry-focused projects.

The nonprofit Norrsken Foundation in Stockholm runs an accelerator program for impact startups, in addition to raising three venture capital funds, running three coworking spaces, and hosting more than 200 events each year.

It’s time we pivoted the idea of ​​a unicorn. Let’s think 1 billion, which also means having a positive impact on 1 billion people”

Lisen Oliw of the Norrsken Foundation highlights how unique this is: “Our partners Nordea, Nordic Capital, Afry and PwC offer pro bono support to our members and subsidize membership fees for impact startups. We also collaborate directly with the city of Stockholm through our recurring “impact meetup” events. I haven’t seen another city that does this.

On the industry side, Gothenburg-based MobilityXLab offers mobility startups and emerging companies the opportunity to accelerate with its seven founding companies: CEVT, Ericsson, Polestar, Veoneer, Volvo Cars, Volvo Group and Zenseact. One example is the Polestar Project 0 which aims to produce a climate neutral car by 2030.

Another lab in Gothenburg is BioVentureHub, which offers startups and academic groups the opportunity to co-locate and interact with AstraZeneca experts – to advance life sciences, healthcare and human wellbeing. patients.

It’s time we pivoted the idea of ​​a unicorn. Let’s think 1 billion, which also means positively impacting 1 billion people,” says Bertling. “That’s success.”

This year the Swedish business impact and accelerators will be present at Web Summit 2022 in Lisbon. Take the opportunity to learn more about the Swedish impact scene, engage with startup accelerators and try Swedish fika at the Swedish booth located in Hall 4, Booth E461.

Sponsored by

Co-lab with Sweden, Impact, start-ups, innovation, business accelerators, sustainability, investment in Sweden

Learn more.

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