Insights into Stockholm’s Startup Scene
Juli 13, 2020
Aus dem Unterricht des CAS Digital Masterclass mit Manuel Nappo berichtet Patrick Mamie:
What’s in for you?
This article provides some insights into the startup scene in Stockholm and gives some answers to the following questions:
What are the current trends for startups in Stockholm?
According Sissel Hansen, the founder and CEO of Startup Guide, the effects of successful companies like Skype, Klarna, King, Mojang and Spotify are still tangible. So, it is not a surprise that Sweden and especially Stockholm is still a “hotbed for Innovation” in the area of gaming, music- /video streaming and fintech. Depending from the listing agency, Stockholm has the second highest number of Unicorns in the world after the area of Silicon Valley in the USA. During our study tour we got great insights into some of the startups in Stockholm.
Spotify – Core of the Stockholm’s Startup Scene
Which industries and business models are ideal for startups?
As Sweden is one of the most advanced digital economies and one of the most gender-equal countries in the world the startups also have evolved from the typical IT sector to many other industries. Besides gaming, fintech and media many startups focused on biotech, health and even the food-industry and the culture and purpose has a large importance which business models have been developed. For sure the financials are still the “backbone” of startups and the goal of entrepreneurship is to make money.
Therefore most of the startups common DNA is to develop an idea which can be somehow scaled. This means that the “product” can be reproduced and delivered to the clients with nearly no additional efforts and related costs. Therefore in most of the cases the business model of startups leans on the combination of a very good idea with the internet as base of the digital marketplace.
How do startups interact within the startup community and support each other?
In addition to state initiatives and governmental support in many areas also the success of Stockholm’s Unicorns attracted talents from all over the world and the startup ecosystem has grown considerably. At some time the need from the startups raised to get some support for logistics, facilities and related services. That’s where startups for startups jumped in and managed to fulfill the needs.
One of those early contributor was Startup People of Sweden (SUP46) who managed to provide a platform for the entrepreneurs to connect with the support they need to develop better and faster. Currently there are more than then different hubs in Stockholm which helps the startups to connect among the startup community and to get the support they need to stay focused on core of their startups.
SUP46 – One of the first hubs in the Stockholm’s Startups Scene
How do startups get in touch with with potential investors and get support?
What we have learned during our visit in Stockholm’s startup scene from the different people we have met is that there is a strong relationship between the founders of very successful companies and the startup community. There is a kind of will to give something back and they become Business Angels and participate with their expertise and invest part of their assets in new startups. Besides this momentum there are academic and privately funded programs which contributes also to the selection and the development of startups. Actually every program has its own characteristics and rules.
The following is a non-exhaustive list of such programs who provides workshops, trainings, tools, consultancy and funding support:
- KTH Innovation
- Amplify Innovation
- Ericson ONE
- Foodtech Village
- Hyper Island
- Ignite Sweden
- SSES Ventures: Affinity
- Sting
What are the roles and influence of Angels investors and Venture Capitalists?
Angel investors and venture capitalists both provide capital to help the entrepreneurs and the small businesses succeed scaling their business model. Angels are wealthy individuals who invest their own money in promising startups by taking most of the financial risks. Professional venture capitalists usually invest not only their own money. But also the assets from other investors which are looking for an opportunity to gain higher revenues by investing in new business ideas. In the startup ecosystem usually angels are the only ones which invest capital in risky business ideas for which other funding sources such as bank loans and formal venture capital is not available.
As in Stockholm’s startup scene the most active angels are often people which managed to quickly grow their startup and to sell at the right time and become very rich with their “exit”. As angels of a proven track record of fails and success they enjoy great confidence and respect among the startup and investor community. So, what we learned during our visit in Stockholm is that the startup world is somehow a closed group of actors which knows each other quite well and for “external” new players its probably not that easy to get very close to the core of the startup community.
What are the main drivers for a successful start-up?
- Create a strong team with interdisciplinary skillset and complementary personalities to challenge each other
- Be flexible and patient and iteratively adapt the plan if circumstances require some changes to the goals
- Attract interest from the market and from the investors, potential clients and competitors in order to learn as much as possible from the different actors
- Have a clearly defined problem to solve – and an appropriate solution to propose for the pain points of your clients
- Be ready to launch soon as velocity and surprise are two important success factors for your business idea
- Have a clear value proposition which is simple enough to be understood by anyone interested to invest in your product
- Think Big! Your startup should have the potential to become a global player within the target industry
- Think fast as you need to act and deliver fast and grow quickly
- Be unique by combining ideas, technology and people in a completely different way
- Collaborate, learn from the others and have passion for the problems of your clients you want to solve
- Be open to new challenges as you will encounter many obstacles to work around
- Know the value you bring to the table when you meet potential investors and partners
- Have the desire to make an impact – Try harder!
What are the main risks for startups and why is the “fail-rate” very high?
- Market Problems
- Business Model Failure
- Poor (Management) Team
- Running out of Cash
- Product Problems
- No scaling effect
- Missing Vision
- Insufficient Focus
- Absence of Marketing/PR
- Too Slow and too little Drive
What are some of the advices from entrepreneurs of Stockholm’s startup scene to avoid failure?
- Learn about the customs and culture of the market you want to expand to
- Perform a market analysis and do your due diligence in a market in a timely manner
- Build trustworthy relationships and broaden your network through your existing contacts
- Be curious and open-minded
- If you have a great business idea, don’t give up on it
- You can’t do it all by your own
- Collaborate and learn from the others
- Ask for help and look for partners
- Dare to dream big and have a global mindset from day one
- Find the right people to join your startup journey
- Focus your time and resources on the most important parts of driving your startup forward
- Narrow it down to a handful of two of investors you want to approach
- Be picky when choosing your team members
- Always focus on the customer
- Start and see how far you get – worst you have learned a lot for the your next startup
Source: Startup Guide Stockholm V.2, 2019
You want more?
Happy Reading:
- The Impact of socio-cultural factors on fostering startups
- Study Tour Stockholm: Inspiration for the Public Sector
- Startups, Stockholm & Sun: Digital Masterclass Study Tour 2020