by Larissa Gutscher

When you think about startups, what hubs spring to mind? For many, the word “startup” calls to mind big companies such as Facebook who are growing out of Silicon Valley. In Europe, London and Berlin are the cities most strongly associated with the startup culture. But over the past few years, a new startup community has been blossoming somewhere a little colder: the Nordic countries. Sweden, Denmark, and Finland are leading the way when it comes to new tech startups in Europe – but why?

Nordic Startups

The Government Factor

Despite living in the dark for half of the year and paying high taxes, the Nordic countries consistently top lists ranking quality of life and happiness. A large part of this is due to the social welfare programs in place, ensuring that citizens are taken care of. It’s therefore no surprise that the government also plays a part in the success of startups in these countries.

Take Sweden, for example. Thanks to a healthy economy that stems from government mechanisms implemented in the 1990s to keep national debt low, entrepreneurs can feel comfortable starting a business without having to worry about a crippling recession. The Swedish government also understands the value in research and development, with 3.6% of GDP being invested into it in 2009. There are also different governmental seed fund programs that help accelerate startups.

The Swedish government has even helped plant the seed early, having offered citizens a tax break to buy a personal computer in the 1990s. An early adoption of technology has contributed to the growth of tech startups in the country. And, with free higher education, Swedes can afford to attend university and develop the skills required for technology-related careers. There is no shortage of talent for startups, with 18% of Stockholm residents employed in the tech sector.

The Cultural Factor

There is an old concept in Scandinavia known as the Jante Law, which encourages citizens to see themselves as part of the collective rather than as someone special. It promotes egalitarianism and conformity and discourages personal gain. Some of the key concepts of Jante Law can still be seen in Nordic office environments, such as flat hierarchies, but mostly it has become an old-fashioned concept that the younger generation is looking to disrupt. New startups in the region have shown a dedication to creativity and innovation that does not fit in with Jante Law.

Nordic Startups

Scandinavians are now looking for ways to stand out from the crowd.

Growing up in such small populations (Sweden is the largest Nordic country with just over 9.5 million inhabitants) forces entrepreneurs in the region to think internationally from the start. And this mindset has paid off: between 2000 and 2014, 487 startups exited Sweden, Denmark, Norway, and Finland at a value of USD$47.9 billion.

The Success Factor

Possibly the greatest factor helping new startups thrive up north is the history of successful companies that have already established themselves in these cities. Nokia’s downfall in Finland during the economic recession benefitted many local startups as Nokia’s top talent, equipped with plenty of technological know-how, found positions on the boards of some of Finland’s 200 gaming startups that have been founded since 2009. Helsinki now hosts the annual Slush conference, one of the biggest conferences in the world for tech startups.

In Sweden, successful entrepreneurs continue to feed the startup economy with investments of their money and experience. A report conducted in Stockholm found a web of connections between famous companies such as Skype and Spotify and newer firms like King and iZettle.

Nordic Startups

While Denmark has produced several notable startups, so far not many founders have reinvested in the country after expanding internationally. Thankfully, as the startup scene in Copenhagen flourishes, this is beginning to change.

Having people around who have succeeded and sold is vital to the ecosystem. We don’t have the American dream embedded in our culture so we need someone to push us.

— Rasmus Makwarth, co-founder of Opbeat

The Numbers Don’t Lie

All of these factors are breeding a new startup culture that is full of success stories. Finland’s burgeoning gaming industry has seen its turnover increase twentyfold since 2008, reaching nearly USD$2 billion in 2014. The number of investments in Danish startups nearly doubled between 2014 and 2015, with 65 investments worth USD$273.5 million last year. Stockholm was recently named Europe’s third-best city for startups, with 8,000 startup companies in the city employing 52,000 people.

So, if you’re looking for The Next Big Thing, turn your eyes to the north. A fantastic environment for startups is ensuring these countries will continue to churn out successful companies for years to come.

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