The Swedish taste of success

Many developing countries have a problem that economists call the “middle-income trapFalletrap”. They have ­success in low-value manufacturingProduktion mit geringer Wertschöpfunglow-value manufacturing, for example, often thanks toaufgrund von, dankthanks to low labour costs, but struggle to develop high-value sectorBranche mit hoher Wertschöpfunghigh-value sectors. When it comes to technology, most of the biggest companies, such as Google and Apple, come from the US or, increasingly, they are emerge from sth.aus etw. auftauchen; hier: aus etw. stammenemerging from China, including Alibaba and ByteDance, the company that created TikTok.

Relatively few of those global companies are European, leading some experts to ask: “Is Europe be stuckfeststeckenstuck in a ‘middle-tech trap’?” The continent has an excellent early-stagein der Anfangsphaseearly-stage start-up scene, but what happens after that? When it comes to tech at scalein großem Umfangat scale, European consumers tend to rely on US platforms for things such as navigation, social media and e-commerce.

There are a few exceptions, however — and they come from one European country in particular, Sweden. Spotify, Klarna and Skype are all examples of tech firms that began in Sweden and went on to become global brands. per capitapro KopfPer capita, this Nordic country of 10.5 million people has produced more tech unicornEinhornunicorns, start-ups worth over $1 billionMilliarde(n)billion, than any other European country, except for little EstoniaEstlandEstonia. Even during uncertain times, investment in Swedish tech firms has stayed strong, with €2.4 billion in venture capitalRisikokapitalventure capital (VC) in 2024.

Mario Draghi, a former European Central Bank president, identified Sweden as a model for European innovation, point sth. outauf etw. hinweisenpointing out that its tech industry is twice as productive as the EU ­average. “They have something — particularly in the tech sector — which other European countries do not really have to the same extent,” researcher Jacob Kirkegaard told The New York Times. 

They have something which other European countries do not really have

Looking north

What is it exactly that the Swedes have that others do not? ­Experts have pointed to a combination of factors that have been significant. One was early and widespread access to technology. Back in the 1990s, Sweden’s government helped a lot of young people get computers and connect to the internet. This is said to have produced an “engineeringhier: technisch (versiert)engineering generation”.

With a small domestic marketInlandsmarktdomestic market, Swedish entrepreneurUnternehmer(in)entrepreneurs are used to concentrating on international success, supported by a high level of investment. Large foundationhier: Stiftungfoundations, such as the one run by the furniture giant IKEA, as well as the state pension fundstaatliche Pensionsfondsstate pension fund, have been useful sources of VC finance for local start-ups.

It has even been speculated that the safety net provided by Sweden’s generous welfare systemWohlfahrtssystemwelfare system encourages a level of risk-taking and experimentation that’s lacking in other parts of Europe. An appetite for risk is generally be considered sth.als etw. geltenconsidered a strength of American entrepreneurs. Fredrik Cassel, a partner at the VC firm Creandum, says: “You can afford to take risks, you will not be on the street [if you fail].”

Not all of what Sweden has is easy to replicate sth.etw. nachmachenreplicate, but when it comes to properly investing in their entrepreneurs and building tech at scale, other European countries could certainly learn a few lessons from the north.