Why are startups so popular in Scandinavia?

When people want to start up a company they dream of having something like such global giants as Microsoft, Apple, Google, etc. but it isn’t easy and a lot of factors should be taken into account, including the country traditions, the government general policy in the field of entrepreneurship, the public attitude towards the innovative ideas, the existence of the precise set of tools to stimulate innovation, human capital and research, infrastructure and many others. Why is it easy to set up new companies in one country and difficult in another? To answer this question I investigated the experience of Scandinavian states in this field. Why precisely Scandinavia?

Nordic countries seem to be in the forefront of this development. Having given us Ericsson, Skype and Spotify Scandinavia has become a global leader in IT, mobile and multimedia development, and the pace of innovation shows no sign of slowing. The list of prosperous start – up companies itself is inspiring: Spotify, iZettle, SoundCloud, Klarna, Uber, Fishbrain, Sticky Wrapp in Sweden.  I needn’t even mention such giants from Denmark as the app developer Podio and Unwire, a mobile platform provider which enables the hosting of TV content on mobile phone. Or let’s take Bird Step from Norway which continues to bring a raft of leading-edge mobile connectivity products to market. By the way, Sweden is currently No.1 in the world for IT, according to the latest Global Information Technology Report. In fact, all three Scandinavian countries are among the top 10.

I think, the reasons why start ups are so popular in Scandinavia are the following:

-political and economic factors play a key role.  Scandinavian strong welfare system makes people feel safer and enables them to take risk to start their own company. Government support for tech innovation is evident in basic conveniences such as free Wi-Fi, and each administration has introduced specific measures to encourage tech development;

-clustering– the pooling of ideas by a group of organisations for common gain. Vivid example of this is creation of the Movation innovation partnership by 7 Norwegian tech companies in 2006 and the Nordic Tech Five linking universities in Denmark, Norway, Finland and Sweden. It has become possible due to the compact nature of the region which encourages a shared sense of purpose and a willingness to help each other out.

 – tech culture and general positive attitude of Scandinavians to innovation is the biggest factor in Scandinavian supremacy.  Scandinavian people pick up trends quickly. The same goes for new markets and technology. Common people are willing to embrace new technology, specifically regarding IT and communication. In 2009, a survey in Denmark found 72% of the population used the internet every day, people are not afraid of the internet in Scandinavia, everyone buys online. Isn’t it a dream for any country when old Nordic grannies surf the net, school children use laptops in exams and parents allow their kids online without fearing for their safety? It is a nation embracing IT.

  • history and tradition play a crucial part in start-up trends, too. This enthusiasm for innovation, particularly mobile innovation, goes back decades. Sweden, for example, is very strong in engineering, from building the first telephones, to the global expansion of Nokia. Engineering has always been sought after, and tech is just the latest manifestation of that.

     

  • strong support of tech talents and fierce competition for talents. All top-ranked Nordic universities enclose student incubators that offer everything from free working space to specific courses and mentor programs to encourage and foster virtuous entrepreneurship. To start a company Scandinavian entrepreneurs could find world class engineers and designers.

 – scale advantage. The small scale of the Scandinavian market is used by Nordic start-ups to their advantage. They are more organized, disciplined and mobile.

  • nation’s infrastructure – telecommunications, education and institutions – has helped deliver high broadband and mobile penetration and a tech-savvy population. The Internet in Scandinavian countries is pretty ubiquitous, affordable, and the average speed for both down- and upload is good.

– rapid globalization of Scandinavian start-ups. Nordic people have got more international quickly which makes it an advantage. Moreover, most Swedes, Norwegians and Danes are skilled English speakers which is a big advantage for start-ups to become international.

  • great informal network which unites experienced and new entrepreneurs. The amount of knowledge sharing among community members is huge. The advice websites for start-up businesses are really popular. People help each other and share best practice information.

     

  • availability of Venture capital helps start-ups make a good start, too. The amount of Venture capital available in relation to the GDP is higher in Scandinavia than in the rest of Europe. 

  •  accelerator programmes for startups developed in Scandinavian countries are a relatively new, ‘modern’ breed of business incubators which attract small teams and provide a number of technology companies with seed funding, mentoring, training like SICS and Bonnier’s Accelerator in Sweden, beta FACTORY in Norway, Startup boot camp Mobility and Accelerace in Denmark.

  •  long, dark, and cold Scandinavian  winters encourage people to stay inside and noodle away at creative endeavors, such as programming or gaming. So, when Scandinavians don’t chop wood they sit in front of the internet and consume. 🙂

As a conclusion, I’d like to say that there are probably many more aspects. And we don’t deny that Scandinavia has its challenges as well. Not everything is perfect, and there are exceptions to every rule. But simply judging from the quantity (and quality) of its entrepreneurial outcome the climate for starting your own company seems to be pretty good there in the north. Ladies and gentlemen, that’s why Scandinavia is winning. Feel free to add your thoughts in the comments!