What makes Sweden innovative?

We talked to two of the most influential people from Stockholm’s start-up scene about how the country produces world-competing companies, and what makes Sweden’s innovation culture unique.

A central aspect of the Swedish way of life is following the “Law of Jante”. The term, first introduced in the 1933 novel, A Fugitive Crosses His Tracks, suggests that one should not consider themselves better than anyone else or talk about individual success. IKEA’s founder, Ingvar Kamprad, was well known for embracing this lifestyle through shopping for clothes at flea markets and driving a pre-owned Volvo, despite being one of the world’s wealthiest entrepreneurs. It may seem like the direct antithesis of what it means to be successful in the U.S., but the lack of prestige and social hierarchy can also serve as an explanation to the success of Sweden’s innovation culture.

“If you see someone not too different from yourself succeed in building companies such as Spotify, Skype, Klarna, Mojang or King, this, of course, creates a feeling of if they can, then so can I.” – Sebastian Fuchs, Founder, and CEO of SUP 46. 

Earlier this year, The World Intellectual Property Organization, WIPO, named Sweden the second most innovative country in the world, followed by the U.S. in third place. The ranking considers over 80 categories, including technology outputs, patent applications, and the level of human and capital research.

So how has this small-populated country with its freezing winters, expansive wilderness, and a culture that discourages bragging about success become a world-leader in innovation? To answer this question, among other topics, we took the help of two of the key players in Sweden’s start-up scene.

Donnie Lygonis – KTH

Donnie Lygonis is an Entrepreneur, Business Coach, and International Innovation Advisor at KTH-Innovation. Most recently, he returned to Sweden after spending a year in Silicon Valley where he helped start the Swedish platform at the Nordic Innovation House. 

What is the mission of KTH innovation and how do you work with shaping our future entrepreneurs?

KTH Innovation exists with the sole purpose of supporting ideas and research results that are generated at KTH and maximizing the amount that meets the market. (KTH = The Royal Institute of Technology in Stockholm, Sweden) We are a free early-stage innovation support department at KTH with 16 full-time employees, and our work is focused on helping the aspiring entrepreneurs develop their ideas with a clear focus on customer and market in a very early stage.

What are the key ingredients of a successful international expansion?

To understand from the start that your business is international; the Swedish market is not big enough. So you need to start by understanding customer needs outside of your home market. Traveling to other countries, understanding customer and business culture, establishing your networks, having people on the ground in the new market, all those are important stepping stones to a successful international expansion.

Sweden is ranked among the top countries in several global indexes, from sustainability and innovation to economic development. What core competencies and characteristics do you think enables Sweden to stand out as a leader of innovation?

I think the combination of well-traveled citizens that have seen the world, a high level of digitalization and high-speed internet penetration, a high level of education, and a history of solving big problems for many people. All of these factors contribute to making us look for large solutions to large problems. And with a high standard of quality in delivery, a systematic approach with solutions that work in a larger context, we have a unique situation here in Sweden.

Having spent a year working with the Nordic Innovation House in Palo Alto, what is Sweden’s image abroad when it comes to our innovation culture?

I’d say that Swedes, in general, are considered loyal, skilled and no-nonsense people that do what they say. A handshake is a legally binding agreement, trust matters a lot. And trust is one of the fundamentals in building an innovative culture. Openness is another, with very informal organizations where anyone can speak their mind and come up with ideas. We have fostered a culture of curious, openminded, progressive, highly skilled people.

Philadelphia is a growing hub for health care innovation because of the first-rate universities, hospitals, and pharma communities. In a country that is known for having the highest health expenditure per capita among industrialized countries, how do you think innovation in healthcare technology can improve both the quality of healthcare as well as lower the cost?

I think digitalization is here to stay in healthcare, and with that comes both cost-cutting as well as an increase in quality. And considering the state of healthcare today, it’s not a matter of not affording to digitalize – we’re reaching an inflection point where we can’t afford NOT to digitalize. Concrete examples are patient access to data, personalized medicine, a better healthcare experience end-to-end that run from keeping people healthy, through treatment, to follow up and rehab, it all ties together. Swedish startup AsthmaTuner is one good example where asthma patients can monitor their asthma themselves, Coala Life another one, for heart monitoring.

What key drivers of innovation do you find the most interesting today and how do you think they will change in 5-10 years?

Today’s most interesting key drivers are without a doubt all the concerns about sustainability. The UN 17 SDGs have done a lot to help point us in the right direction here. It’s not a matter of choosing between being an entrepreneur or a social entrepreneur, today all entrepreneurship can be socially responsible AND be good business.

Sebastian Fuchs – SUP46

Sebastian Fuchs is the co-founder and CEO of SUP46, the leading startup hub in Sweden. 

 What inspired you to start SUP 46?

I had previously started an early-stage incubator at Royal Institute of Technology and was very inspired to support more companies outside of the university environment. I was surprised by the lack of understanding for the needs of these very talented entrepreneurs. The start of SUP46 came from a gap in the market that we saw to create a meeting space for entrepreneurs and startups back in 2012/13 when most people didn’t really know what a startup was. Sweden has always been ahead of the curve when it comes to technology, and a lot of friends of mine were testing out ideas that they had but they didn’t have a natural place to work from and meet like-minded people like investors and partners. My co-founders and I wanted to create an inspiring place for these people, so SUP46 (Start-up People of Sweden) was successfully launched thanks to the wonderful support of the whole ecosystem.

What is the mission of SUP46 and how are you working to form the next generation of global entrepreneurs? 

Our vision is that all SUP46 startup members will become global game-changers. We do that by offering a physical and online environment where we support and foster startups to succeed and grow faster. We’ve been blessed to have supported companies such as KRY, Natural Cycles and Karma and over 150 other companies that raised more than €400M since 2013.

Sweden has a leading start-up scene and is unique in having so many unicorns per capita. What is the secret behind Sweden’s ability to create such a successful innovation culture?

One very important reason is that the international success of Swedish startups inspires other entrepreneurs to start businesses. Stockholm having the second most unicorns per capita in the world, only beaten by Silicon Valley, is, of course, a huge thing. It changes people’s attitudes if you see someone not too different from yourself succeed in building companies such as Spotify, Skype, Klarna, Mojang or King. This, of course, creates a feeling of “if they can, then so can I”. Some factors that might explain Swedish startups success:

  • That media, investors, and influencers turn their eye to Swedish startups, which enables the next generation of startup successes to go further in terms of funding, attention, and network. It also means that international top talents are more encouraged to choose Swedish startups, which is key to growth.
  • Sweden is also strong in all creative industries, from music to design and software, which creates a good base for new business ideas.
  • The market size of Sweden is also quite beneficial. We are a relatively small country filled with early adopters and tech-savvy people (thanks to early tax subsidies on home PCs) with a great design/engineering culture – the perfect test market. And given the small size of users, companies are forced to think global from day one, which is also an important factor.

SUP46 has a lot of member companies in the health tech field and is the incubator where KRY, one of the most successful Swedish companies within the field, started its journey. Why do you think we are seeing so many emerging start-ups within the health care industry today, and are there any projects that you find particularly interesting within health tech that is coming out of SUP46?

Healthcare is absolutely an industry that needed to be disrupted by technology, and companies like KRY are doing that. We have a few MedTech members who are challenging the current market such as Medpeople, corsMED, Holistal and GOH Group.

Where do you see today’s consumer trends taking innovations in the next 5-10 years, and what role are you hoping that SUP46 will take on to enable start-ups to create these innovations?

In terms of trends, we are seeing an increased awareness around impact tech. For example, environmentally friendly solutions that are both a healthy business and good for the environment. Something that we see now and will continue to support as a community, is an industry-agnostic approach to startups – meaning that more and more investors are not putting money into just one particular sector, but are rather opening themselves up to different types of industries. Here at SUP46, we exist to support any type of tech startup that is challenging the status quo, and that continues to range across a broad variety of industries.

Thank you, Donnie and Sebastian, for the interview!

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