Stockholm is so over-hyped. Yes, there is a lot of engineering culture, but there is so little risk capital available at the bottom is it truly laughable.
Furthermore, I don't see many of these unicorns putting a lot back into the ecosystem in terms of investment, social capital, or outreach.
Sweden's needs her of "Paypal mafia [1], Facebook Mafia [2], Trilogy Mafia, and Dellionaires [3] if this startup startup ecosystem is to really thrive.
Compared to where? The days where you get funding based on an idea is over. I don't think the funding situation is particularly bad "per capita" [0]. There are other problems with Stockholm of course, but that's another story.
I don't see how that, without any data, isn't just "the grass is greener". No one is surprised that Stockholm isn't London, that doesn't really speak to the different ecosystems nor that you can raise money across borders. There can be issues with "per capita" measurements, but that pretty hard to discuss when you didn't bother to include your reasoning.
Tell that to any number of seed-stage, bootstrapped companies in Stockholm. A fund-raising "roadshow" from Stockholm to London can be very costly -- especially if it is unsuccessful.
Linking a 91 page presentation without specifying your point isn't very helpful.
As I said, you don't get funding for an idea anymore so being bootstrapped is becoming the norm. The presentation even says that "all in all, Q3 was a quarter for big, big deals. Less so for seed-stage and Angel financing, both of which were down for the fifth consecutive quarter on a global basis". Fundraising is never easy, but having more and more eyes on Stockholm helps.
As other commenters has said, fundraising is never easy no matter where you are.
There's plenty of super early stage money you can get (i.e. up to $100k) from government grants etc. so that part isn't that hard.
What's lacking in Stockholm is a strong angel scene, and what's especially lacking are larger angel investors that does investments of $100k-$500k. I.e. investments that are too small for a fund, but a bit too large for someone that just does investments as a hobby.
However, one of the things I'm doing right now is helping some of the local venture funds and some UK based ones to scout for investments, and the perspective from the other side of the table is that there's currently a shortage of fundable projects that are raising $500k-$2m.
Also there's a new monster fund being announced soon. Rumours on the street (i.e. drunk people at startup events who let their mouths slip) is that it's going to be the largest first time fund globally so the competition among VCs for investments in that size will increase.
If you are doing something interesting but lack connections to VCs or angels, ping me (email in bio) and I'd be more than happy to make introductions.
You really just have to try and raise money there to realize how bad. Most of Scandinavia are still in many ways caught in the idea of loans rather than risky investments.
And most investors in Europe are very risk averse.
Maybe it is, but on the other hand I've never heard anyone which couldn't easily get funding, i.e. the majority of people, not complain about it. I would even expect that the factors of ones specific situation quickly overtake the importance of the general funding situation anyway.
What I do know is that if you play your cards right you can make your own seed funding in a year, even if the housing market is making this slightly harder these days.
Not only is he largely based in London, he is not making seed stage investments [1]. The Atomico website does not list Stockholm as a city where they have an office. Very telling...
Exactly. It's more of an analogy than based on any specific access to talent. There is great design talent in Scandinavia but thats just not enough to build a company.
Except if you look at the successes they are as based on engineering and business talent as much as design. Spotify, p2p + licensing deals. Klarna, Erlang + credit checks. King, game development + gamification.
I'm not sure that I would hold up King.com as an example of either engineering or business talent.
On the technical side, I've not seen anything very impressive about their games, and their business practices seemingly consist of ripping off (later settled out of court) an indie developer who built a game in memory of his late mother, and dragging him into a protracted legal battle.
Not so much technical skill, as being able to run one of these "mass" game studios says something about the availability and flexibility of the talent pool. They've been profitable since 2005 so they've been doing something right.
Point being, unless you want to call gamification design, their success was far more based on engineering and business. Like you said it wasn't an original idea, but they could relativly quickly produce a clone of something and monetize. I'm not claiming that this is a particularly great way of doing business, just that it's inaccurate to say that it was design.
Stockholm suffers from extreme housing shortage. I live here now but in a student flat I got after 3 years of queue time, and moving in a couple of month. Not worth it and I think this will limit the number of startups in the future.
Someone said something about old-school tech and it is true, I rarely meet anyone who is on the edge on new technology. I find myself always explaining what something is, but regardless of tech there are some talented people here.
There is also some serious tax problems, long over 50% in tax. People think they only pay around 23% in tax since the government splits up the tax in two parts, one for the company (around 32%) and one for the employee but money that would have been yours. Then you have tax on items and for example gas tax. Everything is very subtle and perhaps why they get away with it.
>, one for the company (around 32%) and one for the employee but money that would have been yours.
This is similar in the US. There are lots of additional costs beyond the salary for an employee. It's just never really advertised to the employee how much money the company actually puts up to pay the salary in your offer letter.
Yes, employer side of payroll taxes and other costs, along with the gigantic health insurance costs (employer side). These should be eliminated, let the compensation flow to employees and then tax it in land values or consumption taxes, ideally. Then people can get an idea of just how much tax they are paying, and maybe Americans will stop thinking they're getting such a great deal.
That said, it's still pretty remarkable how high US salaries are even with all these costs.
> Stockholm suffers from extreme housing shortage.
Is that much worse than Silicon Valley (legitimately curious, I've never looked into the housing situation in Stockholm)? 1brs go for nearly $3k (if not more) in many of the more populated parts of the peninsula and SF.
You can't really do a straight up comparison like that. The median salary for a software engineer in Stockholm is somewhere around $50K or $60K. Based on that, the rent situation in Stockholm is quite dire, and availability is atrocious.
You also have to compare the cities, let us say they are on equal terms in housing shortage.
Stockholm is piss dark and cold 8 month a year, in Silicon Valley not so much right? All the big boys are in SV and you earn more and pay less in taxes. You also get other perks from living in the USA.
So you are a talented guy, Stockholm or SV? The choice is obvious, SV. So I don't see the point in trying to fight for a place to stay in Stockholm when you can go somewhere else better.
Not only that, just the last 5 years have done much harm to the housing in Stockholm due to mass immigration and now immigration peaks at 2000 people per day so expect it to get even worse.
While I don't think Stockholm can "afford" the state of its housing market, renting a sublet is quite comparable to the rest of the world. It's just that people expect more, including myself.
For some reason the swedes think it's a good idea to have insanely long mortgage terms, if they don't just pay interest. Prices in Stockholm proper is around $950 per square feet, which I guess is comparable to SF [0].
Your last part is in the direct contrast to low tax countries.
Not only do you pay tax on both sides of your income. But we have moms on everything. Essentially you pay more than 50% tax.
In Singapore, restaurants will usually show prices excluding tax, forcing you to see the direct impact of tax added on the total sum.
Swedish receipts do contain the amount of tax, but it's never as apparent as they always include the sum into everything you buy - thus normalising the concept and make it easier to melt down and eventually accept.
Sure, it sucks to split bills with an explicit tax added on, but I rather do the math than having the government normalise taking tax.
Very few Swedes are aware of how much tax they actually pay when you go beyond your side of the income tax.
40% loan of GDP doesn't mean jack when the GDP includes a housing bubble about to burst.
EDIT: I am not arguing against taxes here, I am just pointing out the differences on how taxes are presented to you.
Stockholm resident here. We have a nice combination of being seriously trendy and having a deep engineering culture. Many of our unicorns (Spotify, Klarna, King) embody this in their DNA. Easy to get good UI people here, which is unusual.
I do have to say, having visited Stockholm recently, it does have the vibe of simultaneously seeming cool/trendy and yet relaxed, which I think helps startups spring up
After having spent almost a year here I have to say that it's striking to me how much old-school tech I meet here. Ppl just starting to dip into cloud, Go/Rust hardly heard of and Rails+jQuery still perceived as the "new" thing.
That said, good ideas and an entrepreneurial culture can flourish on oldish tech and there's no need to obsess over the latest, I just felt the difference compared to the us west coast was striking when i came here.
Could you elaborate more on what you mean by "old school tech"?
To add some counter-anecdata to yours, I find there's plenty of Rails/jQuery/Go/Rust/Cloud people here in Sweden/Stockholm and that there's quite many using cloud services and what not. I find it a bit hard to digest that any of those languages or techniques are perceived as "new" here. Perhaps by some, but then that would apply at any place around the globe to some extent.
old school tech: greenfield waterfall Java projects, very little dev-ops, big-iron databases (Oracle, SQLServer and IBM).
This is all anecdotal evidence from having lived in the city for not even a full year, so not saying I know something. It just seems like friends and acquaintances seem less inclined to try out the new stuff than in the US.
Sweden in general is weird though: there's like this stark difference between a smaller group of very competent people and a herd that seems to be pretty much stuck in its ways. The difference between the best and the mainline is greater than in other places. (or so it seems to me)
You'll find that it's a bit different here. There's loads of Erlang here - not unusual, considering it was invented here. Loads of C, C++ - not unusual, considering Ericsson and its ecosystem.
Sorry, I will find what a bit different where? I'm speaking with the frame of reference of Stockholm, Sweden (as mentioned in previous comment)
Yes, of course with regards to Erlang, C and C++ - but Ericsson is far from everything in the Stockholm region and in Sweden. That said, Ericsson is enormous and there are bound to be plenty of former Ericssoners in many other companies. But I find it a lot more diverse than stated in the original comment none the less. Especially if you're looking into start-ups, SME and up - as well as with the meetup.com/HN-crowds.
This provides circumstantial evidence to support something I've thought for a long time: that America's lead in entrepreneurship is more cultural than it is a product of economic right-leaning / supply side policies. Sweden is significantly more "socialistic" than anything in the USA.
Perhaps even more significantly most of the USA is nowhere near as entrepreneurial as places like SF, LA, and NYC, despite many places having lower taxes and less regulation. There's lots of states that are more business friendly than California that have far less entrepreneurship.
Taken together these two things argue strongly against the "entrepreneurship comes from having small government" right-wing thesis. Don't get me wrong-- too much government meddling can sink business. But this argues strongly against the hard-line rhetoric that we often hear.
Edit: It does not however support the inverse thesis -- that more government is better. I personally think it is mostly cultural and all government has to do is not bork things too badly and keep the lights on and the barbarians out.
I've heard it surmised that the biggest advantage the United States has in terms of entrepreneurship is our incredibly lax bankruptcy laws. It's easy to start a company, fail, and maintain the ability to do it again. This is partly cultural (we don't look down on failure very much) but also is structural (failing doesn't ruin you for life). That isn't true of many countries.
I don't think anybody thinks "I will start a business because I have favorable bankruptcy laws." I'm not even sure what you mean by favorable. an LLC or an S Corp is a business entity designed to limit the risk exposure of an individual if they form one. And yes there are provisions in the law to allow you to restructure - namely because it allows your creditors a chance to get paid but there's nothing "lax" about that.
Entrepreneurship is definitely culturally engrained in the US. Starting a business although risky is generally lauded. I think Entrepreneurship is a very accessible concept to most Americans - most people in the US know someone that has started their own business.
Also surmising here, I would assume a more socialist country would be more fail-friendly. More support available if I hit rock bottom. I'm from Canada and not being able to afford health insurance for my family sounds terrifying.
The biggest advantage is just the huge market and tremendous amount of capital the country has flowing around. Reserve currency status imports even more capital (to our detriment). I think Americans who haven't analyzed other nations don't realize how different the capital availability is here vs abroad, from real estate to corporates to startups. This is why the economy basically froze when the credit markets seized.
The large market drives the entrepreneurial culture, because the stakes are so big if you "make it" here, and market sizes for even the most niche things become viable for an entrepreneur to chase with investors in tow. Not so in smaller markets.
Most success is in spite of our poor government, inefficient land use, and entrenched inequality. Chapter 11 is fascinating, I studied it extensively in school. I would not say it drives entrepreneurship but rather large corporate risk taking maybe. Startups aren't thinking about restructuring options. Besides, startup investors are after equity, not debt; Chapter 11 is about reorganizing debt, with secured debt the higher priority, at the expense of equity holders.
The culture of the Bay Area is also much more "left-leaning" than that of much of the US. The Bay Area likely helps creativity and innovation in other ways as well, as it has a ingrained culture that favors outsiders and diversity (e.g. diverse ethnic and gay cultures), reducing the barrier for other kinds of "outside" thinking.
This would support your thesis. However the US is also more entrepreneurial in other areas as well and its large government budget as well as domestic market helps indigenous large manufacturing (e.g. aerospace) in a way that few other countries can match.
I wouldn't be surprised, actually. I suppose the left versus right descriptions of politics are somewhat dependent on context.
On the other hand, historically communist countries currently span a range of left/right cultural tendencies, from the Baltics to Russia, to Azerbaijan, to Georgia, etc, etc...
Considering that human ability is normally distributed, and the easy migration enabled by modern technology has resulted in a massive concentration of intelligence in the major cities of the US, it's exactly as expected that there would be certain regions that stand out above the rest. I don't think this really provides evidence for or against any political philosophy, provided there are relatively reasonable amounts of liberty in the system.
Culture is very important, but keep in mind that USA is the biggest market without massive barriers like in EU (language, regulations etc). Look at B2B.
In the end the equation may consist of: culture, weather, big markets, limited regulation (non-compete not enforceable), free enterprise, proximity to certain institutions (Bell labs, NASA, Stanford), rich people (angel investors), hackers
I believe you are incorrect on both counts. The Texas Medical Center and the Energy sector in Houston are massive industries that have created tons of large companies. Just not the hacker news type, they actually have solid revenue, ipo, and continue making money.
Austin as a liberal island is also a bad Texas stereotype. I live in Austin now but was born in El Paso which has been an entrenched democratic stronghold for decades. San Antonio, Houston(most diverse city in the US), and Dallas are all also blue-voting urban areas. The Texas state constitution is just notorious for giving rural districts a lot of power and blatant gerrymandering.
The population figure seems pretty off. In school it's always been 1.5M, and Wikipedia says that it varies between 900k, 1.6M, and 2.2M, depending on what you define as Stockholm.
Stockholm is so over-hyped. Yes, there is a lot of engineering culture, but there is so little risk capital available at the bottom is it truly laughable.
Furthermore, I don't see many of these unicorns putting a lot back into the ecosystem in terms of investment, social capital, or outreach.
Sweden's needs her of "Paypal mafia [1], Facebook Mafia [2], Trilogy Mafia, and Dellionaires [3] if this startup startup ecosystem is to really thrive.
[1] - https://en.wikipedia.org/wiki/PayPal_Mafia
[2] - https://www.cbinsights.com/blog/facebook-mafia/
[3] - http://www.barrypopik.com/index.php/new_york_city/entry/dell...
(edit) so more thoughts