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Sweden’s Silicon Valley: the success of local startups and the role of the government
Klarna, a Swedish fintech company, has made a splash on the European market. It had the largest listing in the region, and the startup’s founder believes that government support played an important role in its success. Sebastian Siemiatkowski says that if Sweden continues to support the IT segment, Europe may soon have its own Silicon Valley.
Moreover, the Swedish government has long been working in this direction. For example, at the end of the 90s, there was an initiative to install computers in every home. Now billionaire Siemiatkowski recalls that at that time his family could not afford to buy such expensive equipment, but thanks to the government program they had a computer. Sebastian took up programming, and this passion led to the creation of Klarna, which is estimated to be worth $46 billion.
It should be noted that the example of fintech success is not unique to Sweden. Such well-known companies as Spotify and Skype also appeared in this country. Moreover, in the beginning of their activities, such technology startups were far ahead of their competitors in the U.S. and other advanced countries. Klarna was founded in 2005, at which time there were 28 broadband users per 100 people in Sweden. By comparison, there were 17 such subscribers in the U.S. during the same period, and the global average was 3.7.
In its early days, Spotify offered music content streaming services when iTunes was still limited to downloads only. That’s why the Swedish service gained so quickly among users around the world. In the European country, broadband Internet became available much faster than others, which sped up connectivity and data transfer. Consequently, local startups were able to launch and improve their products faster while other countries were just learning about the possibilities of high-quality Internet.
Experts do not only associate Sweden’s increasing technological potential with the program of home computer popularization. Various social initiatives are an excellent support for the development of the population. For example, insurance funds protect people in case of business bankruptcy or job loss. They guarantee payments of 80% of wages for 300 days. This allows Swedes not to be afraid and take risks, organizing their own business or trying a new field of activity.
According to data from last year, Sweden ranks 3rd in the world in the number of technology start-ups. In addition, it has the highest survival rate of companies, calculated based on the activity for 3 years, which is 74%. At this rate, Sweden has all chances to create its own Silicon Valley, which will be a strong competitor for the American market.