Stockholm is the 'most prolific' billion-dollar startup hub behind Silicon Valley

Sweden lacks the scale to be Europe's main tech hub, but that hasn't stopped it producing the most billion-dollar online companies over the past decade.
Written by Liam Tung, Contributing Writer
Image: Shutterstock

Stockholm is the home of billion dollar startups in Europe, and by one measure the Swedish capital is second only to Silicon Valley as the birthplace for the world's most successful internet companies.

That's according to Atomico, the VC firm started by Skype co-founder Niklas Zennström, which analysed the global distribution of startups launched after 2003 with a valuation of at least US$1bn today, whether by a public listing, acquisition, or private investment.

Of 138 startups that have made the 'billion-dollar' club worldwide since then, Silicon Valley was home to the largest number, with 53 to its name — among them Evernote, LinkedIn, FireEye, Box, Uber, and YouTube.

No other city comes remotely close to Silicon Valley's ability to produce technology heavyweights, but to make a point that it's not the only fertile ground for success, Atomico — which investments in startups primarily outside the Valley — highlights that the majority of the world's billion-dollar startups actually come from other cities, with 61 percent drawn from emerging tech hubs elsewhere in the US, Asia, and Europe.

Second to Silicon Valley was Beijing, home to 17 startups with a $1bn valuation, such as Qihoo 360, lashou.com, Sina Weibo, and Cheetah Mobile. (The list only includes software companies, which leaves Xiaomi out).

After this, the rate of billion dollar companies per city drops off steeply, with New York producing seven, Stockholm five, and Los Angeles four in the past decade.

The five from Sweden's capital include the now Microsoft-owned gaming outfit Mojang, payments firm Klarna, the Anglo-Swedish gaming company king.com, Spotify, and Skype, which, having launched in 2003, just scrapes into the list.

Stockholm seems even brighter when contrasted to Europe's bigger tech hubs, such as frontrunner London, which counts three to its name, including Hoopla, Wonga and Monetise. Berlin meanwhile has Zalando, Rocket Internet, and Delivery Hero. Finland has Supercell while Denmark produced Zendesk.

And if startup success can be traced back to the innovation and savviness of a city's populace, Stockholm, which is home to just under one million people, is nearly on par with Silicon Valley, according to Atomico.

"On a per capita basis, Stockholm is the second most prolific tech hub globally, with 6.3 billion-dollar companies per million people (compared to the Valley with 6.9)," it notes.

Stockholm's penchant for producing successful startups seems to be recognised in the level of VC funding that startups from the nation attract.

A recent snapshot of VC deals across Europe and Israel by DFJ Esprit London partner Gil Dibner estimated that Swedish startups landed $94m between July and September this year — which was minor compared with the $642m for German startups, $461m for UK startups, and $443m for companies in Israel.

Sweden made about just over half of the $187m that startups across the Nordics attracted in the period. But once megadeals such as the $350m tipped into Germany's Delivery Hero this September were stripped out, VC investments in Nordic startups were only a shade behind the $294m invested in startups from Germany, Austria and Switzerland (DACH).

The leading destination of funds was the UK and Ireland, where startups drew $503m. Falling outside period was the $115m Klarna landed in March, as well as Atomico's $60m bet this October on Stockholm's India-focused Truecaller.

Read more from Sweden

Editorial standards