Photo credit: Henrik Trygg

How cities can create an environment that supports innovation and startups

Joseph Michael
Oct 19, 2016 · 4 min read

I recently spoke at an event by UniverCITY here in Stockholm. The topic for my session was “What is the cities role in creating an innovative environment to support entrepreneurship and startups?”.

It’s a great question that I naturally think a lot about as a city employee who works with startups.

In short, I believe it is the city’s responsibility to create an environment where innovation happens. And the city has many roles in achieving that.


The city has a role of an enabler of innovation by making technology accessible to everyone.

In Stockholm, we achieve this by treating technical infrastructure the same way we treat regular infrastructure like roads and water supply — everyone should have access to it.

Over 20 years ago politicians in Stockholm made an incredibly bold decision to take full responsibility of the fiber broadband network in the city. It led to a situation today where over 95% of households and 100% of offices in Stockholm have access to the fiber network, and we’ve had that for a while now. This in turn has led to socio-economic returns of over 16 billion SEK, conservatively measured. Many cities around the world are now copying this model known as the STOKAB model.

Stockholm was the first city in the world to introduce the 2G, 3G and 4G mobile networks — and we’re aiming to be the first city with 5G. You can actually try 5G today on a public street in Kista.

Technology is everywhere in Stockholm. Which is good because innovation can happen everywhere and can come from anyone.

The city has a role of an enabler of innovation by making technology accessible.


The city also has a role a visionary — setting up bold visions that encourage innovation.

For example, in Stockholm (and Sweden) we have a vision of becoming the first cashless society. And we’re close: only 20% of transactions in shops are made with cash compared to the global average of 75%. ATM machines are disappearing and half of all bank offices don’t handle cash at all. Swedes use card payments three times more often than people in other European countries and the mobile app Swish is used by more than half of the country to send money to friends and family.

The vision of a cashless society can only be achieved with technology. So if we enable innovation by making technology accessible we’re also opening up for visions like these.

Another bold vision Stockholm has is to become the smartest city in the world. We’re not the only city with this vision, but the point of having this vision is to fuel actions today and encourage innovation in this space. It shows fortitude from the city’s side to aim high and invest in new technologies that will make life better for its citizens. Which leads us to the next role.


The city can create an innovative environment by investing in innovation.

In Stockholm, one way we do this is by simply granting funds to innovations. We have an innovation scholarship that we award recipients every year in six categories: tech, cleantech, creative industries, everyday products, tourism industry and life sciences. The total amount is about 1M sek and some of the recipients have gone on to become successful companies.

The city is also one of the owners of Stiftelsen Electrum who in turns owns Stockholm Innovation and Growth (STING) — one of the leading tech investors in Stockholm who among other things started the citys’ very first incubator and accelerator.

A way of investing in innovation is also “buying” innovations who are not yet ready for the market. This concept is called innovationsupphandling, or “innovation procurement”. In essence the city and the creator of an innovative product or service (supplier) together develop a solutions to a problem in the public sector. But being a pure customer of market-ready innovation is a role in itself that the city can have in supporting an innovative environment.


One of the most important roles that the city has in my opinion is the role of a partner. The city can help create an environment of innovation by being a partner to those who help drive innovation forward.

Stockholm Tech Ecosystem

In Stockholm, the city is a partner to many important entities in the local tech ecosystem. The city was an early partner to SUP46, THINGS, STHLM Tech Fest and many others, and still is today. There is a new generation of hubs in Stockholm that the city hopes to partner with, such as Norrsken’s hub for social innovation (which will be the largest in Europe of its kind) and Internetstiftelsens new hub for early stage startups.

A partnership is not about funding, it’s about supporting each other to serve the same target group: innovators — and by extension the broader public.

If you want to create an innovative city, support the innovators.

Stockholm is ranked as one of the most innovative and connected cities in the world. Innovation helps drive down costs and increases quality, but innovation also help solve social challenges.

The world needs innovation and it doesn’t really matter where it happens, as long as it happens. That’s why it’s so important to create an innovative environment, and the city has an important role in creating that.

Follow me on Twitter and Linkedin for more posts about the Nordic tech scene.

Joseph Michael

Written by

Startup Growth Lead at Stripe — focusing on the Nordics. I meet a lot of great companies and write about them here.

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