The Nordics are the new SV (Sustainability Valley). What is behind the success of the region in the startup ecosystem?

Andrea Annese
Marcau Partners
Published in
9 min readApr 17


Kungliga Tekniska Högskolan (KTH Royal Institute of Technology)’s metro station in Stockholm — Photo by Visit Stockholm

The Nordic countries have a proven track record of being home to some of the most contented, affluent and inventive individuals worldwide. The impact the region is having in the European environment is so relevant that a recent McKinsey’s report defines it as “the new SV”, which is usually the acronym used for the Silicon Valley, but referring to “Sustainability Valley” this time.

With 42 total unicorns produced, including Skype, Spotify, Klarna, Supercell, Kry just to name a few, more than 1627 successful exits in the last four years only, the fastest (12.5x, 2017–2022) growth in Europe for the number of mega rounds ($100M+), the Nordics have a very sound reputation among investors and founders. This is even more true in the impact and sustainability space. In 2022, 35% of all VC funding in the region went to impact startups: with this number averaging around 22% in Europe, this performance makes the Nordics the most impact-focused region in the world. Even after a challenging 2022 that saw investments in the Nordics dropping by nearly 30% from 2021 but still 2x compared to 2020, the Nordics can be definitely considered a hotbed for innovation.

But what is the secret sauce that makes the region rise through the ranks? Are there any lessons that can be applied in other ecosystems?
While the answers to these questions may be hidden behind several social, economic and geographical factors, we have tried to identify four macro-areas that can help to explain the Nordics success.


1) A well established tradition of entrepreneurship and innovation

2) Combination of private and public effort in supporting the startup ecosystem

3) The high-quality education system in the Nordic region produces a skilled workforce extremely keen on entrepreneurship

4) Sustainability is an intrinsic value in the Nordics, it’s not just an objective

The Nordic region is a technological reference point due to its tradition of entrepreneurship and innovation

The Nordics region has a strong history in innovation that creates a common and shared tradition of entrepreneurship. In fact, while in recent years the Nordics gave birth to a significant number of unicorns and very successful companies, the region’s culture of entrepreneurship and innovation has longstanding and strong roots. With a sound reputation as pioneers in the mobile phones industry with Nokia and Ericsson, that were among the first to prove the possibility to compete at a global level even against the big Asian and American powers, the region continued to boost giants even in more traditional industries with colossus like IKEA, Maersk, Volvo, and H&M. These enterprises became undoubtedly iconic examples of the Nordics’ reputation all over the world.
The ecosystem around innovative products and business models has proven even more solid with the definite proof of power in the recent software revolution, with Skype’s contribution above all.

In this context of established entrepreneurial tradition and focus on innovation, it comes with no surprise that Sweden is at the forefront, especially driving digital disruption in every industry. One of the most significant events that boosted the technological inclination of the country was the late-1990s government policy to put a computer in every home. Over the course of the program, from 1998 to 2001, around 850,000 household computers were distributed for free, up to a quarter of Swedish households. Many individuals who couldn’t otherwise afford such machines were given access to a completely new possibilities and digital skills. Sebastian Siemiatkowski, Klarna’s founder, began to code on a computer his mother bought with the government support. Another catalyst for the spread of digital innovation in the early 2000s was the fast adoption of broadband, which was even faster than in the US: in 2005, when Klarna was founded, there were 28 broadband subscriptions per 100 people in Sweden, compared with 17 in the United and a global average of 3.7.

The overall ecosystem is a recognized asset from its participants themselves who work pro-actively to preserve and to sustain it, enhancing a flywheel that accelerates its development speed. Numerous pioneers of the Nordic technology industry are in fact dedicating their next steps to continue to develop the ecosystem, either by launching fresh startups like Spotify’s founder Daniel Ek did with Neko Health, or by reinvesting their resources, like Niklas Zennström, the founder of Skype, who founded Atomico and then supported Klarna. Talents (and capital) remain in the region, and they set even more ground for the future.

Availability of funding and investment is the result of a unique combination of private and public effort

One of the strengths of the Nordic ecosystem is the synchrony between the governments-public interests and the private ones for the development of the tech and startup ecosystem.
Governments in the Nordic countries have been proactive in promoting entrepreneurship and innovation and have implemented policies and initiatives that encourage investment in startups. This support includes funding for research and development, tax incentives and easy access to public financing.

In Norway, for example, you can claim an income deduction on personal investments up to NOK 1 million (around EUR 89K). In Sweden, instead, state-owned pension funds are a real boost for the startup-ecosystem development. Back in 2016 Northzone, an early investor in Spotify, was able to raise its biggest fund back then of €350M, also thanks to investment from state-owned pension funds AP3 and AP6. All in all, Nordic pension funds account for 16% of total VC funds raised in the region, while in the DACH this number fluctuates around the 2% and it is 3.5% in France and Benelux. Beyond public pension funds’ activity Nordics government are notorious for establishing public programs for investing, both directly or indirectly through other VC funds, in startups, supporting their tech development or international expansion. For example, in 2016 the Swedish government established Saminvest, that actively supports both national and international venture capital funds and angel investor programs that will add value to the Swedish ecosystem. Similarly, Business Finland, the Finnish government organization for funding and trade, provides services and funding for Finnish startups and SMEs, to foster their international growth and to fuel business and product development as well as technical R&D. The entrepreneurial spirit in Sweden is also supported by strong social policies and foundations: “The social safety net we have in Sweden allows us to be less vulnerable to taking risks” — Gohar Avagyan, Vaam’s co-founder, referring to the range of income insurance funds that protect business owners when their venture fails or for startups’ employees if they lose their job, guaranteeing up to 80% of your previous salary for the first 300 days of unemployment (Reuters).

Beyond public capital and government incentives, the Nordics are attracting at the same time a massive amount of private money to the VC space. Startups in the area raised $11.7B in 2022, almost USD 417 pro capita, while in the DACH region the total amount raised was USD 16.1B (EY, Sifted, VentureLab), close to USD 170 pro capita. For the Nordics, this is 36% lower than the all-time high in 2021, but more than 50% higher than 2020’s total. In this context, Sweden results to be the gold reserve of all VC money in Europe. Swedish key venture capital firms, among the others, include Northzone, Creandum, and EQT Ventures. These firms have not only invested in successful startups, including Spotify, Klarna, and iZettle, but they manage the largest funds of the entire European region. Among the top 5 funds in term of size, 4 are managed by the Swedish trio, with EQT (with its EQT Growth I and Ventures III respectively at the first and second position) and Northzone (Northzone X) monopolizing the podium. Creandum follows at the fifth place with its Creandum VI, preceded by the UK-based Felix Capital.

Another key aspect that is worth being pointed out is the lower severity of the funding gap problem through the entire startup lifecycle. If later stages are well covered by incredibly large-size funds, the Pre-Seed and Seed panorama offers an outstanding roster of professional funds laser focused on the growth of the Nordics ecosystem too. Just to name a few: Lifeline Ventures and Inventure in Finland, Heartcore Capital and Seed Capital in Denmark, Industrifonden and Norrsken VC in Sweden, and Skyfall Ventures in Norway.

Even in terms of acceleration programs and community events the region stands out. Nearly 12’000 people attend Helsinki-based Slush conference each year, which has fast become one of the world’s top tech and startup events. There’s also a slew of tech accelerators that have been a huge asset to the region’s popularity in the startup space. Apart from the international ones with a presence in the Scandinavian area like Seedcamp, Antler and Startupbootcamp, the region presents original programs with a strong success path like the Danish Accelerace or Sting, that since 2002 have supported hundreds of promising Stockholm-based startups.

This combination of government support in both financial and infrastructure aspects, large amount of private money interest and a vibrant community, creates a very unique fertile terrain for startup to be founded and then scaled.

The high-quality education system in the Nordic region produces a skilled workforce extremely keen on entrepreneurship

The Nordic region’s education system is considered one of the most successful in the world. When adjusted for GDP, Finland’s higher education system is the best in the world, according to the Universitas 21 (U21) rankings. Denmark and Sweden, are also both present in the top 5. This achievement is the result of a strong tradition of investing in education and providing equal opportunities for all students. The education systems are designed to foster creativity, critical thinking, and problem-solving skills, rather than simply focusing on academic achievement. Nordics students practice the most useful soft-skill in entrepreneurship since their school days. In Sweden, they even practice the hard-skills: entrepreneurship training for high school students started already in 1980. The number of students who participated in the training grew steadily and entrepreneurship eventually became part of the national curricula for both elementary and upper secondary schools in 2011.

Moreover, Nordic countries have a strong focus on research and development with a particular attention to the scientific fields. The Technical University of Denmark (DTU) is a top-ranked university that excels in engineering and environmental science research. KTH Royal Institute of Technology, located in Stockholm, Sweden, is known for its world-class research in areas such as information and communication technology, energy, and transport. Chalmers University of Technology, located in Gothenburg, Sweden, is a highly ranked engineering and technology university with a strong focus on collaboration with industry. Aalto University, located in Espoo, Finland, is a multidisciplinary university that excels in innovation and entrepreneurship in fields such as science, engineering, and design. Finally, the University of Helsinki, the largest and oldest university in Finland, is renowned for its research in fields such as ecology, materials science, and quantum physics. These universities share a common commitment to research, academic excellence, and innovation, making them among the top scientific and engineering schools in the world.

Sustainability is an intrinsic value in the Nordics, it’s not just an objective

Nordic Regions rank first in almost all reports about sustainability. In 2022 (and even in previous editions) Finland, Sweden and Denmark monopolized the podium of the Europe Sustainable Development Report with regards to the percentage of SDGs achievement analyzed. The Nordics have a long and established tradition about sustainability that is embodied and delineated in each aspect of the society, both in the local cultures and in political agendas. The Nordic Council, has identified three priority strategic areas in a joint statement on which all countries involved commit to work together as a unique identity. These areas are the transition to a green economy, promoting social sustainability, and ensuring competitiveness in the region. Denmark for example, has taken the lead in the transition to a green economy, successfully reducing CO2 emissions by more than 50% since 1996. On the other hand, Finland has set an example for sustainable use of resources and is the first country to establish a detailed roadmap for it.

The attention to the sustainability is an issue that is becoming increasingly important especially in the consumers space, driving a significant shift in a market that has been crucial for the development of the Nordics ecosystem. But even from an investor perspective, this theme is becoming more and more relevant. First of all, investment portfolios face significant risks from climate change and global warming, so that investors are starting to prioritize impact investing to hedge their positions. Institutional investors have been noting that hazards associated with ESG matters can significantly impact a company’s market value and public image. Companies have witnessed a reduction in their earnings and gains due to occurrences such as work-related accidents, environmental damage or contamination, and supply chain disruptions caused by weather and social conditions, or even bad governance. Adding to that, sustainability is core to align fund strategies with the priorities of beneficiaries and broader stakeholders. According to US Trust, two-thirds of high-net-worth millennials implement their investment decision expressing their social, political and environmental values, indeed.

Given the primary position the Nordics hold in the sustainability space, both in terms of social engagement and technological development, the region gravitates at the center of the most discussed and material theme of the next decades.

What’s next

So far, the optimism is definitely predominant and the overall sentiment is that the Nordic startup boom will continue into 2023 and beyond, due to the region’s global approach, intrinsic tradition for innovation, and risk-taking mentality.



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