By Shona Hastings, 23.08.2021
Entrepreneurship is growing rapidly helping Sweden to become a hotspot for tech start-ups. Sweden has earned recognition as the European equivalent to the Silicon Valley. Home to some of the biggest global brands, Sweden tech companies include Spotify, Klarna & Ericson. According to the World Bank’s Doing Business Report for 2020, Sweden ranks 10th out of 190 economies for ease of doing business thanks to its robust business climate, language skills, international competitiveness, and commitment to innovation.
How Sweden became a Hotspot for Tech Start-ups
Sweden has become an epicentre for successful tech start-ups in Europe, and it breeds numerous billion-dollar companies. The Swedish Government’s approach to education and their commitment to innovation has played an influential role in shaping the country’s technology and start-up ecosystem. Sweden’s cities also provide attractive start-up facilities like incubators, coworking spaces, and start-up hubs to budding entrepreneurs, offering them the foundations to build the next billion-dollar global company.
In 1998 the Swedish government went about ensuring their citizens were familiar with modern technology, introducing a scheme which made a personal computer (PC) compulsory in every home. Under this scheme a tax break was offered to assist residents to purchase PCs. Sweden’s PC drive, and their early and continued investment in internet connectivity plays a major role in the reason Sweden has become attractive soil for tech start-ups and is home to numerous highly talented individuals.
Investment in the education of their population has also influenced the growth of Sweden’s economy, with 7.3% of Sweden’s GDP allocated to spending on education while the OECD average sits at 5.8%. Sweden spends $11,400 per student from primary to post-secondary education, greater than the OECD average of $9,249. Sweden also offers a college and university education at minimal cost to students due to government funding and grants, so it’s not surprising that they have developed an attractive start-up environment and home to some of the world’s leading companies employing talented and a workforce of highly educated individuals.
The Benefits of Doing Business in the European Silicon Valley
There is an array of benefits and incentives to doing business in what has been crowned, Europe’s most welcoming nation. Laws in Sweden have changed recently to create a more attractive location for start-up companies. Large corporations are prohibited from gaining a monopoly power in the market with the law stating, ‘Any abuse by one or more undertakings of a dominant position on the market shall be prohibited’. This eliminates large corporations from gaining a position of power like they once could and offers new Sweden tech companies and start-ups an equal chance at success.
There are a number of company types a business can choose to register in Sweden including; a Private Limited Company, Public Limited Company, Partnerships, or Branch Office of a Foreign Company. A Public Limited Company is ideal for smaller businesses and requires a minimum share capital of 50,000 SEK with a board of at least one member plus a deputy. A Public Limited Company is ideal for larger companies requiring a minimum share capital of 500,000 SEK and its board must have at least three members. Visit our service page for more information on registering a company in Sweden.
A Swedish company can be operated remotely, however, there are benefits for those looking to relocate:
An attractive incentive for EU/EEA citizens looking to make Sweden a base for their tech start-up is that there is no work permit required. However, non-EU/EEA citizens do need a permit which must be granted prior to entering the country. In many instances, a residence permit may also be required if the individual will be working in Sweden for a period greater than three months. Once you satisfy the requirements for obtaining a residence permit, this can be applied for online from anywhere in the world.
Sweden is known for being a high tax country with capital gains tax up to 30% and income taxed up to 60%. Despite this, Sweden offers additional benefits like free childcare and healthcare to their residents. This offers residents the opportunity to be more innovative and take more risks as the state looks after their social security, something which is not necessarily the case in the US based Silicon Valley.
Sweden vs Silicon Valley
California’s Silicon Valley set a very high bar in terms of economic and business development when it first became the global hot spot for tech start-ups. However, since then many countries across the globe have experienced their own technology boom with tremendous growth in their numbers of start-up companies.
Sweden employs the third-highest start-up rate in Europe (after Turkey and Spain) with 20 start-ups per 1,000 employees and a three-year survival rate of 74%. Sweden tech company start-ups have the highest survival rate across Europe according to a 2018 study by OECD economists.
Stockholm, Sweden is also the second on the globe after Silicon Valley in terms of unicorn start-ups. A Unicorn start-up is a new company that is valued at $1 billion per capita. California’s Silicon Valley has 1.4% unicorns per 100,000 inhabitants, while Sweden has an impressive 0.8% unicorns per 100,000 inhabitants.
Conclusion
Over several years, Sweden has emerged as one of Europe’s biggest competitors to California’s Silicon Valley as an attractive location for budding entrepreneurs and tech start-ups. This is due to Sweden’s booming technology infrastructure, proactive government and modern education system. It is easy to see that Sweden tech companies and start-ups have achieved great success positioning the country as a European Silicon Valley. For more information about how to register a company in Sweden please don’t hesitate to contact us today or call +353 (0) 16461627.
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