The Silicon Valley giant making the Stockholm startup scene even stronger
By Invest Stockholm in collaboration with The Local
Stockholm has long been one of the global startup scene's standout cities and, as world economies tighten, the arrival of a legendary Silicon Valley player adds an additional, very welcome, layer of expertise and investment possibilities for startups in Sweden’s capital.
Stockholm is justifiably proud of the fact that it has now produced more billion-dollar startups per capita than anywhere in the world outside Silicon Valley.
The reasons for Stockholm’s startup success are many and varied. A good free public education system, government support for small businesses, a commitment to gender equality in particular and diversity in general, a high percentage of early tech adopters, excellent English spoken by Swedes, and a strong welfare system that encourages entrepreneurship (if your startup fails, you won’t starve), are all commonly extolled as fundamental underpinnings of the startup ecosystem in Stockholm.
Yet there is another crucial element that is often overlooked, although it might be the most important aspect of all – a broad array of funding for startups.
There are many government-backed programmes that provide funding in Stockholm to entrepreneurs; universities have broad alumni and investor networks; venture capital funds are always looking for investment opportunities; accelerator programmes offer funding; there are regularly run business pitch competitions across Stockholm, many of which offer cash incentives, exposure to the media, and established networks of the judging panelists.
And there are, of course, angel investors, business owners who have been successful and are trying to help make other people as successful as they’ve been, by investing in others’ early-stage startups. Obviously, in return for this funding, investors take stakes in the companies.
However, as the global economy contracts, some investors have become less willing to invest in startups and even major global startup hubs such as Stockholm need a fillip to boost confidence and drive growth.
Therefore the arrival in Stockholm of the Silicon Valley Bank (SVB), the Californian institution that focuses on lending to innovative technology companies, is very timely.
The Swedish arm of SVB could hardly be led by a better-qualified candidate. Maria Ljungberg was previously CEO of Propel Capital, worked with business accelerator STING, and has extensive experience over almost 20 years supporting startup founders and building investor networks.
“I’ve worked a lot on supporting startups and building investor networks, and that’s what Silicon Valley Bank’s entire business is based on – supporting and financing growing companies,” says Maria.
Maria emphasises that SVB does not have a banking licence in Sweden and thus cannot offer fully-fledged banking services.
“But we will offer different types of financing solutions to companies in the technology and life sciences sectors, who we will then support in other ways.”
In 2021, the Swedish startup ecosystem raised a remarkable 70 billion Swedish kronor (€7.8bn) from venture capital funds. The figures so far in 2022 are thought to be significantly less, a contraction which is thought to be at least partially down to economic uncertainty.
Maria suggests that the arrival of SVB could help ameliorate this reduction in venture capital funding.
“SVB can offer loans to supplement venture capital,” Maria says. “And, obviously, loans are a good way for founders to protect their ownership through reduced dilution. We’re not in competition with venture capital or angel investors – we’re very much offering a complementary source of funding.”
Maria thinks the launch of SVB’s Stockholm arm is well timed. “I think debt financing is an interesting option for companies when access to risk capital has become a little harder and valuations have decreased,” she says. “It feels very good that we can enter the ecosystem as a positive force in the current tough climate. For founders, loans can be a very interesting opportunity to complement equity funding.”
SVB prides itself on being a supportive partner, Maria says. “It is part of the DNA of Silicon Valley Bank, to want to be present over a company’s entire journey, to be supportive and follow our clients over time, to ensure they have the right financial tools at the right time. So, even when they’re quoted on the stock exchange and are one of Sweden’s fastest-growing companies, we will still have different alternatives for them.”
Maria is also keen to remain an active member of the Stockholm startup community.
“I’ve been building investor networks in Stockholm for years,” she says. “I don’t intend to stop doing that. And, obviously, SVB has a wealth of experience to share in startups going back to the 1980s, and we will be very happy to contribute that to the startup scene’s knowledge.”
As a maven of Stockholm’s startup scene, Maria is already fully aware of why the Swedish capital is so attractive to startups but there’s one aspect in particular that she thinks makes Stockholm so special.
“There has long been a focus in Stockholm on building strong, mixed teams from around the world,” Maria says. “They also have great tech competence in those teams, but it is a real strength that the main focus is on diversity, that we have people from so many different backgrounds and nationalities. And that is something that is very important for us at SVB.”
Maria believes that the arrival of SVB makes the Stockholm startup scene even stronger. “SVB’s arrival shows just how good Stockholm is for startups,” Maria says. “It’s a very friendly and collaborative ecosystem and now SVB is part of it. My view is that to get through tough times you need as many good people around as you as possible – the more the merrier. That might be a little cliched but I still believe it.”