Swedish companies were such pioneers in the clean technology sector, they were arguably too early by nearly a decade. Starting in around 2006, a number of Stockholm-based companies began attracting both excitement and significant investments with their cleantech ideas. But the market for clean energy and other sustainable products and services wasn’t quite there and then came the recession of 2008. As the global economy took a hit, so did the cleantech hype.
A decade later, the cleantech and sustaintech sectors are once again booming and Swedish startups are back in the leadership position. The market for clean technology solutions has matured, green energy cost curves have plummeted and, perhaps most importantly, consumers everywhere are now more attuned to our global climate crisis and are hungry for more sustainable options.
“Something really happened between say 2012 and now,” said Boel Rydenå Swartling, a Stockholm-based investor and the co-founder of a start-up that makes charging equipment for electric vehicles. “Greentech or the notion of ‘going green’ transformed from a secondary thought to a central business strategy and this was driven in part by legal pressures but also from intense pressures from consumers who now have an acute awareness of the serious environmental problems we need to address.”
Among the Stockholm-based companies leading this second, and larger, wave of cleantech startups is Climeon, which turns hot water into electricity. It has attracted investments from some of the wealthiest people on earth, including Jeff Bezos, Bill Gates and Richard Branson.
The solar cell company Exeger is another Stockholm-based firm to attract major international investments recently, with Japan’s SoftBank Group pumping $10 million into the startup earlier this year.
Other sustaintech firms to emerge out of Stockholm include: OrganoClick, which is ushering in “a new era within fiber based materials”; Ekoligens, which has developed clothes hangers out of recycled cardboard and paper; Einride, which is behind the world’s first autonomous electric truck designed for commercial transport and SurfCleaner, which has created an energy efficient system for collecting and separating pollutants like plastic and oil from water.
Good ideas need backers
With all of the promising ideas emanating out of the Swedish capital, Swartling decided to start Sweden Sustaintech Venture Day, a Stockholm event that connects promising sustaintech companies with venture capitalists. Now in preparation for the event’s second round in February 2020, Swartling started Sustaintech Venture Day out of what she said was a frustration that not enough capital was finding its way to startups that are ready to grow.
“A lot of people put a lot of faith in tech solving our problems, but for that to happen a lot of capital needs to move into this space,” she said.
Among the investors drawn to the inaugural Sustaintech Venture Day was Robert Genieser of the London-based ETF Partners, which specializes in identifying and funding high-growth sustainable technology companies around the world. For Genieser, there is no part of the world quite as ripe with ideas as the Nordics.
“If you’re looking to make investments that have a sustainable impact, you want to look in the Nordics, where there is a whole ecosystem that has really come together on this. You’ve got some very bright entrepreneurs, you’ve got established large companies looking to support them, you’ve got a populace that ‘gets it’ when it comes to climate change and you’ve got strong governmental support,” Genieser said.
Although ETF Partners is not currently funding any Stockholm-based companies, he said there are a number of start-ups in the Swedish capital of interest and that it could be just a matter of time before a deal is struck.
“There are definitely a lot of good things happening in Stockholm and the end of the day, we’ll probably see a couple hundred startups coming from the Nordics,” Genieser said. “If you’re looking to do something environmental, this is the part of the world you want to be involved in.”
Geneiser conceded that investors took some hits by backing some Swedish cleantech firms in the pre-recession days, but said the scene has now completely turned around.
“Since the downturn, things have gone really well for Swedish entrepreneurs. If you look back historically, Scandinavian countries – and particularly Sweden – were the first to really get on board with clean technology. That is not lost on the rest of the world, so a lot of international investors see two things when they look at Sweden: an established history of green solutions and its current position as a sustainable energy leader,” he said.
‘We need products that benefit our environment’
Growth advisor Alexander ‘Bigge’ Lidgren is used to manage the cleantech portfolio of the Swedish Energy Agency. His work in both the public and private sectors may not have given him a secret recipe for finding successful startups – “I wish,” he joked – but he said he knows what he’s looking for when it comes to investment decisions.
“We need products and solutions that benefit our environment and our society as a whole. I try to look for things that can make a dent in making our ecosystems healthier rather than the opposite.”
Like Geneiser, Lidgren said that plenty of Swedish startups and investors took some hits by coming out of the gates too early but their setbacks have now paved the way for current successes.
“There are two reasons cleantech is growing so fast,” he said. “First, consumers are increasingly looking for greener, more climate-friendly products. The second thing is cost curves. The costs of solar and batteries have gone down like crazy since the first wave of greentech. We should really thank those who were doing solar 10-20 years ago because there is now a huge rush that wouldn’t have happened if prices hadn’t become more attractive.”
Both Lidgren and Geneiser agree that Stockholm’s reputation as a startup hub and Sweden’s standing as an international leader in both engineering and environmental awareness will help draw investments to the city. Given the scope of the climate and environment challenges we face, Lidgren concludes that capital is vital but first and foremost it’s the idea that should have real value.
“I’d even argue that we’ve reached the stage now where if you don’t have a product that is benefitting our ecosystem, perhaps you shouldn’t exist,” he said.