The Silicon Valley giant making the Stockholm startup scene even stronger

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.

The Silicon Valley giant making the Stockholm startup scene even stronger
Maria Ljungberg, Country Director of Silicon Valley Bank in Stockholm.

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. 

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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.

Stockholm is a very friendly and collaborative startup ecosystem. Photo: Anna Hugosson/Invest Stockholm

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.”

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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.”  

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Arctic Sweden in race for Europe’s satellite launches

As the mercury drops to -20C, a research rocket lifts off from one of the world's northernmost space centres, its burner aglow in the twilight of Sweden's snowy Arctic forests.

Arctic Sweden in race for Europe's satellite launches

Hopes are high that rockets like this could carry satellites as early as next year, in what could be the first satellite launch from a spaceport in continental Europe.

At the launch pad, about an hour from the mining town of Kiruna, there’s not a person in sight, only the occasional reindeer herd.

The vast deserted forests are the reason the Swedish space centre is located here, at the foot of “Radar Hill”, some 200 kilometres (124 miles) above the Arctic Circle.

“In this area we have 5,200 square kilometres (2,007 square miles) where no one lives, so we can easily launch a rocket that flies into this area and falls down without anyone getting harmed,” Mattias Abrahamsson, head of business development at the Swedish Space Corporation (SSC), tells AFP.

Founded by the European Space Agency (ESA) in 1966 to study the atmosphere and Northern Lights phenomenon, the Esrange space centre has invested heavily in its facilities in recent years to be able to send satellites into space.

At a huge new hangar big enough to house two 30-meter rockets currently under assembly elsewhere, Philip Pahlsson, head of the “New Esrange” project, pulls up a heavy blue door.

Under the rosy twilight of this early afternoon, construction machines nearby can be seen busily completing work on three new launch pads.

“Satellite launches will start to take place from here next year,” Pahlsson says. “This has been a major development, the biggest step we have taken since the inception of Esrange.”

More than 600 suborbital rockets have already been launched from this remote corner of Sweden’s far north, including the Suborbital Express 3 whose late November launch AFP witnessed as the temperature stood at -20C, or minus four degrees Fahrenheit.

While these rockets are capable of reaching space at altitudes of 260 kilometres, they’re not able to orbit Earth.

Booming business

But with Europe gearing up to send its first satellite into space soon, Esrange is looking forward to joining a select club of space centres that include Baikonur in Kazakhstan, Cape Canaveral in Florida, and Europe’s space hub in South America, Kourou in French Guiana.

Various projects in Europe — in Portugal’s Azores, Norway’s Andoya island, Spain’s Andalusia and the UK’s Shetland Islands among others — are all vying to launch the first satellite from the European continent.

“We think we are clearly the most advanced,” says the SSC, which is aiming to launch at the end of 2023 or early 2024.

The satellite industry is booming, and the Swedish state-owned company is in discussions with several rocket makers and clients who want to put their satellites in orbit.

With a reusable rocket project called Themis, Esrange will also host ESA’s trials of rockets able to land back on Earth, like those of SpaceX billionaire Elon Musk.

While the Plesetsk base in northwestern Russia carried out several satellite launches in the post-Cold War period, no other country in Europe has done so.

Small satellites driving demand

So why is the continent — so far from the Equator, which is more suited for satellite launches — suddenly seeing such a space industry boom?

“Satellites are becoming smaller and cheaper, and instead of launching one big satellite you spread it out over multiple small satellites and that drives the demand,” explains Pahlsson.

More objects were launched into space in 2021 than ever before. And more records are set to be broken in the coming years. Orbiting the North and South Poles is enough for many satellites, making sites like Esrange more attractive.

In addition, having a launch site close to European clients spares them and their satellites long boat journeys to Kourou.

In Sweden, like in the rest of Europe, the rockets being developed are “micro-rockets”.

These are around 30 metres long, capable of carrying a payload of several hundred kilos. In the future, SSC is aiming for payloads of more than a tonne.

But working in the harsh Arctic climate “comes with challenges”, SSC says. With temperatures regularly dropping to -20 or -30 degrees Celsius, special attention needs to be paid to the metals used, which become more fragile in the cold.

The war in Ukraine — where the engines for the European Vega rocket are manufactured — and the abrupt end to the West’s space cooperation with Russia have meanwhile increased interest in having spaceports on the continent.

“Europe needs independent access to space. The horrible situation in Ukraine has changed the space business,” notes Pahlsson.