Nordic Countries: potential digital tech hub in Europe

Move out Silicon Valley, California, move in Scandinavia as it is revealed that Scandinavian countries, as well as the Baltic region might just be the leading contenders in the contest to become Europe’s centre for digital technology.

As digital technology continues to take the world by storm, the competition to become a digital tech hub is becoming increasingly fierce. Right now, Europe is constantly searching for new “unicorns,” and it is here where Nordic and Baltic regions may be in with a chance. A unicorn is a privately-owned tech start up which has a net worth of more than  $1bn (€920m). Traditionally, they have populated California’s Plot Alto city, otherwise known as Silicon Valley – home to world tech giants including Amazon, Facebook and Google. However, things are changing and Europe is realising that it needs its fragmented system of unicorn factories to become one piece and form a strong European digital hub.

Europe has potential to develop new startups but faces US and Chinese competition

Europe has the money. It also has the eco-system. Yet, in comparison to tech dominators like the US and China, it remains insufficient. Since the term was coined in 2013 by venture capitalist Aileen Lee, the world has witnessed an explosion in unicorns. In 2013, there were 39; by the end of last year, there were 1,200. More than half of these unicorns were born in the US, followed by China and the UK and half of those originating in the US started in Silicon Valley

Combined, Nordic Countries the most promising for digital technology startups

Europe has competition. However, Germany is currently on the move as between 2008 to 2021, it was responsible for 30% of unicorns, followed by France (15%) and Sweden (14%), according to a research paper commissioned by the European Commission in 2022.  Therein lies the question: why the Nordic and Baltic countries? The truth is that when combined by region, these two regions show promising figures with the highest numbers of unicorns per capita. For the 27 million people living across the Nordic nations, 73 unicorns were created between 2013-23 representing 17% of Europe’s unicorns, despite only being 4% of its population. John Elvesjö, Managing Partner at node.vc, (investment and venture company) said: “There’s been a lot of really, really strong companies coming out of a very, very small region.”  He added: “Just from Sweden alone, we have seen 39 unicorns, while Denmark has 16, Norway 11 with seven from Finland.”

Sweden has an impressive reputation for unicorns in the EU

Amongst Nordic countries, Sweden is the main hub of unicorns and highest in the group of EU countries for its startup ecosystem according to StartupBlink’s Global Startup Ecosystem Index 2024. Ahead of Germany and France, Sweden is currently sixth best country in the world for creating startups. Countries in the Nordic region including Sweden have created an impressive reputation for themselves in the European panorama like Sweden’s success with Spotify. Sweden has the conditions for startups including access to capital for new ventures, a strong tech knowledge base, a forward-thinking mentality and broadband internet.

Nordic countries have a strong social backbone and this makes it more feasible for a country like Sweden to create startups. Elvesjö also commented on other key factors that might make Sweden and other Nordic countries eligible players for being a digital technology hub. He told Euronews Business: “We are very, very small countries. There is absolutely no chance that you can do business in your local language (…) so we all found our companies on an international basis, both contractually, collaboratively, and language-wise. So any company founded in the Nordic countries will set everything up for doing international business.”

Europe needs cohesion in order to match huge tech hubs like Silicon Valley

Sweden has taken steps to keep the Swedish startup ecosystem alive and competitive worldwide, via initiatives to attract AI talent into the country and through offering residency programmes for entrepreneurial immigrants. It is most certainly trying to combat the obstacles, one of which is the lack of free capital over European borders. Carme Artigas, Co-Chair of the AI advisory body at the UN said: “The problem is that we don’t have the start-ups that find the solution to grow up and become unicorns from Europe.” Elvesjö also commented on fragmentation including language disparity, different currencies and diverse regulations in the EU. Elvesjö, working in Sweden, referred to a company in Sweden which required different rules 30 minutes away in Denmark. Elvesjö, like many other venture capitalists urges for greater cohesion in Europe across financial and legal frameworks and stresses the importance of the Capital Markets Union (CMU) in Europe, which hasn’t yet been solidified since 2015. He concluded saying that Europe needed to switch mindset and take more risks. A recent report by McKinsey & Co. said: “If Europe is not successful in competing in these technologies, it could lose its strongholds in traditional industries, for instance, as a leader in automotive the EU could “become a laggard in autonomous driving.”

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