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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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WORK PERMITS

Swedish parliament to vote on raising minimum salary for work permits

Next week, the Swedish parliament is due to vote on a proposal to raise the current work permit salary threshold from the current level of 13,000 kronor a month. The government and the Sweden Democrats have proposed raising it to around 33,000 kronor a month.

Swedish parliament to vote on raising minimum salary for work permits

The proposal would raise the maintenance requirement for work permit applicants from outside the EU, the Nordic countries and Switzerland – and it looks likely to pass, as the three government parties, along with the Social Democrats and the Sweden Democrats are in favour of the move.

The current proposal was put forward by the former Social Democrat government, and after discussions in the social insurance committee, it was clear that a majority of the parliamentary parties are in favour – only the Left Party, the Greens and the Centre Party are against it.

“A higher maintenance requirement is a welcome step on the path towards a system that curbs cheating and fraud and focuses on highly qualified labour immigration,” migration minister Maria Malmer Stenergard told TT newswire in a written comment.

The Swedish framework for work permit immigration has been described as unique. In contrast to most other countries in Europe which are specifically aimed at highly educated immigrants, Sweden accepts all immigrants who fulfil the requirements despite their education or profession.

The number of labour immigrants to Sweden has also increased substantially. So far this year, over 50,000 applications have come in, of which 38,000 have been approved. Labour immigrants represent the majority of immigrants in Sweden.

It’s also unclear when the change in legislation could become law. No date is given in the proposal, but the suggested date of implementation is “the day the government decides”.

Another element which is not yet clear is exactly how high the salary threshold will be. This will be decided in a separate regulation, which is planned to come into force at the same time as the new law.

Sweden’s Migration Minister Maria Malmer Stenergard has yet to say what the new salary threshold will be. Photo: Jessica Gow/TT

“The goal is to introduce the new maintenance requirement as soon as possible, and we will give more information on the exact limit at a later date,” Stenergard told TT.

In the Tidö coalition agreement, the government and the Sweden Democrats state that the salary threshold should be the same as the average salary, which is currently around 33,000 kronor a month.

Seasonal workers, such as berry pickers, will not be affected by this proposal.

Further tightening up of labour migration laws are also expected in the future. For example, the government wants to investigate if certain professions – such as personal assistants – should be banned from getting work permits. Stenergard has also announced that the so-called ‘track change’, where asylum seekers can switch to other permits, such as work permits, will be abolished.

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