“We wanted to move 30 of our staff members to Stockholm this year, but lost focus on the business perspective while trying to find accommodation for all of them,” Lukas Ohlsson, Sweden PR manager for the online voucher startup CupoNation, told The Local.
The firm already has offices across the world, including France, Brazil and India and employs 200 workers. But despite launching on the Nordic market in 2013 – just a year after the company started operations in Germany – it has yet to set up a hub in any of the Scandinavian countries.
According to Ohlsson, the company spent around 12 months trying to come up with solutions to relocate to Stockholm, but stalled due to the ongoing housing shortage in the capital.
Instead, Cuponation's Nordic operations remain run from the company headquarters in Munich – located in a startup environment run by incubator Rocket Internet – part owned by Swedish investment company Kinnevik.
“Right now we're in a city that's not ideal from a business perspective, but is perfect from a startup perspective. If it had been easier and cheaper to move to Stockholm, we would have – but we sat down and did the maths. It was just not feasible,” said Ohlsson.
The birthplace of a range of successful global tech businesses such as Spotify, Skype and Klarna, Stockholm is frequently voted among the top startup cities in the world. For young, creative and international career climbers, Sweden's biggest city is Europe's own Silicon Valley.
READ ALSO: Stockholm third best in Europe for startups
CupoNation is a young and fast-growing company, that on paper would fit right in, with Sweden as its third biggest market and many members of staff in their twenties (Mads Bukholt, head of the Nordics, is 27 years old).
But the housing stumbling block hit upon by Ohlsson and his colleagues is fast becoming a very familiar story for large numbers of entrepreneurs and expats seeking to relocate to Stockholm, the fastest-growing city in Europe.
While many in the city still enjoy rent-controlled public housing, the average wait for this kind of apartment currently stands at eight years. In some highly sought-after areas, this figure grows to two decades.
This means that the market is hard enough to break into for native Stockholmers, who have often been in the city's public housing queue for several years. For newcomers arriving in Sweden, it is near-impossible.
Sweden's strictly regulated market and stagnating rental housing construction has resulted in a highly competitive subletting market emerging, while at the same time the costs of both renting via individual private landlords or buying a home in Stockholm have also shot up.
“There are by and large only two alternatives in Stockholm: buy an expensive apartment or sublet one for extortionate rates,” said Ohlsson, who would like to see more rental homes built.
Lukas Ohlsson, Swedish PR manager at CupoNation. Photo: CupoNation
Sweden’s current Social Democrat-Green coalition recently promised to set aside 5.5 billion kronor ($665m) for various housing projects across the country in what Finance Minister Magdalena Andersson described as the “biggest housing political investment in 20 years in Sweden”.
But Ohlsson, who previously worked with fellow entrepreneurs in Gothenburg, warns that if the housing shortage isn't solved quickly, it may harm the capital's chances to compete – both internationally and with growing startup scenes in other Swedish cities, which are attracting workers failing to find accommodation in Stockholm.
“I've been involved in the Swedish startup industry and have heard stories about how great a startup city Stockholm is – and it is, that's why so many successful companies have started there, so I have no reason to dispute those claims,” he said.
“But of course the housing crisis can have negative consequences – you lose out on so many international talents.”
READ ALSO: Stockholm's housing list in record books?
Jessica Stark, co-founder and chief executive of Swedish startup organization SUP46, would likely agree.
“A lot of countries offer better conditions for startups when it comes to the housing situation,” she told The Local earlier this autumn. “It is very easy for a startup to simply pack up their laptops and leave Sweden.”
In the meantime, Stockholm's business community appears to be doing what it can to pull together to try to ease the crisis, with a focus on helping foreigners to find accommodation.
Julika Lamberth, Business Development Manager for Stockholm Business Region, a state-funded company working to increase investment in the city, told The Local in October that the organization was stepping up efforts to link tech firms with local municipalities and real estate companies in the area.
“We are a facilitator and we can connect interesting players together (…) to make it easier for international companies to continue to attract international talent.”
But for many companies including CupoNation, this kind of work may be simply putting a bandaid on a growing wound.
“It is hard to say exactly and offer comprehensive answers. It's a tough situation for everyone involved…and for us it just got too difficult in the long run,” said Ohlsson.