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10 biggest Stockholm tech stories of 2018

The Swedish capital retained its title as one of the world’s leading tech hubs, with established players making major moves and up-and-comers positioning themselves as forces to be reckoned with.

10 biggest Stockholm tech stories of 2018
Photo: Henrik Trygg/mediabank.visitstockholm.com

With so much innovation and ingenuity coming out of Stockholm, it’s a bit of a challenge to even recall all of the numerous 2018 success stories, let alone boil them down to a top ten list. But embracing the capital’s can-do ethos, we’re going to give it a shot. In no specific order, here are our picks for the top ten tech stories to come out of Stockholm in 2018.

1. Stockholm: where innovation is in our DNA

Just a few weeks into 2018, the international accolades for the Swedish tech scene began rolling in with Bloomberg declaring Sweden the second most-innovative country in the world and the World Economic Forum naming Stockholm one of the world’s most innovative cities. The latter nodded to the Swedish capital’s reputation as Europe’s “unicorn factory” as home to more $1 billion-plus companies per capita than anywhere outside of Silicon Valley.

The list of unicorns founded in Stockholm continues to grow and includes globally-recognized names like Skype, Spotify, Klarna, King, Mojang and iZettle.

Find out more on Invest Stockholm's website

2. Spotify redefines the IPO

After successfully disrupting the music industry, was it any surprise that the Stockholm-based Spotify would approach its initial public offering in an equally innovative way? The streaming music company “disrupted Wall Street” with its decision to go public via a direct listing that put roughly 90 percent of its shares available for immediate trade without an intermediary.

The bold move paid off, with prices opening at $165.90 per share at the start of opening day trading and finishing the day at $149.60, well above the original $132 reference price. At the end of its unorthodox debut on the stock market, Spotify was valued at $26.6 billion. Quite the feat for a company that’s only been around for a dozen years.

3. Stockholm’s FinTech sector goes from strength to strength

The FinTech sector continued its transition from global disruptor to the mainstream in 2018, and much of the action was centered in Stockholm. Financial technology innovations are no longer seen as merely an alternative to the existing financial system. Indeed, the FinTech sector is quickly becoming the existing financial system.

The strength of Stockholm’s FinTech sector was exemplified by the May purchase of Swedish startup iZettle by PayPal for $2.2 billion. At the time of the transaction, the iZettle platform for handling retail transactions was being used by nearly a half million merchants. The purchase was PayPal’s biggest acquisition to date and immediately expanded the US-based company’s reach into Brazil, Denmark, Finland, France, Germany, Italy, Mexico, the Netherlands, Norway, Spain and Sweden.

4. Stockholm businesses declare their commitment to gender equality

In February, The Economist published its annual ‘Glass Ceiling Index’ and named Sweden the best country in the world for working women. Despite the accolades, there is always room for improvement. That’s why more than 100 of Stockholm's best-known businesses publicly declared their commitment to gender equality in 2018.

In Stockholm, we firmly believe that A Woman's Place is wherever she wants it to be. That’s why Invest Stockholm launched its gender equality initiative in March, urging companies to collaborate, contribute and strive towards a future free from gender discrimination.

This commitment to gender equality puts Stockholm ahead of the curve when it comes to addressing a main takeaway of 2018 State of European Tech report, which warned that “Europe urgently needs to fix its diversity and inclusion problem.”

5. In Stockholm, the future of transportation is now

Before the year’s first month was out, driverless buses were cruising Stockholm streets. Two self-driving buses began running between Kista mall and Victoria Tower along a 1.5 kilometre pre-recorded path at a speed of 20 kilometres an hour, using GPS and sensors to ensure they do not divert from the path. Their debut generated international attention, inspiring Forbes to write that “possibly no-other European nation loves technology as much as the Swedes.”

“By testing cars and not buses we were able to shift focus to urban development and more specifically urban mobility,” Kista City Development director Åke Lindström tells The Local. “The self-driving buses that were tested this year was maybe our most covered story ever – and, of course, a success story. Today, we are already on the way to the testing more mobility solutions, both on-ground and in-air.”

The buses were just the beginning. A few months later, the world’s first electrified road for charging vehicles opened just outside of Sweden’s Arlanda Airport. The 2km stretch is currently being used by an electric truck working for the logistics company PostNord as it shuttles deliveries between Arlanda and its distribution centre. A road map is already drafted for national expansion.

September saw the Swedish Transport Agency (Transportstyrelsen) grant permission to Swedish auto giant Volvo to begin real-world testing of its self-driving cars, boosting the company's chances of meeting its goal of bringing the technology to market by 2021. That same month, German automaker Mercedes chose to launch its electric EQC in Stockholm

And did we mention electric car sharing service aimo and electric scooter companies VOI, blinkee.city and Lime also established themselves in the city this year? With these types of advancements happening in Sweden, it's no wonder Stockholm was ranked second in Arcadis' 2018 Sustainable Cities Index.

6. Who needs an office? Co-working spaces spring up across Stockholm

Stockholm area entrepreneurs looking for an affordable, high-energy working space they can share with like-minded people received some very good news in 2018. Swedish venture capital company Wellstreet announced plans to build what will be the largest tech hub in the Nordics. Dubbed The Factory, the suburban facility will open in spring 2019 with space for upwards of 100 startups along with larger tech companies and venture capital firms.

Just a few months later, the American shared workspace company WeWork will open its doors  in the hip downtown neighborhood Urban Escape with desks for more than 1,000 members.

“Stockholm is home to one of the leading tech scenes in the world and has an incredible innovation power and pioneering spirit. Our mission is to give our members the space, community, services, and flexibility they need to bring energy and inspiration to their work, while fostering collaborations with like-minded people who can help their businesses grow and succeed,” Wybo Wijnbergen, WeWork’s general manager for Northern Europe, said.

Find out more on Invest Stockholm's website

7. Stockholm is a magnet for global tech talent

All of those new co-working spaces are likely to fill up quickly, considering Stockholm’s continued ability to attract tech talents from around the world. According to Insead’s 2018 Global Cities Talent Competitiveness Index, Stockholm is the world’s second best city for attracting global talent.

Techies flocking to Stockholm shouldn’t have too much trouble finding work on arrival. The city is bursting at the seams with tech companies looking for skilled workers and demand only looks set to continue growing.

8. Stockholm Tech Week reaches new heights

Whew! With 14 major tech conferences, over 50 events and around 40,000 people, we’ve barely caught our breath from September’s Stockholm Tech Week. Whether it was the Gather Festival, the DreamHack Masters, the me Convention, Sthlm Tech Fest or the Music Tech Fest, the week-long event proved that Stockholm is still unquestionably one of the world's most prolific and innovative tech hubs.

9. Truly life-changing tech starts in Stockholm

Sweden has set itself the ambitious goal of becoming “the best in the world” at utilizing the health advancements ushered in by “digitalisation and eHealth” and 2018 saw a number of positive steps towards achieving that distinction.

While government initiatives include Stockholm County Council’s new digital platform for electronic health records, patient access to digital test results and doctor’s notes, and the development of an app for the online health portal ‘1777 Vårdguiden’, some of the most promising developments can be found in the private sector.

Stockholm is home to around 130 health tech companies that are at the forefront of some truly exciting health tech developments. Examples include the telehealth startup KRY, which created an app to connect patients with doctors for digital consultations and treatment and in which has received investments to the tune of €53 million from companies including Accel, Creandum and Index Ventures, and Coala Life, which developed a heart monitor that can record users’ heartbeat and ECG in just one minute and send the results to an online care portal where they can be assessed by a doctor. In June 2018, it was reported Coala Life has received several rounds of investment totalling over 100 million SEK (€9,752,000) from investors including venture capital company 20 North Street and chairman of Elekta Laurent Leksell.

10. Microsoft buys 130 hectares of land in the Stockholm region

Ending the year on a high, tech giant Microsoft sealed the deal on 130 hectares of land in Gävle and Sandviken. The details of the deal, worth SEK 269 million (€26 million), are currently hush-hush although the local mayor has said that what they have in store could lead to hundreds of jobs.

“Microsoft's interest in buying industrial land in two neighbouring municipalities in the Stockholm Region confirms our attractiveness and global competitiveness,” says Anna Gissler, acting CEO of Stockholm Business Region.

This article was produced by The Local Creative Studio in partnership with Invest Stockholm.

 

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PROPERTY

EXPLAINED: Will Swedish housing prices plummet as interest rates rise?

The Swedish financial supervisory authority warned on Wednesday that rising interest rates could lead to house prices falling "quite sharply". How likely is it that this will happen?

EXPLAINED: Will Swedish housing prices plummet as interest rates rise?

What financial circumstances might make it difficult for borrowers to repay loans?

With an increase in the cost of living, including rising interest rates and rising electricity prices, there are plenty of circumstances that may make it difficult for borrowers – especially those holding large debts in relation to their income – to repay their mortgages.

Households with large debts are therefore more sensitive to an increase in interest rates, according to the Swedish financial supervisory authority, known in Swedish as Finansinspektionen (FI).

The agency published its annual Swedish Mortgage Market report on Wednesday.

“Large debts also mean a higher sensitivity if you were to suffer unemployment during an extensive recession,” said Henrik Braconier, the authority’s chief economist.

Other factors that could stretch borrowers’ finances include rising energy prices, higher food prices, and growing inflation.

“Apples, oranges, tomatoes have gone up by 30 percent,” said Américo Fernández, a household economist at SEB. “Wheat is coming from Ukraine and it’s getting harder and harder to get hold of.”

READ ALSO: 

Will homeowners become unable to repay their mortgage loans?

Not according to Fernández.

“One of the last things Swedish households will fail to make their payments on is their mortgage and their houses,” he said. “They would rather decrease their spending on vacations abroad, or restaurants.”

The FI report noted that most new mortgages include margins that allow for fluctuations in the borrower’s finances. This means that mortgage holders have a cushion that allows them to handle financial changes.

“Our stress test shows that they can handle increases in the interest rate and also loss of income,” said Magnus Karlsson, FI’s director of macroanalysis. “New mortgages have margins in them calculating discretionary income, and will be able to absorb increases in interest rates and loss of income.”

SEB foresees an interest rise of up to three percent over the next two years, Fernández said,an increase that can be absorbed by most households.

Both Fernández and Karlsson agreed that if homeowners have to cut back on spending, those cuts will not come from debt repayment, but from their disposable income – the money they might ordinarily spend on entertainment, eating out, or travelling.

So while household spending may have to change, financial stability is not at stake for most households.

What’s going on with the housing market?

Right now, a record number of mortgage-holders have loans that are worth more than 4.5 times their income. This year, more than 14 percent of new mortgagors took on such large loans, compared to 6.3 percent last year.

A “low interest rate, increase in housing prices, increase in disposable real income and a housing market that is not functioning well” are all factors in the large debts that homeowners have incurred today, Karlsson argued.

Fernández noted that there is an imbalance between the low supply of housing and the high demand for housing, which is in part responsible for the high housing prices we see today.

He said a decrease in price of a few percentage points would not be surprising: “We’re coming from two years of exaggerated prices.”

Will housing prices begin to decrease after two years of increasing prices?

Calculations for three different scenarios tested by FI show that housing prices will decrease, Karlsson said.

While the agency does not predict housing prices, its report shows that under three different scenarios – the first an increase in mortgage interest rate, the second an increase in energy prices, and the third a combination of the first two with a reversal to pre-pandemic housing preferences – prices will decrease.

The Local Sweden reported last year about increasing housing costs in Sweden, spurred on in part by a desire for bigger homes further away from urban areas during the COVID-19 pandemic.

Fernández called the two years of increasing housing costs “surprising.”

“10-12 percent two years in a row, that’s historical in these uncertain times,” he said, noting that prices were still increasing in figures for March this year.

What sorts of housing will see the largest price decrease?

The FI report also included various scenarios of how the price of different types of housing may fluctuate based on changes in the interest rate.

One scenario assumed a 1 percent increase in interest rates this year and a 0.5 percent increase next year, and predicted that while the price of apartments owned in a cooperative – called bostadsrätter – would fall only slightly, the price of detached houses would fall by 10 percent.

Another calculation that accounted for rising electricity prices and a decline in new housing purchases found that the price of bostadsrätter and detached houses risked falling by an average of 30 percent.

Is there a plan to let borrowers end their mortgage terms early?

“We believe it needs to be simpler and more inexpensive for households to repay their mortgages early,” FI Director General Erik Thedéen is quoted as saying in a press release published by the agency on Wednesday.

To that end, Thedéen said at a press conference that the agency had sent a request to the government to change the calculation model for how banks are compensated when mortgages are terminated early.

“When you terminate a loan agreement and the bank incurs costs, it must be reimbursed,” Thedéen said. “But at present the banks are overcompensated, that is what our calculations show. If the government follows our line and changes the model and follows our line, then the banks must simply adapt.”

When asked about the likelihood of this request being granted, FI recommended reaching out to the Ministry of Justice for comment.

What does this mean for foreigners in Sweden?

If you’re already a mortgage holder, then as Karlsson and Fernández assured, mortgage calculations include a cushion that allow for changes in your financial circumstances.

If homeownership is in your future, housing prices may begin to decrease in the near future, so it’s worth keeping an eye on your local real estate listings.

By Shandana Mufti

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