Meet Sweden, the unicorn factory chasing America in the AI race

Often the most effective insulation against market fluctuations is for existing technology to be woven throughout the fabric of society, so that it cannot quickly lose value. When there is a disconnect between people’s real-world experiences and the excitement they feel on trading floors or in boardrooms, problems can loom.

We can learn something in this regard from the eighty-ninth most populous country in the world: my home country, Sweden. In the 1990s, the Swedish government introduced legislation called Hem-PC-reformen (Home Computer Repair), which aimed to put a computer in every home. This move is often credited as the starting point for subsequent decades of technological progress and “punching above our weight.” This wasn’t a corporate strategic statement or a shiny new tech gadget designed by a CEO; It was a nationwide policy for all of us, aimed at embedding new technology into our lives.

Fast forward to today, and Stockholm has the most unicorns per capita of any city in the world outside Silicon Valley. AI startups in Sweden are on the rise. Legora, which automates lawyers’ tasks, is raising capital at a valuation of $1.8 billion. Einride, the only electric vehicle company, recently announced $100 million to expand autonomous charging. Bio-coding platform Lovable, which helps people create apps using artificial intelligence, is one of the fastest-growing companies in the world. And last month, enterprise technology company Workday acquired our own company, Sana, for $1.1 billion.

That’s not bad for a country with a population half that of New York State, located far from the Arctic Circle. People keep wondering how a nation like ours can achieve so much. Although there is no secret sauce, there are some basic ingredients.

The aforementioned home computer repairs were stimulated by the winter darkness that could last for 18 hours, which meant that we Swedes spent hours in front of our computers experiencing the early Internet environment.

This digitally literate generation then built world-leading technology companies. Skype was founded in 2003 to popularize video calling technology. So was King, the creator of Candy Crush. In 2005, Klarna was born. 2006, Spotify. In 2009, Mojang laid out the first blocks of Minecraft.

We Swedes are very proud of these success stories. They showed us what is possible on the world stage. They have also provided massive moments of liquidity for our ecosystem. Skype and Mojang were bought by Microsoft, and Activision by King, all for several billion dollars. Spotify went public in 2018, and Klarna earlier this year. Each of these success stories has created another set of millionaires, many of whom feel a duty to reinvest back into Sweden’s technology and startup sectors.

This flywheel effect has made our AI sector what it is today. Our startups stand on the shoulders of giants, within an environment conducive to business building. There is capital available for deserving entrepreneurs, often deployed by high-quality investment firms such as EQT, Northzone, and Creandum. It is relatively easy to start a company here, and our stock options system incentivizes business building. Stockholm is home to both KTH Engineering University and Handelshögskolan Business School, with many of the founders having degrees from both (along with many successful entrepreneurs who skip university altogether). We also have very high rates of English proficiency.

The government continues to play a crucial role as well. Sweden spends a higher proportion of its GDP on R&D (3.57%) than any other European country. Any employee in Sweden can take six months leave to start a business, a scheme known as tjänstledighet. To embody the successful major PC reform policy of the 1990s, the Prime Minister this year supported Sweden’s AI reform plan that makes agentic AI free for all civil servants, students, teachers, research institutions and non-profit organizations.

There are also aspects of our culture that help us build great companies. We are the country of Volvo and IKEA, with a Swedish design ethos known for blending function and form. Many of the software engineers I know here are passionate about aesthetics, which means that an app’s landing page is often treated with the same attention to detail as Bruno Matheson’s chair.

Finally, we are also a humble nation (he says while writing an article about how great a nation we are!). Placing one’s head above the rest is usually frowned upon. Although this can have its societal drawbacks, it has helped foster a high-trust, low-ego environment in our technology. Information is shared freely between various organizations and entrepreneurs, knowing that every Swedish success in AI benefits everyone.

We still face challenges, of course, ranging from the seemingly trivial (Scandinavian Airlines, please launch a direct flight to San Francisco) to the fundamental ones (we still rely on US investors for later stage capital).

But there is no denying that the Swedish approach to technology – broad and deep acceptance – is an instructive story for the rest of the world. If we are concerned about the speed at which AI companies have increased in value, and when other economic metrics catch up to prevent a bubble, we should weave this technology into our daily lives.

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