Stockholm is Europe’s second most popular city for FinTech investments in past five years
A new report has found that Stockholm is the Europe’s second most sought after city for financial technology (“FinTech”) investments, in the past five years. The report from the Stockholm School of Economics, details that the Swedish capital accounted for 18.3% of all FinTech investments in this time period, putting it only behind London.
It is quite remarkable that Stockholm has achieved such strong and stable results in FinTech, given its size and also because it does not have an extensive financial ecosystem of accelerators, incubators, and niche investors such compared to other European financial centres.
This impressive performance has continued year on year as in 2014 a record $266m worth of investments were secured. Last year’s total also accounted for nearly one-fifth (18%) of the total of $1.48bn FinTech investments across Europe. Stockholm’s FinTech investments in 2014 are particularly noteworthy as they also accounted for a third (32%) of all Sweden’s total investments in private companies (which was $826m).
Stockholm’s FinTech Industry
The three biggest FinTech deals in Stockholm in 2014 were worth over $100m alone, with Klarna receiving the lion’s share of $125m investment followed by iZettle ($55.5mn) and Trustly ($28.8m). Much of the investment boom for Stockholm’s FinTech firms is due to a huge increase in investors seeing the city as a prime location for the industry.
In the past two years alone, Intel Capital, Mastercard and American Express Ventures have all scrambled to invest in FinTech companies in the Swedish capital. In addition to this, local investors have also come to the fore, such as NFT Ventures, a specialty venture capital firm focused on FinTech in the Nordics with Stockholm as its base.
The swift rise in FinTech investment has been mirrored by strong growth in revenue, with the sector estimated to generate $1.3bn in 2013, which is 25% increase over 2010’s values.
The main segments driving this revenue in Stockholm include:
– Trading & Banking Technology (38.8% of total revenue)
– Payments (33%)
– Assorted other segments (28%)
In terms of employment, the industry is estimated to employ 4,600 full time employees (as of 2014), with FinTech roles increasing by 44% from 2010 to 2013.
The report makes a number of recommendations on how Stockholm can continue to be a prime location for FinTech investments and these can be viewed here (along with the rest of the report).
Torbjörn Bengtsson, of the Stockholm business region development, said: “This report highlights how FinTech is rapidly growing in Stockholm. The city has so much going for it and to be the second most popular destination in Europe for this industry in the past five years is an impressive achievement. This growth will likely continue and even intensify in the years to come, enabling Stockholm to retain its position as one of the major fintech hubs globally.”
Daniel Blomquist, partner at venture capital firm Creandum, said: “I think what makes Stockholm unique is that we have a high level of execution intelligence here. This combined with our bottom-up Scandinavian management style enables firms to successfully navigate the many uncertainties in today’s financial services.”