March 9, 2016
The next stop in our FinTech hub haul is in Stockholm as the Swedish city is considered to be one of the hottest FinTech hubs in Europe. Stockholm School of Economics, in collaboration with Stockholm Business Region Development, has performed extensive research on FinTech investments in Stockholm to find out that the year 2014 was a landmark year for investments in Stockholm-based FinTech companies. In total, $266 million were invested in 15 deals, accounting for 17.9% of the total FinTech investments of $1.5 billion across Europe.
According to the report, the amount of investment in Stockholm FinTech makes it the third-largest city in Europe by 2014 investment volume. Only London’s $539 million and Amsterdam’s $306 million are ahead of Stockholm. Germany’s total $82 million trails behind these three leading cities in a distant fourth place. Moreover, Stockholm’s 2014 investment volume alone was half of the past five-year total of $532 million invested in FinTech in the Stockholm region.
Commenting on the hallmark of Stockholm’s FinTech ecosystem, Olof Stenhammar, Nasdaq OMX, Founder of OMX, said, The Stockholm area is on the leading edge of financial services development. Don't forget that technology is not everything. You have to have the knowledge to succeed in this globally competitive sector, and Stockholm is at the forefront of knowledge development as it has built up extensive competence during the past 30 years.
The Nordic countries have produced more than half of Europe’s billion-dollar exits in the last decade. Sweden alone has accounted for half of the Nordic exit value.
Stockholm’s FinTech Ecosystem
The trading & banking technology segment is considered to be the most profitable one with 39% of total revenue. Payments is the next hottest segment, which is accountable for 33%. Those two segments shape an interesting trend, as the researches from the business school believe. The trading & banking technology segment is led by classic heavyweights from the region’s first wave of FinTech companies, such as OMX Technologies and Cinnober. The payments segment, on the contrary, is led by newcomers like Klarna, Payex and iZettle, which have been extraordinarily successful.
Seamless is one of the world’s largest suppliers of payment systems for mobile phones. Seamless’ SEQR is Europe’s most-used mobile payment solution in stores and online. SEQR enables anybody with a smartphone to pay in stores, at restaurants, parking lots and online, transfer money at no charge, connect loyalty programs, store receipts digitally and receive offers and promotions directly through one mobile app.
Klarna is one of Europe’s fastest-growing companies offering safe and easy-to-use payment solutions to e-stores. Valued at about $1.4 billion in 2014 when it raised roughly $100 million from existing investors, Klarna has nearly doubled its valuation in its 2015 funding round by reaching $2.25 billion.
Accumulate offers mobile payment services enabling mobile users to make electronic transactions anywhere.
FundedByMe is a crowdfunding company in Nordic countries with 86% of the market; it operates globally with an Asian branch. The company offers reward, equity and loan-based crowdfunding.
Safello is set out to bring greater compliance and security to the bitcoin industry. Its user-friendly approach has since attracted tens of thousands of customers throughout Europe with an easy way to get into bitcoin.
BehavioSec focuses on a different aspect of security. The company represents an interesting combination of behavioral science, math and technology. BehavioSec transforms behavior into a transparent additional level of security by monitoring the way users interact with their devices in real time. The interaction pattern is contextualized. Technology can recognize if a conflicting user is operating a device by monitoring the environment, rhythms and interactions patterns that are unique to a particular user.
Trustly is a technology company which develops and sells online payment solutions. For consumers, Trustly enables secure online payments and direct bank payments. The risk of errors and mistakes are minimal. It is as secure as everything else you do via Internet banking; you never have to disclose information that could be misused by third parties. All that is required to use Trustly is a bank account.
Tink is a mobile app that provides insights and fun facts about a user’s money every time he/she opens it. Tink continuously collects, sorts and analyzes everything about personal finances and delivers a beautifully simple feed.
Bima is a mobile-delivered insurance and health services in emerging markets. BIMA’s PAYG products are a range of simple and affordable life, personal accident and hospitalization insurance products that can be bought in discrete monthly blocks, much like the way mobile credit top-up cards are sold.
Cinnober delivers solutions to demanding trading and clearing venues.
KncMiner develops chip design, software and services for blockchain-based applications and transaction processing.
Bitjoin is the place to go for interviews with startups advocates and developers working in the blockchain space.
Toborrow is an online marketplace that aggregates consumer savings, connecting it to small- and medium-sized businesses in need of financing.
Lendify offers peer-to-peer lending platform. The company operates a marketplace online credit platform that enables people to borrow money and lend money from each other—without the involvement of banks or credit card companies.
iZettle is a mobile payments company based in Stockholm, Sweden and markets a single application and service called iZettle. The company offerings includes everything from credit card readers to complete point-of-sale solutions and free sales overview tools. The rest of the companies can be found here.
FinTech Investors in Stockholm
Of course, Stockholm’s FinTech ecosystem wouldn’t be as active if it wasn’t for supporters. There is a range of active FinTech investors from the US, Europe and Swedish investors.
Portfolio: Circle, Card Spring, Gumroad, Clinkle, Lenddo, Braintree, Nomi, Yodlee
Stage/Size of Investments: Accel invests in companies from their genesis to growth. Its funding rounds include seed-, early-stage venture and later-stage ventures.
Segments: Technology Companies, Infrastructure, Internet & Consumer Services, Mobile, Software & Cloud-enabled Services.
Portfolio: Stripe, Square, Citrus Pay, Prizm Payment
Stage/Size of Investments: Sequoia is primarily known to invest in seed-stage, early-stage and growth-stage companies.
Segments: Energy, Financial, Healthcare, Internet, Mobile and Technology
Portfolio: Adyen, Avant, Klarna
Stage/Size of Investments: Early-stage venture, later-stage venture and private equity investments
Segments: Financial services, Business Services, Retail and Consumer, Healthcare, Internet and Technology
The rest of the investors can be found here.
As Johan Lundberg, CEO & Founder NFT Ventures, commented on Stockholm’s FinTech, We believe that the banking industry is going through the same radical transformation that the airline, music, and newspaper industries have undergone in recent years. With the number of success stories rapidly growing, the Stockholm region is leading this transformation on a global scale. So a natural next step was for us to establish NFT Ventures in Stockholm since this would enable us to not only successfully leverage the region’s extensive financial services competence and conducive entrepreneurial environment but also its longstanding tradition of innovation within the banking sector.
Stockholm’s FinTech is truly a unique ecosystem worth paying attention to. The ecosystem has been built by a talented workforce. Daniel Blomquist, Partner at Creandum, has very interesting thoughts about it.
Good ideas aren’t enough for success. I think what makes Stockholm unique is that we have a high level of execution intelligence here. For example, not only do programmers have a deep level of technical skills, such as how to build high-volume transaction systems that scale, but they also understand how to turn technology into a product that creates value in a global market. This, combined with our bottom-up Scandinavian management style, enables firms to successfully navigate the many uncertainties in today’s financial services.