Known as one of Europe’s leading venture capital firms, Creandum has backed more than 100 companies in their seed, series A and later-stage rounds. Spotify, iZettle, Vivino, Klarna, Trade republic, Taxfix, Kahoot!, Small Giant Games and Kry are among them.
We’ve seen many scale-ups emerge in Sweden since the beginning of the 2000s. What is so unique about the ecosystem?
There are a couple of reasons why Stockholm still plays such a vital role in Europe. If you go back in time a little bit – maybe ten years ago – Stockholm was the dominating tech ecosystem in Europe. If you look at the capital to unicorn ratio, Sweden is doing fantastic. Many startups here see success, even hypergrowth, and the general population is educated surrounded by these successful companies. Ultimately, this is why many then decide to go into tech instead of traditional fields such as banking or consulting. We observe this pretty clearly if we look at how many companies in our portfolio are run by ex-Spotify, ex-Klarna or ex-iZettle people. That’s the whole “halo effect” of successful companies.
But then – and here there’s a similarity to the Isreali ecosystem – if you want to build something big in Sweden, you have a problem… because Sweden is not very big. So, from day one, you need to think what’s next. If you build a company in Paris or Berlin, you often get bogged down catering to the people and countries directly around you. In my opinion, this is a problem because you can be stuck for quite a long time believing you are the king of the world, not knowing what’s happening further afield.
Is there not something around mindset also?
For sure, if you look at design and product love, this is something that the Nordics in general just do really well. They fundamentally care about the interactions with consumers. The Scandinavians fundamentally know how to build a great product.
At Creandum, we have an office in Stockholm, but also in San Francisco and Berlin. We have this joke about Swedish and German founders that goes: “Talk to a Swedish founder and they’ll launch after two years with a fantastic-looking and working product. Speak to a German and they’ll launch after two weeks with no product, but eventually after three to four years they’ll build one.” Germans are hustling; they take an aggressive approach to going live and push forward the go-to-market.
As we have already started comparing founders, how would you compare Stockholm and Berlin in terms of their tech ecosystems?
As I mentioned, the first thing is which comes first: product orexecution. The stereotype is that in the Nordics, you would develop a product, test it, and then go live. Germans would just go live, test it and then if it works, they would decide to build a product. While nowadays there are fantastic products being built out of Berlin, as a general difference it’s still true.
Furthermore, Germans can deal with Germans as consumers or as users for much longer than the Swedish can deal with Swedes. The Nordics think more internationally, at least continent domination, if not world domination, which is something that we love at Creandum. Creandum rarely invests in “the German version of” or “the British version of”. As a founder, you need to, at least, aspire to conquer the world or the continent.
When you source deals in the Nordics, do you see any industry where they are totally leading the way, more so than Germany, France or anywhere else in Europe?
The Nordics in general are extremely strong in gaming. This is one area where global funds look at what we have. Funds in Asia come to the Nordics only when they do gaming investments. The Nordics are a hub of role models and inspiration for so many gaming studios. If you look at the esports industry also, the best esports teams in the world come from the Nordics. The largest music startups as well, just like Spotify and Epidemic Sound. Same for fintechs. Klarna has turned into one of the largest fintech unicorns and Tink is another that is doing really, really well. What the Nordics have really shown us is that product love and dedication – in other words, making something a little bit nicer, a little bit better than what the rest of Europe has to offer – is key, and this is why they’ve had so much success.
If you look at digital health now, treating real people online is something that Germans refused for many years. In Sweden, you could book and visit your general practitioners online, paid for by the Swedish health insurance, three years before you could do it in Germany. I don’t know about the situation in France right now, but the UK is just opening up for that. Once again it’s just one little area where the Swedes were just a little bit earlier than we were here in Germany. There is more if you look at climate tech, for example. The Swedes do a couple of things just a little bit earlier and then the rest of the world follows. I don’t know whether politicians are more daring or if society is just more open. As a German looking to that region, it’s sometimes frustrating how, in many areas, the Nordics are just a little bit ahead of us.
Let’s jump on one topic we love to discuss with every tech stakeholder. The ecosystem is receiving more and more criticism for its lack of diversity. How do you see that challenge being addressed in Sweden and Germany?
It’s one of the topics that drives our company and our portfolio companies at the moment;. it’s a topic we are dealing with and trying to get better at very actively. We almost have a 50:50 male-to-female ratio in the firm, but at the very top of the investment team, we are not as diverse as we would like to be. We have been doing a lot to make the firm less white and less male but there’s still work to be done.
Concerning the way we work with our portfolio companies, we are strong believers in data and so we started measuring diversity and assessing pay differences. Every year, we ask our portfolio companies to report these metrics. I can tell you from my personal experience that entrepreneurs feel really bad if they haven’t improved from one year to another. So, it is a large topic that is being taken care of and being approached positively by pretty much everyone. There are dedicated people in our investment team who ensure a diverse hiring process for every role we’re looking to fill. That’s how important this topic has become.
If you had to bet on the next unicorn, in Sweden or maybe in Germany, who would that be?
Within our portfolio, in Berlin, it’s either gonna be Taxfix or Trade Republic. You can have my word on that. Within the Nordics, KRY for sure. They’re rolling out their digital health services to Europe. Digital health is one of the largest markets in the world and there is no doubt this industry will digitalize as well.
Is France on your roadmap? You said you don’t have any criteria concerning the ecosystem or the country when you see a good startup, so what do you think about France? Do you have any sourcing tactics here?
We rely a lot on our network in France. There is a good amount of very smart money in France and it is fair to say that Creandum doesn’t hunt on the ground much in France today. When international funds try to make it in France, they hire people on the ground to make things fast and professional. We don’t have anyone in France yet, so we don’t even pretend to be competitive in the early stage scene that France has cultivated. But sometimes, angels or seed/pre-seed funds that we know think about us and that’s how we become aware of really hot deals really early. For example, we beat out many other international players for the Swan deal and were very happy about that investment as they’re doing really well.
France is an ecosystem that needs to be taken very seriously, and I think that trying to become a meaningful player in France without giving it the focus it deserves and without dedicated staff is difficult. Even more so with the competition that is on the ground in Paris. But, we are still very open to meeting French founders and investing in French startups. Just because we don’t have a hub there yet doesn’t mean we aren’t very excited about it.