Sweden is ranked as the top European innovator, but there is more innovation than business, says Gregory Carson, a lecturer at the Institute of Innovation and Entrepreneurship (IIE) at Gothenburg University’s School of Business, and a principal at Ocean Bridge Capital. At the recent E-Days in Gothebburg, he lead a session about “Innovation and Sweden in the Global Innovation Infrastructure” and delivered a keynote.
Gregory Carson is an investor, strategist and researcher in Scandinavia focused on innovation and investment ecosystems. He took computer science at University of California at San Diego and launched several IT-companies in the 1990s. He studied at MIT’s program for entrepreneurship and has an MBA from the Wharton School. Since 2005 he has worked for the investment banks UBS and Jefferies, focusing on Technology-Media-Telecom and Scandinavia.
Sweden is world-famous for groundbreaking innovations, but many of its international companies based on innovations that date back to the 19th century. What is the current state of innovation in Sweden?
“It’s a common misconception. Sweden is ranked as the top European Innovator by the PRO INNO index, and has generated dozens of innovations with a world-wide impact, from Ikea’s flat packing technology to L-Dopa, the beta-blocker for Parkinson’s disease, which was developed at the Sahlgrenska University Hospital. Here we are talking about world leaders.
“We also see emerging leaders like Spotify, and the ecommerce payment system Klarna, and several advances in the biomedical field. The paradox you mention reflects the fact that there is more innovation than businesses, i.e. a lot of innovative ideas are never successfully launched as products and businesses. Here I see an opportunity for international deal-makers and entrepreneurs who could help the region commercialize a larger part of its new ideas. The area along the European Highway 6, which is called the “E6 Innovation Corridor” is an international hub for bioscience innovation, medical science and healthcare management. (The Highway starts in Malmo/Copenhagen and runs through West Sweden to Oslo.)
“If you look at Sweden, you will find innovative companies at every stage of development, and they are bringing out key innovative products to market in high-tech, clean-tech, and bio-tech. Sweden is currently transforming itself from within, changing its venture creation process and social infrastructure for innovation. We are forming an innovative “Knowledge Management Platform” at the University of Gothenburg’s Institute for Innovation and Entrepreneurship (IIE) in cooperation with Sahlgrenska, Chalmers and other universities in the region.
The IT and telecom revolution put Sweden at the forefront of the technology horizon. How has Sweden’s innovation climate changed over the past decades?
“Sweden continues to be at the forefront on innovation, but it has pushed ahead in clean-tech and bio-tech innovation. Sweden also has a IPR-model (Intellectual Property Rights) for handling the new ideas coming out of the Universities that is an opportunity and venture creation model that is effective but not large enough. It is seen as a leading model internationally for technology transfer, venture creation and licensing.
“Another thing that is changing, and changing a lot is the political climate with a strong focus on entrepreneurship, and commercializing innovations. Sweden and other EU countries have prioritized the need to develop new companies based on innovations. We see progress in the entire ecosystem, including the political climate, access to investment capital, rate of globalization, and quality of leadership. I see a huge change over the past decade since I began working with innovation and venture capital in Sweden back in 2000. There has been an incredible evolution in attitudes, infrastructure and mindset.
Should we expect new “green” equivalents of Ericsson, Alfa-Laval, SKF or will the new green sectors be more decentralized and network oriented?
“We don’t know yet, but Sweden has a particular strength in renewable energy and energy storage, with companies like Alelion on the battery side, Enviro in innovative recycling, and Arise Windpower driving wind farm development. But green technology goes beyond that. There are interesting companies in materials science, efficiency, etc. We see a creative combination of an innovation culture with a political climate focused on environmental sustainability. The corollary is that international players know this is a good market for these types of innovation, but Sweden could lose several of these huge opportunities to international licensing and acquisition, which is why we need to find ways to make it easier to operate internationally from Sweden.
Is it wrong to look for new companies? Will most of the change come from existing companies with a global reach, companies that realign their business models to include green technologies and sustainability?
“Like in any innovation and investment ‘ecosystem’ there is a combination of opportunities for both new and existing companies. Existing companies sometimes have better capital resources and international reach, but smaller companies are often more nimble, or visionary. They don’t suffer from the ‘innovator’s dilemma’, which sometimes stifle innovations within larger organizations. The combination of investment capital and innovation strategy are two key elements for success, but the enterprise must have a solid ecosystem to operate within and engaged stakeholders to help foster growth. Another area where we see positive moves from the Swedish government is its fund to accelerate auto innovation, as well as from Volvo’s venture arm, the Volvo Tech Transfer group.
Sweden has traditionally focused its export to Scandinavia and Germany, but has become ever more global with the rise of China, the transformation of Russia and the former Eastern European states. The U.S. market is intimidating to small and midsized Swedish companies, but few other markets are more critical when it comes to technology exchange and cooperation.
“The most successful Swedish Entrepreneurs are ‘born globals’… look at Skype, Ikea, Spotify, H&M, etc… but Sweden needs more of them and a culture, government and system that helps encourage creation of such ventures. Since I moved to Sweden I have joined a couple Boards and have advised growing companies on this exact issue, and we are immediately refocusing to more global opportunities. The U.S. market does scare some Swedes because of cultural differences, and concern about legal issues, but these are both much exaggerated by the media and rumors. I know many Swedes who live in the U.S. and do very well and embrace the business environment there. The best thing about the U.S. market is that it is homogeneous, uses a single language, and is open and welcoming to innovations from Sweden. Companies that ignore the U.S. market do their firms a disservice. It is possible to grow in the U.S. through partnerships, and you can find access to capital there. I also think that the U.S. is beginning look to Scandinavia/Sweden more for new opportunities. An example is the Silicon Valley VC group Sequoia that recently invested in Klarna and founders fund invested in Spotify. I believe Sweden and Scandinavia has what it takes to thrive and be world innovation leaders, and provide a fertile ground for international players to leverage.