Fintech dominates Nordic startup investments

By Dennis Mitzner for

Fintech attracted the most investment for the first time in the Nordic region, more than any other vertical.  Between January 1, 2014 and end of March 2016, 51 fintech investments were made in companies in Sweden, Finland, Norway, Denmark and Iceland, totaling $390.17 million.

The Nordics are following a global trend which saw year-on-year investments in fintech companies increase by 106% in 2015 to $13.8 billion, according to a KPMG report.

While smaller in numbers, nearly one in 10 investments in the Nordics is now made in fintech.

Sweden gobbled up the lion’s share with 32 out of 51 fintech investments, according to data from The Nordic Web, a resource on venture capital for the Nordic startup scene.

“This is quite the achievement for a region that has long been associated with gaming, enterprise SaaS and health and wellness as the dominant verticals,” said Neil S W Murray, the founder of The Nordic Web.

According to Murray’s analysis of the data, majority of Nordic fintech investments are in the $1-3 million size range, “indicating that a high number of healthy-sized seed rounds are being raised, and showing that despite the increasing amount of investment, the ecosystem is still at a fairly early-stage and the Nordics potential to be a fintech hub is still in its infancy”.

Why is Nordic fintech on the rise?

“The Nordics lend itself particularly well to fintech for a few reasons. Stockholm has a strong financial history, mobile adoption is rife, and fintech lends itself well to mobile solutions, meaning Scandinavia is a good user market. What’s more, the success of Klarnaand iZettle has meant more interest in fintech in the region,” Murray says.

Klarna, a Stockholm-based payments startup allows users to buy without the use of cards and iZettle – also based in Stockholm – a mobile payments company for small businesses, have led the rise of fintech in the Nordic region.

Klarna, valued at over $2.25 billion, has raised $291.33 million in 6 Rounds from 12 Investors and iZettle, $244.04 million in 9 rounds from 16 Investors.

Although Klarna and iZettle are the undisputed fintech jewels of the region, Stockholm-based companies received 18 percent of all investments in fintech companies across Europe in 2014, indicating a widely spread fintech know-how in the Swedish capital,  and a recent Europe-wide fintech study by showed that Sweden is the third largest fintech hub in Europe after UK and Germany.

Don’t ask for change

One of the less obvious reasons is the cash-averse attitude many Scandinavians exhibit.

“The Nordic consumers avoid cash. For example in Finland, you can manage without cash 100% of the time,” said Timo Ahopelto, founder of Helsinki-based Lifeline Ventures.

 Swedish anti-cash mentality has made headlines around the world. In an article about Swedish cash-phobia, the New York Times featured Bjorn Ulvaeus, a former Abba member, embracing a cashless existence.

“We don’t want to be behind the times by taking cash while cash is dying out.”

According to a study cited in the same article, bills and coins represent 2 percent of Sweden’s economy, compared with 7.7% the US, and 10% in the eurozone. Swedes prefer apps and credit cards to bills or coins.

One of the popular payment solutions, Swish, a rival both to cash and credit, was launched by six different Swedish banks. The app allows users to transfer money in real-time between major banks with a click of a button. In October, the platform was integrated into Klarna’s checkout solution so that users can pay for all eCommerce purchases with Swish.

Transactions without a paper trail

Companies in the Nordics are behaving much like local consumers.

Driven by a mixture eco-friendly thinking and efficiency, 89% of large and 59% of small businesses in Finland use e-invoicing, compared to the global average of 8.4%, according to the accounting body ACCA.

“Nordic companies have highest adoption rates in e-invoicing, rooted in the electronic banking system,” Ahopelto affirmed.

According to Mattias Hansson, the co-founder and CEO of Helsinki-based online invoicing software, Zervant, Finland is at the forefront of paperless invoicing.

”Small businesses are often late adopters, which is also true when it comes to electronic invoicing. But we have still seen huge growth in this segment in the Finnish market. In fact our figures show that in the last three years the number of small businesses using electronic invoicing has more than doubled each year.” 

2016: Nordic fintech abound 

The Q1 of 2016 has already witnessed 15 fintech investments, indicating a strong year for Nordic fintech.

“I think 2015 was the year fintech established itself in the Nordics, but 2016 will be the year that it leaves all other verticals behind,” said Murray.


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