You might not realise it, but the apps on your smartphone today are far more likely to be created in Stockholm or Sweden than in Silicon Valley.
We care about where our food, clothes and devices come from, and the provenance of our software, the apps and services we use to run our lives, is starting to become important too.
Apps like Spotify, Skype, Just Eat and even the British tech favourite TransferWise which we use everyday have a secret.
If asked most people would assume these businesses are American or British creations, but they’d be wrong.
While they may have now moved the bulk of their staff to those countries, these businesses are flag bearers of the Nordic countries, five nations that have quietly become a global powerhouse for churning out successful tech businesses.
Yesterday Vivino, the Copenhagen-based wine app which demystifies buying a bottle of vino, became the latest Nordic tech star raising $25m from a host of investors.
And Vivino doesn’t want to be just another app, while it may sound like a whimsical idea, using an app to scan wine bottles, see reviews and help you buy a better bottle, this is big business.
“Wine is a huge industry,” Suranga Chandratillake, a partner at Balderton Capital which invested in Vivino, told The Memo. “Depending on who you talk to it’s between a $200bn and $300bn a year industry.”
“That’s bigger than books, it’s bigger than music, it’s just one of these colossal industries that really hasn’t been altered by the digital revolution yet.”
Today Vivino is already the biggest wine app in the world, despite its home of Denmark having only a fledgling wine industry, now the company is on a mission to cement its position.
CEO Heini Zachariassen said the new investment: “cements our position as a dominant leader in the global wine industry.”
Vivino is deadset on becoming the next app you install on your smartphone.
And Zachariassen’s not the only Nordic tech CEO eyeing world domination.
Critics of London tech always bemoan the capital’s inability to produce ‘the next Google’ or Facebook or Microsoft.
Meanwhile between Denmark, Finland, Iceland, Norway, and Sweden, a huge number of world-beating businesses are being built every year.
You might have heard of Clash of Clans (Supercell) or Angry Birds (Rovio). These hit smartphone games are both huge Finnish exports.
So how do these countries keep turning out hit after hit?
“If you think back to the early days of mobile phone coverage mobile penetration in the Nordics was far higher than average, and the same thing happened with smartphone penetration. When 10% or 20% of people in the UK had a smartphone, in the Nordics everyone had one.”
Indeed even today internet penetration in these countries is among the highest in the world, with the populations of Iceland (96.55%), Norway (95%), Sweden (94.8%), Denmark (94.6%) and Finland (91.5%) boasting near universal internet access.
“So you have, broadly speaking, a highly educated population that are fairly wealthy and can afford to quickly adopt new technology,” says Carlsson.
That combined with an international mindset — the total population of the Nordics is only 26m people, meaning Nordic entrepreneurs are thinking globally from day one — is the winning formula for success.
Last year the region received some $1.8bn in investment from venture capitalists pouring cash into Nordic tech businesses, growing at around 115% a year, and some forecasts expect the region could overtake London’s investment levels as quickly as this year.
“It’s not surprising because if you look at the region from a point of view of the success of its technology companies, it’s second only to London by its number of large hits and large exits,” says Balderton’s Chandratillake.
When Candy Crush maker King Digital was bought by gaming giant Activision last year it sold for £3.8bn, Minecraft maker Mojang was bought by Microsoft in 2014 for $2.5bn and Spotify was valued last year at $8.5bn.
Today the smart money is chasing Nordic businesses, like Vivino, that are building the next indispensable apps.
Wise investors investing in Europe should look north.
UPDATE 2016-01-13 – Updated with more accurate Nordic investment figures and forecasts for 2015/16.
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