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Stockholm is Europe’s second most popular city for Fintech investments in past five years

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A report from the Stockholm School of Economics has found that Stockholm is Europe’s second most sought after city for Fintech investments in the past five years. The Swedish capital accounted for 18.3 per cent of all Fintech investments in this time period, putting it behind only London.

The report’s authors comment that it is quite remarkable that Stockholm has achieved such strong and stable results in Fintech, given its size, and also because it does not have an extensive financial ecosystem of accelerators, incubators, and niche investors such compared to other European financial centres.
 
This performance has continued year on year as in 2014 a record USD266 million worth of investments were secured. Last year’s total also accounted for nearly one-fifth (18 per cent) of the total of USD1.48 billion Fintech investments across Europe. Stockholm’s FinTech investments in 2014 accounted for a third (32 per cent) of all Sweden’s total investments in private companies, at USD826 million.
 
The three biggest Fintech deals in Stockholm in 2014 were worth over USD100 million alone, with Klarna receiving the lion’s share of USD125 million investment followed by iZettle (USD55.5 million) and Trustly (USD28.8 million).
 
The report’s authors find that much of the investment boom for Stockholm’s Fintech firms is due to a huge increase in investors seeing the city as a prime location for the industry. “In the past two years alone, Intel Capital, Mastercard and American Express Ventures have all scrambled to invest in Fintech companies in the Swedish capital. In addition to this, local investors have also come to the fore, such as NFT Ventures, a specialty venture capital firm focused on Fintech in the Nordics with Stockholm as its base.”
 
The rise in Fintech investment has been mirrored by strong growth in revenue, with the sector estimated to generate USD1.3 billion in 2013, which is a 25 per cent increase over 2010’s values. The main segments driving this revenue in Stockholm include:  Trading and Banking Technology at 38.8 per cent of total revenue; Payments at 33 per cent and assorted other segments at 28 per cent.
 
In terms of employment, the industry is estimated to employ 4,600 full time employees (as of 2014), with Fintech roles increasing by 44 per cent from 2010 to 2013.
 
The report makes a number of recommendations on how Stockholm can continue to be a prime location for Fintech investments.
 
Torbjörn Bengtsson, of the Stockholm Business Region Development said of the report: “This report highlights how Fintech is rapidly growing in Stockholm. The city has so much going for it and to be the second most popular destination in Europe for this industry in the past five years is an impressive achievement.  This growth will likely continue and even intensify in the years to come, enabling Stockholm to retain its position as one of the major Fintech hubs globally.”
 
Daniel Blomquist, ‎Partner at venture capital firm Creandum, said: “I think what makes Stockholm unique is that we have a high level of execution intelligence here. This combined with our bottom-up Scandinavian management style enables firms to successfully navigate the many uncertainties in today’s financial services.”
 

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