SWEDEN Trends and Developments Contributed by: Corinne Ekman, Mikael Nagy and Joacim Kanstedt, Gernandt & Danielsson Advokatbyrå KB
cations. While this segment is not expected to become a primary driver of Swedish VC activity in the near future, a growing number of Swedish dual-use start-ups have begun attracting early- stage capital as the national focus on defence tech is gaining momentum. Exit opportunities and challenges Exit activity remained subdued on the Swed - ish venture capital market in 2024, even though the general IPO market in Sweden somewhat recovered from previous years’ all-time lows. A few exits and IPOs occurred in 2024 but nothing comparable to landmark exits in previous years. The exit environment continues to be difficult for venture capital backed companies with a slow M&A market and insufficient IPO liquidity avail - able being the main challenges. In recent years, Sweden has witnessed a nota - ble outflow of its unicorns, with IPOs increas - ingly taking place on the US market rather than in Sweden. High-profile listings such as Spotify, Oatly, and Olink on Nasdaq US exemplify this trend. Notably, the anticipated IPO of Klarna, a prominent Swedish fintech company backed by venture capital, is also set to occur in the US market; however, as of the time of this article, it has been postponed due to market volatility and uncertainties surrounding valuation. This reflects a concerning trend for the Swedish IPO market, as companies appear to prefer going public in jurisdictions that offer the largest market size, as well as greater valuation potential and investor demand. Profitability requirements and rise of bankruptcies Despite the second half of 2024 and the start of 2025 presenting a more lucrative investment climate in Sweden compared to 2023, there are still several start-ups having had difficulties in
raising sufficient capital. This is of course due to geopolitical and macroeconomic uncer - tainty but also as a result of investors shifting their investment appetite and focus; the previ - ous mindset of “growth at all costs” is being replaced by profitability requirements and more strategic approaches. The LPs of venture capital funds are becoming increasingly more demand - ing, wanting to see returns on their investments rather than a hypothetical figure derived from the valuation in the latest investment round. Starting in late 2023 and continuing into 2024 as well as 2025, there has been a rise in bankrupt - cies among Swedish start-ups. A recent major example is the bankruptcy of Northvolt, which underlines the many uncertainties facing capital- intensive industries. Once described as Europe’s flagship manufacturer of batteries, Northvolt filed for bankruptcy in March 2025 despite hav - ing raised billions in funds and received substan - tial amounts of state aid. Summary In summary, as Sweden continues to foster a nurturing environment for start-ups and inno - vation, the venture capital landscape is set for sustained growth. With a strong emphasis on sustainability, digital transformation and stra - tegic defence investments, together with an ever-growing appetite for AI-driven companies, Sweden is well positioned to attract a diverse range of venture capital investors in the coming years, paving the way for a dynamic and impact - ful investment ecosystem. Regulatory Trends and Developments Foreign direct investments (FDI) The implementation of the new Swedish For - eign Direct Investment Act (the “FDI Act” ) in December 2023 has significantly influenced the venture capital landscape in Sweden. The
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