Regional power meets national investment - Sörmlandsfonden joins Sweden Startup Nation

When a study concluded that Sörmland was "basically the worst in Sweden" for venture capital, Thomas Karlsson decided to do something about it. Today, Sörmlandsfonden is a regional hub for active business angels, entrepreneurs and growth companies. Now they are taking the next step by joining Sweden Startup Nation Nation as a partner.

From white spot on the map to regional engine

Thomas Karlsson has been at the intersection of entrepreneurship and innovation systems for over two decades; as a founder, as head of Munktell Science Park and as co-founder of the incubator Create.

When a survey showed that Sörmland basically lacked structured risk capital, he, together with regional actors, took the initiative for something new: two independent savings banks and Länsförsäkringar Sörmland became owners and Sörmlandsfonden AB was formed.

- "We decided early on that we would be an evergreen, not a fund that closes, but a small venture capital company that can be there as long as needed," says Thomas.

The initial capital of SEK 15 million has since been significantly increased. By consistently building and activating a business angel network, from around 20 people at the start to around 40 active angels today, Sörmlandsfonden and its co-investors have channelled more than SEK 400 million into 24 companies. A couple of successful exits have already returned capital to the fund, the founders and the angels, and paved the way for new investments.

- "Our investment has been leveraged about 26 times. It shows the power of regional actors, entrepreneurs and angels working together," says Thomas.

"A lot of heart and brain" - how they build security

The Sörmlandsfonden is small in terms of organization. In practice, it is Thomas half-time and a board. But they are big in relationships.

They work closely with the four largest municipalities in the county, Eskilstuna, Nyköping, Strängnäs and Katrineholm, where business managers and business developers act as nodes and scout entrepreneurs and ideas. Companies that are not yet ready for investment are guided to, for example, an incubator or Almi.

When a company is ready, it is invited to the "Sörmlandsnästet", which in the past was often organized at the homes of business angels around the county, creating the personal touch that distinguishes them.

- "We are not chasing quick cash. It 's about building relationships and getting to know each other properly before we invest," says Thomas.

An important principle is reverse due diligence: the entrepreneurs should also choose their investors. In the cooperation agreements, the founders have a form of veto. If more angels want in than there is room for, it is the entrepreneur who chooses the best fit.

- "It creates security and proximity. Sörmlandsfonden is often perceived as a guarantor in the middle, with secure owners behind it and a network of committed angels around the companies," he says.

A deliberate exception: why Sörmlandsfonden is joining Sweden Startup Nation

Sörmlandsfonden has deliberately kept its overhead costs down. It is not part of industry associations or major networks, and the money is primarily used for investments.

Joining Sweden Startup Nation as a partner is therefore a clear, and rather unusual, choice.

- "We're not really in any other forum like that. But here I felt: this could be something really important. Sweden Startup Nation can be the missing piece in the innovation support system," says Thomas.

For him, the partnership is interesting for several reasons:

• Data and insights - a dashboard with in-depth data on portfolio companies, past investments and exits.
  
  

• Inflow and visibility - not primarily logos, but smarter matching between companies, investors and ecosystems.
  
  

• Networking and collaboration - the opportunity to build relationships with other investors and regional actors around Sweden.
  
  

- "Visibility is not the most important thing for us. It is more important to be able to contribute with our voice and our experiences, and to find new collaborations and exchanges of experience with other partners within SSN. If we get to know each other better, we can do more business together, connect companies to the right environments and investors, and strengthen the whole of Sweden," he says.

Sweden as a startup nation - the whole country must be involved

Thomas is clear that Sweden has much to build on, but also some to defend.

- "Sweden has been statistically strong for a long time, but development is incredibly fast. There is a risk that we will start to fall behind if we do not boost the system."

He sees Stockholm as an important locomotive, but not the whole train.

- "A lot is happening in the Stockholm region, and that's great. But if we want Sweden to succeed as a startup nation, the whole of Sweden needs to be involved, and I think a national initiative like Sweden Startup Nation can help."

Capital, teams and skills - the big issues

Like many other investors, Sörmlandsfonden sees that access to risk capital in early stages has become worse in recent years.

- "It takes several years for many companies to become cash flow positive. In the meantime, they need risk capital, and that's where it has become tougher," says Thomas.

Moreover, in a regional context, it is often more difficult to put together really strong entrepreneurial teams.

- "Good teams make all the difference. Here we want to put even more effort into helping to build strong teams around the companies, not just based on who happens to be closest geographically."

The business angel network currently has a wide range of experience, age and background, but Thomas would like to see more profiles with deep digital and AI expertise.

- "We have some, but I would love to see more angels who can really analyze the new AI companies and digital business models," he says.

Nationally, he also calls for more early capital and "soft money" - for example, in the form of reinforced efforts via Almi or similar so that more companies have time to verify their idea and build a core team before they meet business angels and funds.

Exits that reignite the spark

The exits that Sörmlandsfonden has been involved in so far have had great significance, both financially and symbolically.

- "It sends strong signals throughout the innovation system: you can build companies here, exit and raise capital. In terms of PR, it's fantastic."

Exits also release capital back to the fund, the business angels and the founders, and some of the entrepreneurs themselves have joined the network as angels.

- "Founders who become investors bring experiences that are incredibly valuable. They know what the journey actually feels like."

Going forward, Sörmlandsfonden wants to step up a gear and be able to be an even stronger and more long-term owner, even in companies that have come a long way and where valuations are higher.

"Sweden is a great lab environment"

So what does Thomas want to send to international investors looking at Sweden?

- "Sweden is a fantastic arena and lab environment. We are at an early stage of technology development and it is possible to build initiatives here that can then be scaled up in Europe," he says.

He is already seeing more international investors turning their eyes away from the US and looking more towards the Nordics and Europe - a trend he hopes will continue.

- "There are so many exciting things happening all over the country. Sweden Startup Nation can play an important role in making companies, teams and ecosystems visible and connecting the right capital to the right journey."