Sweden must step up a gear

At the seminar “How Sweden can become excellent in the utilisation of socially critical innovation”, organised in the Second Chamber of the Swedish Parliament on 19 March by Lili André (KD) and Daniel Vencu Velasquez Castro (S), in collaboration with SISP – Swedish Incubators & Science Parks, this gap between potential and reality was forcefully highlighted. Politicians, researchers, ecosystems, entrepreneurs and investors gathered in the Second Chamber of the Swedish Parliament to discuss why Sweden is lagging behind in the competition to scale socially critical innovations – and what needs to be done – now.

We must choose our future

The seminar was opened by Daniel Vencu Velasquez Castro (S), Member of Parliament, who emphasised that Sweden is at a crossroads. His message was clear: innovation is not a luxury – it is a necessity.

“We are facing major societal challenges: the climate, energy supply, health and the provision of future jobs. We have the research and the entrepreneurs, but we lack the holistic system that makes it possible to scale up ideas into global solutions. This evening is about discussing what is needed for Sweden to take the lead – but also about politicians listening and acting accordingly.”

From world-leading research to global impact

Darja Isaksson, Director General of Vinnova, described a Sweden that has long had the potential to lead developments in technology-heavy areas such as AI, biotechnology and advanced materials. But the picture has changed.

“We have fallen behind. Sweden fell from 17th to 25th place in the global AI index in just one year. This is not about numbers in an index – it’s about lost investments, jobs that are never created and innovations that don’t reach the market. We cannot afford to wait any longer. Policymakers need to set the direction and step on the gas now.”

Isaksson stressed that many other countries have already taken clear steps to strengthen their innovation systems and create strategic programmes to take research all the way to market and industrial application. “If Sweden is to be in the global race, we need a clear plan – now.”

Startups and scaleups as drivers of society

Another of the seminar’s keynote speakers was Stina Lantz, CEO of SISP, who highlighted the imbalance that exists in Sweden’s current innovation system. She pointed out that while Sweden is ranked as one of the world’s most innovative countries, the proportion of start-ups that manage to scale up into sustainable, global companies is extremely low.

“Only 0.19 per cent of all Nordic small businesses take the step to become global scaleups. The few that succeed account for a disproportionately large share of job growth and build the industries that will sustain Sweden in the future. For more to succeed in scaling up, we need a national innovation and commercialisation strategy, and we need it now.”

Lantz did not call for more studies or visions, but for concrete measures. She said that Sweden currently has world-leading research, but the system that takes innovations from the lab to industrial production and export needs strengthening.

Without the right capital structure, it is not possible

One person who has already built a company with global potential is Karin Ebbinghaus, CEO of Elonroad. The company has developed an innovative solution for charging electric vehicles while travelling – a technology that has made an international impact, but is now threatened by the funding gap in Sweden.

“We have the technology, we have the customers and we have the team to deliver. But we lack the capital to scale up seriously. Our cycles are not seven years, like software companies, but at least ten to twenty. If Sweden wants to be a leader in the climate transition, the government must create structures for long-term, patient capital – otherwise we will lose the companies to other countries.”

Ebbinghaus was clear that traditional venture capital funds, which focus on quick profits, are not suitable for deep tech and industrial companies. She called for new models, such as evergreen funds, and government support to fund capex-intensive companies.

“We need a strategy, not a hope”

Boel Rydenå-Swartling, founder of Charge Amps, investor and business coach at Sting, emphasised the importance of a long-term approach and predictability in both capital and regulations. She warned of the consequences of Sweden lacking a coherent strategy for how the innovation system should support the scaling up of future industrial companies.

“We see talent, capital and investment moving to countries where there is a clear plan. In Sweden, we identify key technology areas, but we don’t have the support structures or incentives needed for companies to grow here. We can’t wait for the market to solve this – we need to act politically and strategically.”

Ms Boel called for a government initiative to take over where venture capital is insufficient, and a coordinated plan for Sweden to become a world leader in future climate technologies.

Competition between innovation nations

Klementina Österberg, CEO of GU Ventures, described the structural challenge facing many Swedish deep tech companies – and why current funding models are not sufficient:

“We see time and time again that companies with world-leading technology are forced to seek capital abroad because the Swedish ecosystem does not offer the long-term structures required. Our companies are not only competing with technology, they are competing with other countries that have both more capital and better conditions to build the next generation of industry.”

She emphasised the need to rethink how the state and public actors support innovation companies:

“We need sustainable capital and evergreen funds, not funds with ten-year lifespans that push companies into quick exits. The government must create incentives for funds and investors to think long-term. If we don’t do it now, we risk losing entire generations of future global companies.”

Academia a goldmine for innovation

Elias Arnér, professor of biochemistry at Karolinska Institutet and CEO of Thioredoxin Systems, which is developing a new antibiotic, emphasised that academia often holds research results that could be the next big export success. But current structures and culture are slowing down the process.

“We invest over SEK 50 billion* every year in research in Sweden – but how much of that reaches the market? We must stop being afraid of commercialisation. Policy must ensure that academia has the incentives and support to commercialise its research. Otherwise, we are missing out on both value and societal benefit.”

Mr Arnér described how uncertainty about rights, conflicts of interest and lack of support for business development mean that many promising research projects never become more than projects.

Politicians hold the key

After the panel discussion, Lili André (KD) took the floor and summarised the day from a political perspective. She emphasised the importance of listening to the whole ecosystem and bringing the insights into the parliamentary work.

It is clear that we are in a unique position, but also that we face major challenges. We have heard from researchers, entrepreneurs and investors that Sweden risks losing momentum – and we cannot afford to do that. We need to create a business climate where innovation is not only born, but also grows, scales and leads to new jobs and export opportunities.”

André emphasised the importance of action over words:

“Good intentions and reports are not enough. We now need the tools, resources and courage to make decisions that ensure Sweden remains a leading innovation nation. That responsibility lies with us politicians, and I promise to take today’s clear message into the work of the Riksdag.”

Dare to prioritise and invest where we have the greatest potential

In her closing remarks, State Secretary Maria Nilsson gave the government’s perspective on the discussion that had taken place during the evening. She recognised the challenges and stressed that the government sees the seriousness of the situation.

“We agree that Sweden needs to step up a gear. We cannot be the best at everything, but we can be world leaders in the areas where we have our strongest assets. That’s why we need to dare to prioritise and invest for the long term.”

Maria Nilsson highlighted that the recently presented research and innovation bill includes investments in excellent research environments and innovation support, but emphasised that there is also room to go further:

“We share the view that more coherent work is needed to take research all the way to societal benefits and global markets. We will take this input with us as we continue our work to develop Sweden’s innovation strategy.”

She concluded by calling for continued co-operation between academia, business and politics:

“Sweden is strong when we work together. We will continue to create the conditions for our researchers and entrepreneurs to change the world – but we must do it together, and we must do it now.”

Sweden can no longer afford to hesitate

The mingle after the seminar was characterised by a shared seriousness and a strong desire for change. The Swedish innovation system is full of potential, but also full of bottlenecks.

If Sweden is to remain a leading innovation nation in the future, action is needed now.

“We know what it takes. Now we just need the courage and determination to do it!” concluded Stina Lantz.

*According to the latest statistics from the Swedish Research Council and Statistics Sweden, the public research budget is approximately SEK 52 billion per year (2023/2024), which includes funding for universities and colleges, research councils and government research programmes.

Including business investment and other private actors, Sweden’s total investment in R&D amounts to approximately SEK 182 billion per year, which corresponds to about 3.4% of GDP. This places Sweden among the most R&D-intensive countries in the world.