The EU and the U.S. are looking to Sweden to boost innovation
The European Commission has decided to entrust the management of the new Scaleup Europe Fund to Sweden through the private equity firm EQT. The fund has a total value of 5 billion euros, equivalent to approximately 63 billion Swedish kronor, and will invest in key areas such as tech, quantum technology, AI, and deep tech.
The fact that the project is being based in Sweden is significant. It can be seen as a clear recognition of the investment expertise, technical know-how, and entrepreneurial culture that have developed here over a long period of time.
The announcement also comes at a time when Sweden’s position in advanced technology is being strengthened on several fronts. The government recently announced that Sweden and the United States have signed a memorandum of understanding on bilateral technological cooperation in research and development, including in the fields of AI, 6G, space, quantum technology, and so-called defense technology. The agreement is intended to build on complementary strengths and mutual interests in new technology, research, and innovation, and to provide improved access to cutting-edge technology as well as increased opportunities for research and innovation exchange.
Taken together, these initiatives point to the same conclusion: Sweden has a significantly stronger role to play in international technological development than our market size would suggest. However, for that potential to translate into new companies, investments, and global competitiveness, research, capital, and the market must be closely linked.
Europe is a leader in research and innovation. The challenge has instead been the conditions surrounding everything from a heavy regulatory burden to securing capital in the later stages of growth, when technology needs to be commercialized, production scaled up, and global markets established.
It is this funding gap that the Scaleup Europe Fund is designed to bridge. The fund aims to mobilize capital at a stage when many European tech and deep tech companies currently struggle to secure sufficient funding in their home markets.
Swedish entrepreneurial culture can contribute to Europe's innovation climate
Sweden has long held a strong position in innovation and technological development. Relative to our size, we have built an unusually vibrant ecosystem of startups, investors, research institutions, and serial entrepreneurs. This has generated insights that are valuable not only for Sweden, but also for Europe as a whole.
Now that the Scaleup Europe Fund is set to invest in areas such as AI, quantum technology, space technology, deep tech, and clean energy, there are several reasons to view the fund’s management having a Swedish base in a positive light.
First, our proximity to the Nordic and Swedish innovation ecosystems helps us gain a deep understanding of the needs of fast-growing tech companies. It’s not just about capital, but also about timing, market insight, and the ability to identify companies with genuine scaling potential.
Second, Swedish investors often have experience contributing more than just financing. In the most successful cases, this involves “smart capital”: operational experience, international networks, and knowledge of how to build companies for global markets.
Third, a stronger flow of capital in later stages can have positive effects throughout the innovation chain. If more companies see a realistic path to growth in Europe, this will also strengthen the conditions for research spin-offs, early-stage startups, incubators, and new entrepreneurs.
This new collaboration between Sweden and the United States also underscores how important it is for Swedish research and innovation communities to be more closely connected to international knowledge flows, which must also be supported by strong commercialization ecosystems at home.
Capital must be combined with the right conditions
At TechSverige, we view the decision to establish a Scalup Europe Fund as an important step in the right direction. It is fully in line with our view of how the public sector can best contribute to innovation and growth: by creating favorable conditions, mobilizing private capital, and strengthening market mechanisms, rather than micromanaging development.
It is essential that the fund be managed on a commercial basis by professional investors. This increases the likelihood that capital will be directed toward companies with strong technology, clear growth potential, and the ability to contribute to European competitiveness.
At the same time, ample access to capital is just one—albeit important—piece of the puzzle. For the fund to be fully effective, the political framework must evolve in line with Europe’s ambitions.
Access to cutting-edge expertise is a critical issue.Increased investment in advanced technology will boost demand for engineers, researchers, AI specialists, and other key skills. Sweden therefore needs to improve its ability to attract and retain international talent, including through faster, more predictable, and more digitized permitting processes.
Incentives for entrepreneurship and ownership need to be strengthened.This involves, among other things, developing the regulatory framework for employee stock options and designing targeted R&D incentives that make Sweden an attractive hub for innovation.
Regulation must be innovation-friendly.New European regulations, for example in the field of AI, must safeguard fundamental rights and security without creating unnecessary administrative burdens or hindering the growth of emerging companies.
The infrastructure must be commensurate with our ambitions.Deep tech, AI, and other advanced technologies require robust digital infrastructure, access to computing power, cybersecurity, and a stable energy supply. These are areas where long-term national and European investments will continue to be necessary.
A critical juncture for European competitiveness
The Scaleup Europe Fund should be viewed in a broader context. It is not just about financing individual companies, but about Europe’s ability to build the tech companies of the future on a strong and attractive domestic market. At a time when technological leadership is having an increasingly significant impact on competitiveness, security, and geopolitical freedom of action, this is a matter of strategic importance.
At the same time, bilateral cooperation between Sweden and the United States demonstrates that Sweden is a relevant partner in global technological development and that Sweden holds a strong position within the EU.
The fact that Sweden is playing a central role in this effort is positive for the entire Swedish innovation ecosystem. It demonstrates that Swedish entrepreneurial spirit, research, technical expertise, and financial acumen are relevant far beyond our own market.
At the same time, this decision should be seen as the start of a larger effort, not as the end goal. If Europe is to succeed, we need to do more than just launch promising tech companies. We must also create the conditions for them to grow, stay, and become global leaders from Europe. Sweden can play an important role in this regard.
Peter Kjäll
Economic Policy Expert, TechSverige
Jonas Sandwall
Secretary General, SME-D