Sweden’s tech sector is thriving, but the nation’s startups warn that overregulation could slow their momentum. At Stockholm’s Techarena event, Deputy Prime Minister Ebba Busch asked founders what support they needed, prompting a blunt response from venture capitalist Tobias Bengtsdahl: “Get out of the way.”
Bengtsdahl, a general partner at VC firm Antler, told Euronews Next that Sweden’s government and the European Commission should prioritize deregulation over new initiatives. “Please don’t do anything. Please deregulate,” he said.
The Nordic country is in the midst of a tech surge surpassing its first major wave in the 2010s, which produced global names like Spotify and Klarna. In 2025, Swedish AI startups raised nearly $1 billion (€843 million), and companies barely two years old, such as AI vibe-coding startup Lovable, have become internationally recognized.
Experts trace today’s success to early government support. In the 1990s, Sweden encouraged companies to provide employees with computers and invested heavily in high-speed internet. Swedish entrepreneurs like Skype co-founder Niklas Zennström set early examples, showing that local companies could compete globally.
The first wave of tech companies, including Spotify, Klarna, and gaming giant King, created significant opportunities but also concentrated talent in a few firms, slowing the broader ecosystem. Post-COVID-19 and with the rise of generative AI, a new generation of founders, often alumni of these tech giants, is emerging. Notable successes include AI company Sana, acquired by American HR firm Workday for $1.1 billion, Europe’s largest AI acquisition to date.
Despite the boom, founders highlight regulatory hurdles, particularly around talent mobility. Many startups struggle to hire skilled employees quickly due to Sweden’s restrictive immigration system. Visa refusals and bureaucratic delays persist, with the minimum period for nationality recently rising from five to eight years. Omid Ekhlasi, founder of Techarena, described the system as “a huge problem” that risks limiting Sweden’s global competitiveness.
The political backdrop adds complexity. Busch’s Christian Democrats govern alongside the far-right Swedish Democrats, a coalition that has promoted stricter immigration rules since 2015.
Startups also face EU-wide regulatory challenges. Lukas Saari, founder of Tandem Health, said expanding into other European markets remains difficult due to inconsistent rules on employee equity and incentives. Initiatives like EU Inc, designed to simplify cross-border operations, are seen as promising but still in early stages.
Founders argue that European regulation, including the AI Act and GDPR, could stifle innovation if not carefully calibrated. Bengtsdahl emphasized the need for independence, resilience, and sovereignty in Europe’s AI ecosystem, suggesting that nurturing local AI companies and data infrastructure should take priority over restrictive rules.
Sweden’s startup ecosystem demonstrates both strength and fragility. As AI and tech investment continues to surge, industry leaders urge policymakers to remove barriers, allowing Sweden’s new generation of founders to fully capitalize on global opportunities.
