Investors in Swedish AI technology are embracing industry consolidation
In the rapidly evolving world of artificial intelligence (AI), Sweden is positioning itself as a key player. Tove Larsson, General Partner at Norrsken VC, the leading Swedish impact investor, has expressed her favour for Submer, a company that cools data centres more efficiently and cost-effectively than conventional methods. Larsson also supports Biorce, a company that accelerates the absorption of data from clinical trials, aiming to reduce trial time and costs.
The AI sector has recently faced concerns, with slumps in share prices for many AI-oriented tech companies. However, Larsson argues that the first trillion-dollar company will leverage AI to solve challenges, and the losers will be those who attach AI to their names but fail to solve real problems. This sentiment is shared by Ali Sarrafi, a former Spotify exec, who predicts an inevitable shake-out in the AI industry, with the question not being if, but when.
Emmet King, co-founder of Swedish investors J12 Ventures, believes AI is delivering substantial productivity gains in certain industries, keeping it on a positive trajectory. A recent study by MIT showed, however, that 95% of organizations have zero return on their $30-40bn investment in Generative AI, highlighting the need for a focus on solving real-world problems.
Sweden, despite coming late to the industrial revolution, is expected to be at the forefront of the AI revolution. This is evident in the rapid growth of AI-tech startups in Stockholm, the city that generates more startups than any other. One such startup is Lightbringer, which uses AI to help startups and innovators manage patent applications more efficiently.
AI technology can achieve more with less, leading to companies driving huge values with fewer resources and becoming profitable faster. This is not to say that non-AI companies will disappear from investor focus, but AI will have a dominant gravitational pull. Capital will flow to adjacent areas such as semiconductors, energy infrastructure, and data management, in addition to AI.
Swedish AI startups are making significant strides in addressing real-world problems, particularly in the areas of climate change, healthcare, and food waste. For instance, Radical Dot is developing advanced recycling technologies for plastics, aiming for significant CO₂ savings and industrial scale-up. EleQtron, another Swedish startup, is advancing with substantial funding to develop low-complexity, cost-effective technologies related to the energy sector. These represent concrete progress in sustainability and circular economy solutions in Sweden and neighbouring regions.
The AI sector is expected to see winners in providers of foundational models, such as OpenAI, Anthropic, and Google. Strong categories for AI include productivity and workflow automation, customer support and sales, decision support in healthcare, finance, and manufacturing, and vertical applications in areas like law or HR. Applied AI companies, which automate high-value professional services, are also expected to be winners.
The AI revolution is underway, and Sweden is making a significant contribution by focusing on solving real-world problems. With President Trump's State Visit to Britain accompanied by pledges of billions of pounds in investment in U.K. AI from Nvidia, Microsoft, OpenAI, and Google, it seems that the future of AI is bright, and Sweden is poised to play a major role in this future.
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