Stockholm's startup scene: Part 3: Oscar from Epidemic Sound

Hello and welcome to the Controlled Burn and the third part of our four-part series on Sweden and its startups. This week I spoke to Epidemic Sound co-founder Oscar Höglund (the full interview is below).

Here in the UK, I attended the Insurtech Insights conference at the O2 and learned a lot about what is going on in the world of insurtech.

Next week's newsletter will be a full report from there along with insights about what startups are doing in that space. It is an interesting sector: in many ways like fintech a decade ago. Will we see a Revolut in insurtech that will grow to take on the big insurers? Or will big insurers just buy the brightest and best?

Let me know if you want to talk about that, and in the meantime read on to hear from Oscar who I really liked, even if I was shocked to find out he had never heard of the best Swedish band of all time, Bathory.

Epidemic Sound's Oscar Höglund on how Abba paved the way for Sweden's tech boom

In attempting to sum up why Stockholm has developed an oversize reputation in Europe when it comes to innovation, Oscar Höglund doesn’t talk about Eriksson, Skype, Soundcloud or even Spotify. He talks about Abba. 

In meetings with investors, it was the reputation of Abba and the Swedish bands that came before and after them, that made Epidemic Sound, his startup, instantly click. 

“We used to turn up and knock on doors and say: ‘Hey, we’re from Sweden. We’re a music company.’ People would say: ‘Well, that makes sense.’ You get the benefit of the doubt. People would hear you out,” Höglund said. 

Founded in 2006, Epidemic Sound became a unicorn in 2021 when it raised $450 million in March 2021 from EQT. In 2025 acquired Song Sleuth, a AI music recognition startup, its third in three years. In 2022 it acquired AP Records, now Overtone Studios, and in 2023, Soundly, a sound effects platform from neighbouring Norway. 

“Swedish artists in the 50s, 60s and 70s - and then Abba - paved the way for Swedish music,” Höglund said, and just as those musicians became global by necessity, so did Sweden’s startups, constrained as they were by their origins. 

“Sweden is a small country - at least in terms of population. We speak a difficult, very nuanced language. We’re situated somewhere off by the North Pole,” said Höglund. 

“I think from day one we knew that we didn’t have a home market that could carry us. That’s difficult from other markets, where a home market is large enough to support fantastic businesses. In those markets, the first vision of the company can be regionally-centric. In Sweden, we don't have that luxury.” 

Then there is the fact that from the days of Eriksson and Skype through Spotify and Klarna right up to Sana and Lovable today, Swedish founders that have built companies tend to stick around. By European standards, the country’s tax regime is relatively generous and there is less incentive to go hide out in Switzerland or Dubai. 

It is those founders that pour money into new startups as angel investors and take seats on their boards, or become investors at VC firms and dole out cash themselves. 

“When you have a hub and you tend to punch above your weight you tend to pay it forward,” Höglund said. 

Take Spotify, which in other markets might be a competitor with Epidemic Sounds but in fact the two companies work closely together, and the same for Klarna. Plenty of those working at Epidemic Sounds now worked at Spotify or Klarna, Höglund said. 

“When you get this critical mass - a large amount of companies that have seen wither a huge amount of success or some success and have the aspiration of that, that allows for a pretty dynamic transfer of talent. There’s ambition, there’s reputation, there’s introduction and knowledge and then there is talent.” 

Spotify gradually moved towards the US due to the sheer size of its market - and its status as the centre of the global music industry - signing contracts with record labels in 2011 and then launching stateside in 2011. In 2018, it listed on the New York Stock Exchange. Could a similar trajectory be ahead for Höglund’s firm? 

“The US is by far our most important market, roughly 50% of our business is in - or originates from - the US,” he said. Not only is most content on Epidemic Sound created in America, it is also consumed and distributed there. The startups has offices on both the east and west coasts, even if it is headquartered in the US (as is Spotify). 

"We don't think that AI is something which is transient or a bubble.”

Höglund is in the US at least four times a year, and when we speak he is fresh from a trip to both the east and west coast in one trip, which is “gruelling”, he acknowledged. 

Epidemic Sound was a unicorn before the 2023 boom in AI that came with the launch of OpenAI, but Höglund is not worried by talk of an AI bubble. 

“I think ultimately it comes down to whether or not you see a sustained significant benefit as it relates to AI. If the answer is no, then I could underwrite a bubble notion. But I would argue that that's not the case for us,” he said. 

As well as owning masses of physical IP, Epidemic Sound is also anchored in the digital world of AI, with its product integrated into most major video editing software. It enables content creator to massively cut down the amount of time they spent cutting and editing audio and finding music to soundtrack social media and other content. 

“It's literally changing the way that content gets produced, distributed, manipulated augmented, and then spread [...] A lot of people found sound design [...] very time consuming and complicated from a technical perspective,” he said. 

“This is why we don't think that AI is something which is transient or a bubble.” 

It is fair to say that Spotify hasn’t always been popular with creators, especially artists that aren’t able to attract millions of views and make very little money from their music from its platform. Höglund says he “doesn’t really like comparing and contrasting with other platforms” but that Epidemic Sounds takes copyright seriously.

“This is what guarantees their livelihood so I think it is always going to be something that is front and centre [...]. We pay our artists upfront, so they are always guaranteed compensation for the work that they do.,” he said. 

Epidemic Sound has also introduced a “soundtrack bonus”, where a single digit percentage point of its turnover is put into a royalty pool. Depending on how often a creator’s tracks are downloaded, they receive a pro-rata rate of that pool. All its music is also uploaded to music platforms, like Spotify, and revenue shared 50/50 with creators. 

“We've commissioned the tracks. We've done the marketing. But they made the music and so, for us, It feels It feels like a super fair split that scales beautifully,” he said. 

When it comes to fundraising, Höglund sees Sweden as in a good place, even as many complain about a lack of European funds and VCs able to find the hundreds-of-millions-of-dollars that can be found over the Atlantic. Unlike elsewhere in Europe, institutional investors are regularly involved in funding startups, and there is a “vibrant angel community” that are often involved in seed and pre-seed rounds. 

"Swedes in general are very accustomed to saving money in shares and so investing in the stock market and so on an individual basis It's very common that Swedes hold shares from an early age. You start saving a small amount every month early on [...] and it's something which is celebrated,” he said. 

“You also have these institutional investors who are allocating a part of their entire pension capital back into the system to get a diversified return. I think that probably works better than most markets.”

Check out our previous interviews with Joel Hellermark of Sana and Max Junestrad at Legora. Drop me a line on ocrowcroft@gmail.com.