Carl Bildt has earned his stripes as the world's best-known Swedish politician and statesman. Now he's turned venture capitalist, bringing some of those diplomatic skills honed in the war-torn Balkans to bear in the ravaged tech sector.

Yes, this is the fellow who over the past five years has served as special envoy to the Balkans for the European Union and then the United Nations. Now, however, Swedish investment firm IT Provider is getting his advice.

Mr. Bildt's international network, combined with his personal enthusiasm for high-tech, certainly qualifies him for the new job. It also makes for some surreal conversations. "Here listen," says the former prime minister, offering me the earphones attached to his Ericsson mobile phone with a nifty little MP3 player attached, which downloads music from the Internet. I listen and have to chuckle, because it seems like a surprisingly old-fashioned choice for such cutting-edge technology: It's the 1970s Swedish pop group Abba singing one of their cheesy hits, "Fernando."

The fact that he enjoys Abba is perhaps a trite example, but Mr. Bildt, 51 years old, certainly delights in such unlikely reconciliations of past and future. Indeed, confronting the two has been something of a leitmotif of his career over the last 10 years. "For me, there is no looking forward without first looking back," he says. "We can never shape the future if we fail to understand the past."

As Sweden's conservative prime minister from 1991 to 1994, Mr. Bildt was faced with tackling the problems engendered by the country's generous postwar welfare system, cutting taxes, paring back benefits, deregulating various state-controlled monopolies and bringing Sweden into the EU. Many now credit him with having set in motion the reforms that have established Sweden today as a leading player in Europe's telecommunications revolution.

"One reason that Sweden is so advanced today is because of enlightened politicians like him," says Esther Dyson, president of EDventure Holdings and former chairperson of the Internet Corp. for Assigned Names and Numbers.

After his term as prime minister, Mr. Bildt has played a prominent role in the Balkans, earning international applause for his calm handling of tense and often intractable situations. The former Swedish ambassador to Bosnia, Erik Pierre, recalls traveling under Serbian fire across Mount Igman into Sarajevo with Mr. Bildt in an armored personnel carrier. "He has a dry, almost British sense of humor," recalls Mr. Pierre.

Now, Mr. Bildt says, he'll be spending less time on such high-profile diplomatic roles and more on his mission as venture capitalist. In June he joined Swedish Internet and technology investor IT Provider as a senior adviser, and he sits on the boards of a number of information-technology companies.

The way Mr. Bildt describes it, his new career isn't a break with the past but a continuation, giving him hands-on experience with the same Swedish entrepreneurs that the government's IT Commission -- which he set up back in 1994 while prime minister -- helped foster.

"I have always been keen to support and promote young entrepreneurs in order to pave the way for the IT revolution in Sweden," he says.

Indeed, he suggests that the current crunch on technology stocks and the squeeze on venture-capital funding puts him in position to play the role of cool-headed veteran and statesman within the sector. "During last year's gold rush, I don't think my name counted for much," he says. "How it will be now remains to be seen [but] I believe there will be a need for [people] with more perspective on the IT sector and perhaps a more realistic view of things."

In fact, Mr. Bildt has already had a bitter taste of the New Economy, as adviser to the ill-fated Dressmart.com, a Stockholm-based online clothes retailer run by two 20-something entrepreneurs that collapsed, and was then acquired by a competitor, this summer. Mr. Bildt says that he didn't invest in the company and didn't have a seat on the board, but that he doesn't regret accepting the role. "[The founders] met me once, and asked if I could be part of their circle of advisers. I listened to their presentation and said yes," recalls Mr. Bildt. A press release followed, and "that was the beginning and end of the story."

He also says there are lessons to be drawn from the Dressmart episode, notably that the company tried to grow too fast. "With a more careful and slower approach the company might well have survived and prospered," he says.

That's not a mistake that another dot-com near to his heart will commit, he says. His wife Anna Maria Corazza Bildt is chief executive of ItalianTradition.com, an online retailer of Italian foods. Mr. Bildt isn't an investor there but acts as informal adviser. "The business model has been focused on the core business of gradually building up a base of satisfied customers, thus assuring profitability," he says.

But it's not his dot-com experience so much as the halo effect of having Sweden's one international statesman on board that interests IT Provider and its portfolio companies. "There's a risk that the VC industry is going to get a lot of criticism as overambitious young companies crash," says IT Provider's Simon Lindfors.

"So it's important," he adds, "that people of high moral standing [like Mr. Bildt] are seen supporting the industry."