In partnership with his brother-in-law, Theodor Winborg (1832–1918), Palmcrantz founded a small workshop on Vollmar Yxkullsgatan 25, Södermalm, Stockholm.

As number of employees increased along with the production volume, he moved to a new factory on Kungsholmen, Stockholm, where they manufactured firearms, reaping machines, mowers and other agricultural equipment of their own design.

[3][4] In 1868, the first version of his machine gun was finished and a demonstration of its capacity was held on Ladugårdsgärdet, Stockholm in front of the Swedish Defense Minister; G. R. Abel.

To reach international success, Palmcrantz met industrialist Thorsten Nordenfelt (1842–1920) in 1875 and the latter's company became his British agent.

It was Nordenfelt who convinced Palmcrantz to increase the caliber of his gun to one inch, making it a suitable weapon for use against the growing threat of torpedo boats.