Swedish Tech Funding Report 2016

50 %
50 %
Information about Swedish Tech Funding Report 2016

Published on January 4, 2017

Author: Industrifonden

Source: slideshare.net

1. Swedish Tech Funding Report 2016

2. 2 The year in review 2016 ended on a high note, with a record number of investment rounds and amount of capital raised. The strong increase in number of deals – twice the number of 2015’s – primarily stemmed from a record-breaking amount of seed stage investments. This also explains the more than doubled increase in number of active investors, as a very high number of new angel investors dipped their toes for the first time in 2016. This was also matched with a record year for Swedish tech IPOs. The companies going public ranged from older, venture-backed companies seeking an exit for investors to startups that had a hard time attracting venture capital or sought a more attractive valuation. The public markets treated tech IPOs favorably for the most part of the year, but the positive sentiment came to a halt in Q4 with several stocks flatlining or decreasing compared to the IPO price. While the data in this report does not include investments in publicly traded companies as that constitutes a different kind of funding compared to venture investments in private companies, the development is still highly noteworthy. Apart from angel investors and the public markets, the clear trend for 2016 was the return of profitability as a key value driver. Following the market correction in the US, several Swedish companies accelerated the focus on finding paths to profitability. 2016 saw a number of venture-backed companies shutting down or raising down-rounds, but the market for later stage funding did not dry up completely as domestic and international VCs picked up the pace again in the last quarter of the year, following moderate activity in the first half of 2016. Just like in 2015, the most popular sector for venture funding was FinTech. More interesting to note however was this year’s runner-ups. E-commerce climbed to a second place and while Enterprise SaaS had another strong year, MediaTech fell sharply while Digital Health and Gaming instead gained significant momentum. OVERVIEW 400Funding rounds (2015: 175) $1.6B(SEK 13.6B) raised (2015: $1.1B) KEY FIGURES 575Active investors during 2016 (2015: 250) Björn Bergström Investment Manager Industrifonden

3. 3 2x increase in number of rounds – slower growth in invested capital INVESTMENT ACTIVITY Note: The outlier adjusted graph excludes Spotify’s funding rounds in Q2 2015 and Q1 2016 to provide a more comparable trend line than the total investment graph $M $M$M Deal count 1,5 1,4 0,8 0,7 0,7 0,7 1,2 0,8 0 25 50 75 100 125 0 1 2 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Median deal size Deal count 0 200 400 600 800 1000 1200 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Total investment* 0 50 100 150 200 250 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Total investment, outlier adjusted*

4. 4 INVESTMENT ACTIVITY Increase in number of rounds remain driven by early stage – flatline in growth stage 8 11 2 1 19 15 6 2 26 10 4 3 32 20 2 41 29 4 1 62 27 4 44 39 8 64 43 8 1 0 10 20 30 40 50 60 70 ≤$1M $1.1 - 5M $5.1 - 25M >$25M 2015 - Q1 2015 - Q2 2015 - Q3 2015 - Q4 2016 - Q1 2016 - Q2 2016 - Q3 2016 - Q4 Deal count Deal size

5. 5 INVESTOR ACTIVITY 129%Increase in active investors 2016 compared to 2015 23%Of the active investors participated in at least two funding rounds during the year 105 146 310 349 0 50 100 150 200 250 300 350 400 Q1-Q2 2015 Q3-Q4 2015 Q1-Q2 2016 Q3-Q4 2016 Active investors

6. 6 Angel investors and VCs remain most active backers of tech startups Investor type by % of deals INVESTOR ACTIVITY 56% 23% 11% 5% 2% 2% Angel VC Investment firm, other Corporation Accelerator Corporate VC 37% 47% 51% 29% 60% 20% 56% 23% 0% 25% 50% 75% 100% Angel investors VC Share of deal count by investor type Q1-Q2 2015 Q3-Q4 2015 Q1-Q2 2016 Q3-Q4 2016

7. 7 FOREIGN INVESTMENT ACTIVITY Foreign investors broke the downwards trend – picked up the pace in Q3-Q4 42% 25% 18% 21% 0% 25% 50% 75% 100% Q1-Q2 2015 Q3-Q4 2015 Q1-Q2 2016 Q3-Q4 2016 Funding rounds with foreign participation (%) 29 27 32 47 Q1-Q2 2015 Q3-Q4 2015 Q1-Q2 2016 Q3-Q4 2016 Funding rounds with foreign participation (count)

8. 8 FOREIGN INVESTMENT ACTIVITY …but remain active mostly in growth rounds 14% 20% 79% 100% 0 50 100 150 200 250 0% 25% 50% 75% 100% ≤$1M $1.1 - 5M $5.1 - 25M >$25M Foreign participation % Total deal count Deal count Deals with foreign participation (%) Deal size

9. 9 Decreased US and UK dominance – greater regional spread FOREIGN INVESTMENT ACTIVITY 33% 25% 19% 10% 7% 6% Foreign participation by country 2015 USA UK RoW Germany Finland Denmark US and UK investors together accounted for close to 60% of foreign activity in 2015 In 2016, US and UK investors’ share of foreign participation dropped by a fifth to 47% 29% 18% 18% 10% 9% 7% 6% 4% Foreign participation by country 2016 USA UK Rest of World Denmark Germany Norway Finland China

10. 10 VERTICALS Top 2 verticals by deal count FinTech 12% E-commerce 10% FinTech remained hottest sector, while E-commerce, Digital Health and Gaming rapidly gained momentum

11. 11 The Fundraising Journey – Seed Stage FUNDRAISING TRENDS Most active seed stage investors in 2016 Founded Raised ’FFF’-round* & innovation loan Beta launch & first hiresRaised seed round Public launch & additional hires • Founded in 2014 by 2-3 founders • Raised a small initial funding round topped up with a soft loan before making its first hires, moving into its own office and launching its first product • Went on to raise a $500K seed round in 2016 from a syndicate of angel investors and one early-stage institutional investor * ”Family, Friends and Fools” 2017 2014 A data-driven look at the average seed stage company’s path to 2016

12. 12 The Fundraising Journey – Series A FUNDRAISING TRENDS Most active Series A investors in 2016 Founded Raised ’FFF’-round & innovation loan 2012 Beta launch & first hires Raised seed round The average Series A stage company’s path to 2016 2017 Public launch & additional hires Moved to bigger offices Achieved full product- market fit Raised Series A round Prepared for international expansion Raised bridge round from existing investors to extend runway

13. 13 The Fundraising Journey – Series B & Beyond FUNDRAISING TRENDS Most active Series B & Growth investors in 2016 Founded Raised ’FFF’-round & innovation loan 2010 Beta launch & first hires The average growth stage company’s path to 2016 Raised seed round 2017 Public launch & additional hires Moved to bigger officesPrepared for international expansion Launched in selected European markets Raised Series B round Achieved full product- market fit Raised Series A round Prepared for US expansion Raised bridge round from existing investors to extend runway

14. 14 METHODOLOGY What’s included • This report covers disclosed venture investments in Swedish private tech companies • Analysis primarily based on proprietary database with 600+ funding rounds • Both first-time and follow-on investments are included • Deals are tracked in SEK but reported here in USD. If originally reported in other currencies, conversion is based upon exchange rate per date of disclosure. Aggregate figures are subject to change due to currency fluctuation What’s not included • Investments in life science, med tech, bio tech, retail, and consulting • Secondary transactions, investments in subsidiaries and M&A transactions • Equity crowdfunding and investments in public companies of any kind • Grants, bonds, bank loans and any other types of funding that is not intended to result in ownership An end-note to keep our lawyers happy: The information contained in this report has not been independently verified as to its accuracy. No representation or warranty, express or implied, is given by Industrifonden or any of its directors, partners, officers, affiliates, employees, advisers or agents as to the accuracy or completeness of the contents of this report or any other document or information supplied or any opinions or projections expressed herein or therein, nor is any such party under any obligation to update the report or correct any inaccuracies or omissions in it which may exist or become apparent.

15. Industrifonden is a Nordic venture capital investor with $500M in assets, focusing on early-stage tech and life science companies with international potential. Industrifonden is an active partner to innovative companies poised for growth. #swedishtechreport @industrifonden

#swedishtechreport presentations

Add a comment