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Corporate ventures in sweden

Corporate Ventures in Sweden How to improve the connection between Swedish start-ups and corporations?

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Corporate Ventures in Sweden
How to improve the connection between Swedish
start-ups and corporations?
April 2016
160401 BCG Corporate ventures in Sweden_vSend.pptx 1
Executive summary (I/II)
Sweden is consistently ranked among the most innovative countries in the world and has
since 2012 been in the Top 3 globally
• Stockholm internationally considered one of the top tech hubs in the world and is the 2nd
fastest growing VC tech market globally, with >$1B raised in 2015
However, Sweden has a challenge in growing start-ups to larger sized enterprises
• Only 9% alumni companies (2007-2013) from Swedish incubators had turnover >5MSEK 2014
On the other hand corporations are in pursuit for new ways for innovation & value creation1,
where they have traditionally relied on R&D and/or M&A
• R&D and M&A with limited correlation to value creation, and often focused on core business
Corporate venturing becoming an increasingly important complement to traditional
innovation sources
• Especially in R&D intense industries such as pharmaceuticals and technology
• Three main corporate venture vehicles used by corporations:
– Corporate venture capital with minority equity investment in start-ups
– Accelerators and incubators focused on fast scan of new business ideas
– Innovation labs through internal innovation team outside of traditional R&D
1. Value creation measured as Total Shareholder Return
1
2
2
1
160401 BCG Corporate ventures in Sweden_vSend.pptx 2
Executive summary (II/II)
So far, Swedish corporations have not been very aggressive in investing in local start-ups
and the majority of acquisitions of Swedish start-ups are made by foreign companies
• Only ~20% of the largest companies in Sweden have their own corporate venture set-up today,
compared to ~33% in 2012 and ~40% today among the worlds largest companies, with
considerably higher penetration in the tech industry (~70%), pharmaceuticals (~65%) and
telecom (~55%)
While there are already good examples of Swedish Corporate venture set-ups there is an
opportunity for Sweden better match innovative start-ups with corporations
• Comparing Sweden with other successful CV and start-up clusters such Silicon Valley, Israel,
and Unternehmertum in Munich there are three key areas to further strengthen:
– Foster and promote a more entrepreneurial culture, building on Silicon Valley success
– Focus policy making to match private funding and pro-actively attract foreign investments
& talent, building on Israel success
– Effective incubator organizations with role to integrate private sector and academia and
where the government's role is to enable the collaboration, building on Munich success
3
4
160401 BCG Corporate ventures in Sweden_vSend.pptx 3
Sweden ranked third most innovative country in the world
Relatively small share of population as entrepreneurs (6.7%) but high company survivability (84.4%)
Sweden consistently ranked as top
innovator...
3rd in Global Innovation Index 2015
• Top 3 placement since 2012
• Sweden with both high input and high output
in innovation process
1st in Innovation European Scoreboard 2015
• Leads index since 2007
• However, sharp relative decline since 2012
... but has modest company creation,
although with very high survivability
Only ~7% of Swedes engaged in entrepreneurship
• Well below OECD average
~85% of new companies still active after 2 years
• 2nd best in EU after the Netherlands
1
Source: Global Innovation Index, Innovation European Scoreboard 2015, Global Entrepreneurship Monitor, Eurostat
Draft—for discussion only
With 6.7% of population as entrepreneurs, Sweden is well
below OECD average
1. Share of population (18-64 years) running a business that is younger that 42 months
Source: Global Entrepreneurship Monitor
Backup
0
10
20
30
CANADA
SLOVAKREPUBLIC
UNITEDKINGDOM
PORTUGAL
NETHERLANDS
ESTONIA
HUNGARY
POLAND
AUSTRIA
GREECE
LUXEMBOURG
SWITZERLAND
SWEDEN
6.3
7.1
8.7
19.0
7.9
6.7
5.65.7
3.8
7.1 6.5
10.7
10.9
9.4
5.45.5
26.8
13.0
13.8
4.4
5.5
9.3
5.3
Ø 9.0
9.510.0
13.1
5.3
9.2
AUSTRALIA
MEXICO
UNITEDSTATES
Share of population as entrepreneurs (%)1
IRELAND
SLOVENIA
NORWAY
GERMANY
SPAIN
BELGIUM
FRANCE
DENMARK
FINLAND
JAPAN
CHILE
ITALY
Draft—for discussion only
But survivability of newly founded companies remains very
high at 84.4% after 2 years
1. Share of companies founded in 2011 still active in 2013
Source: Eurostat
Backup
0
20
40
60
80
100
UNITEDKINGDOM
SLOVENIA
AUSTRIA
CYPRUS
LATVIA
NORWAY
POLAND
FRANCE
BULGARIA
SLOVAKREPUBLIC
CZECHREPUBLIC
ITALY
GERMANY
59.7
64.3
67.1
84.4
64.9
62.3
55.3
59.5
64.5
61.3
73.974.5
68.3
40.6
49.7
85.5
75.4
82.4
50.1
67.9
Ø 66.7
70.0
73.3
78.1
67.1
LUXEMBOURG
SWEDEN
BELGIUM
Company survivability (%)1
SPAIN
DENMARK
ROMANIA
PORTUGAL
FINLAND
LITHUANIA
HUNGARY
NETHERLANDS
160401 BCG Corporate ventures in Sweden_vSend.pptx 4
In creation of billion dollar tech companies, Sweden is ranked
#1 per capita and #5 in absolute terms 2003-2015
1
0.0
0.5
1.0
Large tech companies per capita created1
DenmarkFinlandNew
Zealand
USAIsraelSweden
0.51 0.49
0.18 0.180.22
0.30
5577
39
97
0
50
100
Amount of large tech companies created2
GermanySwedenUKIndiaChinaUSA
1. Amount of tech companies per capita created sine 2003 valued at more than 1 billion USD 2. Amount of tech companies created since 2003 valued at more than 1 billion USD
Source: Atomico, Swedish Startup Space
• Stockholm as Sweden's dominating
tech hub
• 2nd fastest growing VC tech market
globally, with >$1B raised 2015
• Since 2003, Stockholm has
supported creation of 6.3 large tech
companies per million inhabitants,
and is 2nd only to Silicon Valley (8.1)
160401 BCG Corporate ventures in Sweden_vSend.pptx 5
However, few Swedish start-ups make the enterprise journey
Only 9% alumni companies (2007–13) from Swedish incubators had turnover >5MSEK 2014
0
100
200
300
400
Revenues (MSEK)M&A100-40050-99,930-49,915-29,95-14,91-4,9<10Kon./Likv
Amount of companies
-200620072010 2009 2008201120122013
7% companies have
exited through M &A
Incubator alumni companies (2007–13) by 2014 turnover
9% of companies with revenues
over 5MSEK
Alumniar
1
Source: ALMI, BCG analysis

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Corporate ventures in sweden

  • 1. Corporate Ventures in Sweden How to improve the connection between Swedish start-ups and corporations? April 2016
  • 2. 160401 BCG Corporate ventures in Sweden_vSend.pptx 1 Executive summary (I/II) Sweden is consistently ranked among the most innovative countries in the world and has since 2012 been in the Top 3 globally • Stockholm internationally considered one of the top tech hubs in the world and is the 2nd fastest growing VC tech market globally, with >$1B raised in 2015 However, Sweden has a challenge in growing start-ups to larger sized enterprises • Only 9% alumni companies (2007-2013) from Swedish incubators had turnover >5MSEK 2014 On the other hand corporations are in pursuit for new ways for innovation & value creation1, where they have traditionally relied on R&D and/or M&A • R&D and M&A with limited correlation to value creation, and often focused on core business Corporate venturing becoming an increasingly important complement to traditional innovation sources • Especially in R&D intense industries such as pharmaceuticals and technology • Three main corporate venture vehicles used by corporations: – Corporate venture capital with minority equity investment in start-ups – Accelerators and incubators focused on fast scan of new business ideas – Innovation labs through internal innovation team outside of traditional R&D 1. Value creation measured as Total Shareholder Return 1 2 2 1
  • 3. 160401 BCG Corporate ventures in Sweden_vSend.pptx 2 Executive summary (II/II) So far, Swedish corporations have not been very aggressive in investing in local start-ups and the majority of acquisitions of Swedish start-ups are made by foreign companies • Only ~20% of the largest companies in Sweden have their own corporate venture set-up today, compared to ~33% in 2012 and ~40% today among the worlds largest companies, with considerably higher penetration in the tech industry (~70%), pharmaceuticals (~65%) and telecom (~55%) While there are already good examples of Swedish Corporate venture set-ups there is an opportunity for Sweden better match innovative start-ups with corporations • Comparing Sweden with other successful CV and start-up clusters such Silicon Valley, Israel, and Unternehmertum in Munich there are three key areas to further strengthen: – Foster and promote a more entrepreneurial culture, building on Silicon Valley success – Focus policy making to match private funding and pro-actively attract foreign investments & talent, building on Israel success – Effective incubator organizations with role to integrate private sector and academia and where the government's role is to enable the collaboration, building on Munich success 3 4
  • 4. 160401 BCG Corporate ventures in Sweden_vSend.pptx 3 Sweden ranked third most innovative country in the world Relatively small share of population as entrepreneurs (6.7%) but high company survivability (84.4%) Sweden consistently ranked as top innovator... 3rd in Global Innovation Index 2015 • Top 3 placement since 2012 • Sweden with both high input and high output in innovation process 1st in Innovation European Scoreboard 2015 • Leads index since 2007 • However, sharp relative decline since 2012 ... but has modest company creation, although with very high survivability Only ~7% of Swedes engaged in entrepreneurship • Well below OECD average ~85% of new companies still active after 2 years • 2nd best in EU after the Netherlands 1 Source: Global Innovation Index, Innovation European Scoreboard 2015, Global Entrepreneurship Monitor, Eurostat Draft—for discussion only With 6.7% of population as entrepreneurs, Sweden is well below OECD average 1. Share of population (18-64 years) running a business that is younger that 42 months Source: Global Entrepreneurship Monitor Backup 0 10 20 30 CANADA SLOVAKREPUBLIC UNITEDKINGDOM PORTUGAL NETHERLANDS ESTONIA HUNGARY POLAND AUSTRIA GREECE LUXEMBOURG SWITZERLAND SWEDEN 6.3 7.1 8.7 19.0 7.9 6.7 5.65.7 3.8 7.1 6.5 10.7 10.9 9.4 5.45.5 26.8 13.0 13.8 4.4 5.5 9.3 5.3 Ø 9.0 9.510.0 13.1 5.3 9.2 AUSTRALIA MEXICO UNITEDSTATES Share of population as entrepreneurs (%)1 IRELAND SLOVENIA NORWAY GERMANY SPAIN BELGIUM FRANCE DENMARK FINLAND JAPAN CHILE ITALY Draft—for discussion only But survivability of newly founded companies remains very high at 84.4% after 2 years 1. Share of companies founded in 2011 still active in 2013 Source: Eurostat Backup 0 20 40 60 80 100 UNITEDKINGDOM SLOVENIA AUSTRIA CYPRUS LATVIA NORWAY POLAND FRANCE BULGARIA SLOVAKREPUBLIC CZECHREPUBLIC ITALY GERMANY 59.7 64.3 67.1 84.4 64.9 62.3 55.3 59.5 64.5 61.3 73.974.5 68.3 40.6 49.7 85.5 75.4 82.4 50.1 67.9 Ø 66.7 70.0 73.3 78.1 67.1 LUXEMBOURG SWEDEN BELGIUM Company survivability (%)1 SPAIN DENMARK ROMANIA PORTUGAL FINLAND LITHUANIA HUNGARY NETHERLANDS
  • 5. 160401 BCG Corporate ventures in Sweden_vSend.pptx 4 In creation of billion dollar tech companies, Sweden is ranked #1 per capita and #5 in absolute terms 2003-2015 1 0.0 0.5 1.0 Large tech companies per capita created1 DenmarkFinlandNew Zealand USAIsraelSweden 0.51 0.49 0.18 0.180.22 0.30 5577 39 97 0 50 100 Amount of large tech companies created2 GermanySwedenUKIndiaChinaUSA 1. Amount of tech companies per capita created sine 2003 valued at more than 1 billion USD 2. Amount of tech companies created since 2003 valued at more than 1 billion USD Source: Atomico, Swedish Startup Space • Stockholm as Sweden's dominating tech hub • 2nd fastest growing VC tech market globally, with >$1B raised 2015 • Since 2003, Stockholm has supported creation of 6.3 large tech companies per million inhabitants, and is 2nd only to Silicon Valley (8.1)
  • 6. 160401 BCG Corporate ventures in Sweden_vSend.pptx 5 However, few Swedish start-ups make the enterprise journey Only 9% alumni companies (2007–13) from Swedish incubators had turnover >5MSEK 2014 0 100 200 300 400 Revenues (MSEK)M&A100-40050-99,930-49,915-29,95-14,91-4,9<10Kon./Likv Amount of companies -200620072010 2009 2008201120122013 7% companies have exited through M &A Incubator alumni companies (2007–13) by 2014 turnover 9% of companies with revenues over 5MSEK Alumniar 1 Source: ALMI, BCG analysis
  • 7. 160401 BCG Corporate ventures in Sweden_vSend.pptx 6 R&D and M&A both with low value creation correlation Traditional sources for innovation (R&D and M&A) also primarily focused on core business No clear correlation between R&D spend and value creation over time... ... with very similar pattern for M&A spend compared to value creation 160223 SISP Corporate venture capital_v1.pptx 5Draft—for discussion only No correlation between R&D spend and value creation 15 year total shareholder return for five portfolios based on average R&D spend 2000 2005 2010 2015 2,500 2,000 1,500 1,000 500 0 TSR % (year 2000 index) Year 4 5 - lowest R&D spending21 - highest R&D spending 3 Portfolios grouped on rolling 5yr average R&D spend Note: Portfolios based on rolling 5 year average share of revenue spent on R&D, portfolio companies updated yearly Source: S&P Capital IQ; Mergermarket.com; Company annual reports; BCG analysis 1 160223 SISP Corporate venture capital_v1.pptx 6Draft—for discussion only M&A activities show no clear pattern for performance 15 year total shareholder return for five portfolios based on activities in M&A deals 2000 2005 2010 2015 1,500 1,000 500 0 2,000 2,500 TSR % (year 2000 index) Year 5 - lowest M&A spending4321 - highest M&A spending Portfolios grouped on average spend on all M&A deals Note: Portfolios constant throughout period, based on average share of revenue spent on M&A activities Source: S&P Capital IQ; Mergermarket.com; Company annual reports; BCG analysis 1 Note: Portfolios based on rolling 5 year average share of revenue spent on R&D, portfolio companies updated yearly Note 2: Portfolios constant throughout period, based on average share of revenue spent on M&A activities Source: S&P Capital IQ; Mergermarket.com; Company annual reports; BCG analysis 2 Corporations looking for alternative innovation and value creation sources
  • 8. 160401 BCG Corporate ventures in Sweden_vSend.pptx 7 Corporate Venturing supports & expands existing innovation management approaches R&D activities in BUs  100% financed through BUs Central R&D - Projects  Financed by Corporate or BU Central R&D – Internal Start-ups  100% financed through Corporate Source: BCG analysis newMarkets existing Technologiesnewexisting New to Company Core competencies New to industry/ world CVC Potential positioning of CVC 2
  • 9. 160401 BCG Corporate ventures in Sweden_vSend.pptx 8 Corporate Venturing and M&A with clearly differentiated characteristics Source: BCG analysis Research and development Corporate Venturing • Gain access to new markets/technologies • Create option room • Strengthen strategic position Technology licensing • Directly acquire specific technology • Save time and avoid R&D risk/costs Key rationale Mergers and acquisitions • Fill gaps in current portfolio • Enter developed markets • Directly influence revenues/profits • Leverage internal knowledge and expertise • Ensure exclusivity Value upside potential Investment amount €1M–5M €500M+ Maturity of target Low High Risk of failure Low High Low High Level of control Low High 2
  • 10. 160401 BCG Corporate ventures in Sweden_vSend.pptx 9 Corporations applying especially three types of venturing tools mostly dependent on industry dynamics • Internal innovation team outside of traditional R&D • Rapid delivery of prototypes • Fast testing of MVP1 in market • Fast scan of new business ideas • Look into broad array of searchfields • Structured program with start ups Corporate Venture Capital Accelerators and Incubators Innovation Labs • Minority equity investment in start-ups • Gain early understanding of market/technologies • Create mid-term option room S 1. MVP = Minimum viable product Source: BCG analysis 2 Automotive Chemicals Consumer goods Financial services Media Tech Telecom
  • 11. 160401 BCG Corporate ventures in Sweden_vSend.pptx 10 The higher the R&D intensity the higher CVC penetration Pharmaceuticals and tech with highest relative share of corporate venturing among industries 1. R&D investments divided by total sales 2. Compared to global average for various industries, industry composition of leading Swedish companies implies that there should be a 32% CVC penetration 3. The actual CVC penetration of leading Swedish companies is just 20%, indicating an underperformance Source: Lovain University; BCG analysis 0 20 40 60 80 10 165432 Share of companies with CVC (%) Construction and heavy engineering industries Transportation industry Utilities (energy, electricity, gas, water) R&D intensity (%)1 Basic materials and mining Oil and gas Consumer goods and services Automotive Health-care equipments and services Industrial goods and services (electronics and electrical equipment) Chemicals Financials (banks and insurance) Computer-related industries (hardware, software, office equipment) Telecommunications Pharmaceutical and biotechnology 30 companies 2 20% - Actual Swedish CVC penetration3 32% - Aspirational Swedish CVC penetration2
  • 12. 160401 BCG Corporate ventures in Sweden_vSend.pptx 11 Only ~20% of Sweden's top 50 companies have a CV1 set-up Compared to average of ~33% of largest global companies 3 Source: Company annual reports, press searches, BCG analysis 20 33 80 67 60 20 0 80 40 100 (%) Global Top 500 (2012)Sweden Top 50 (2016) 70 63 57 50 30 37 43 50 20 40 0 80 100 60 Pharma Global Top 30 Technology Global Top 30 (%) Telco Global Top 30 Media Global Top 30 Swedish Corporate Venture less common than global average... ...where several industries vastly over perform Since 2012 corporate ventures among global top 500 (Fortune) companies has increased from ~33% to ~40%
  • 13. 160401 BCG Corporate ventures in Sweden_vSend.pptx 12 Swedish CVC landscape adds major players at steady pace H&M latest to move into the investing in start-ups, even if CV set-up not fully developed yet 3 "Sweden's largest public company H&M to search for more tech investments...H&M has established a Venture Capital business aimed at investing in young tech companies in sectors adjacent to apparel, like marketing and logistics" Breakit.se (3/9 2015) "The newly launched MTGx is to become "the X factor" in accelerating the organization's innovation and success within digital entertainment, by creating a portfolio of new entertainment platforms and centralize digital know-how for all the group's companies." Dagens Industri (2013) Swedish trend in line with global trend Over the past decade, more and more Swedish blue chip corporations have been entering the CVC sphere at a moderate pace Despite tech-companies being first-movers, the trend spans industries • Everything from tech (Google Ventures) to Apparel Retail (H&M) and Media (MTGx) Source: Press searches, Company websites, BCG analysis
  • 14. 160401 BCG Corporate ventures in Sweden_vSend.pptx 13 Several successful Swedish CV set-ups now exist Source: S&P Capital IQ; BCG analysis 3 Companysnapshot • Entertainment broadcasting company – Free-TV, pay-TV, digital entertainment, radio and content production – Revenue (2014) 1.7B€ • Automotive manufacturer – Trucks, buses, construction equipment, marine and industrial engines – Revenue (2014): 31.0B€ • Pharmaceutical and biologics company (British-Swedish) – Discovery, development and commercialization of prescription medicines – Revenue (2014) 19.8B€ CVCactivities • MTGx Ventures est. 2012 to engage in new digital fields – Small-scale investments to large-scale acquisitions – Sub-departments: MTGx MediaFactory (incubator), MTGx media-for-equity, (media start-ups investor) • Volvo Group Venture Capital est.1997 – Induce business growth and increase profitability through investments in technology-based companies • Medimmune Ventures, acquired by Astra Zeneca 2007 – Invests in early-to late- stage biotech companies • BioVenture Hub, est. 2014 – Alternative eco system and life science-incubator for academics and start-ups Strategy • Leveraging MTG's global reach and marketing power combined with financial support to grow startups • Startups with talented mgmt teams, active in disruptive/ transformative technologies that can be combined with core Volvo capabilities • Broad scope: all growth stages of startups, and very wide spectra of product categories adjacent to mother company core
  • 15. 160401 BCG Corporate ventures in Sweden_vSend.pptx 14 Several global CV success factors that Sweden can build on Three very different, but successful, start-up hubs compared 1. Foreign Direct Investment Source: S&P Capital IQ; BCG analysis 4 Key characteristics Munich incubator Unternehmertum Europe's largest university-based incubator • Supporting >50 startups/year • 90% long-term private financing • Close cooperation with private sector • Utilizes university's research • Pan-regional hub for Bavaria Silicon Valley ecosystem World's premier innovative eco system with several inimitable strengths • Private capital supporting all stages of startup cycle • Proximity to global tech leaders • Heavy exposure to state funded research Israeli government policy making Active long-time state support of entrepreneurship and tech startups • Network of incubators (30 yrs) • Matching of private capital (20 yrs) • Actively recruiting FDI1 for investments and R&D to Israel (10 yrs) Key characteristics Effective incubator organization • Integrate private sector and academia; government role only to enable • Regional cooperation to scale incubator effectiveness Culture of entrepreneurship • Increase status of entrepreneurship • Focus on market need and individual innovators, not government Active government policy • Make innovation central to labor policy • Match private investments • Use government agencies to promote Swedish startups abroad
  • 17. 160401 BCG Corporate ventures in Sweden_vSend.pptx 16 With 6.7% of working population as entrepreneurs, Sweden is well below OECD average 1. Share of population (18-64 years) running a business that is younger that 42 months Source: Global Entrepreneurship Monitor Backup 0 10 20 30 CANADA SLOVAKREPUBLIC UNITEDKINGDOM PORTUGAL NETHERLANDS ESTONIA HUNGARY POLAND AUSTRIA GREECE LUXEMBOURG SWITZERLAND SWEDEN 6.3 7.1 8.7 19.0 7.9 6.7 5.65.7 3.8 7.1 6.5 10.7 10.9 9.4 5.45.5 26.8 13.0 13.8 4.4 5.5 9.3 5.3 Ø 9.0 9.510.0 13.1 5.3 9.2 AUSTRALIA MEXICO UNITEDSTATES Share of population as entrepreneurs (%)1 IRELAND SLOVENIA NORWAY GERMANY SPAIN BELGIUM FRANCE DENMARK FINLAND JAPAN CHILE ITALY 1
  • 18. 160401 BCG Corporate ventures in Sweden_vSend.pptx 17 But 2-year survivability of newly founded companies remains very high at 84.4% compared to other EU countries 1. Share of companies founded in 2011 still active in 2013 Source: Eurostat Backup 0 20 40 60 80 100 UNITEDKINGDOM SLOVENIA AUSTRIA CYPRUS LATVIA NORWAY POLAND FRANCE BULGARIA SLOVAKREPUBLIC CZECHREPUBLIC ITALY GERMANY 59.7 64.3 67.1 84.4 64.9 62.3 55.3 59.5 64.5 61.3 73.974.5 68.3 40.6 49.7 85.5 75.4 82.4 50.1 67.9 Ø 66.7 70.0 73.3 78.1 67.1 LUXEMBOURG SWEDEN BELGIUM Company survivability (%)1 SPAIN DENMARK ROMANIA PORTUGAL FINLAND LITHUANIA HUNGARY NETHERLANDS 1
  • 19. 160401 BCG Corporate ventures in Sweden_vSend.pptx 18 No correlation between R&D spend and value creation 15 year total shareholder return for five portfolios based on average R&D spend 2000 2005 2010 2015 2,500 2,000 1,500 1,000 500 0 TSR % (year 2000 index) Year 4 5 - lowest R&D spending21 - highest R&D spending 3 Portfolios grouped on rolling 5yr average R&D spend Note: Portfolios based on rolling 5 year average share of revenue spent on R&D, portfolio companies updated yearly Source: S&P Capital IQ; Mergermarket.com; Company annual reports; BCG analysis 2
  • 20. 160401 BCG Corporate ventures in Sweden_vSend.pptx 19 M&A activities show no clear pattern for performance 15 year total shareholder return for five portfolios based on activities in M&A deals 2000 2005 2010 2015 1,500 1,000 500 0 2,000 2,500 TSR % (year 2000 index) Year 5 - lowest M&A spending4321 - highest M&A spending Portfolios grouped on average spend on all M&A deals Note: Portfolios constant throughout period, based on average share of revenue spent on M&A activities Source: S&P Capital IQ; Mergermarket.com; Company annual reports; BCG analysis 2
  • 21. 160401 BCG Corporate ventures in Sweden_vSend.pptx 20 MTGx focuses on expanding into adjacent digital solutions 1. Competitions in video and computer gaming 2. Multi-Channel Network Source: MTGx; BCG analysis Linktooperationalcapability Time to impact for BU 1-3 years 4-6 years 7-10 years ClosetocoreCompletelynewAdjacent MTGx with multiple venturing divisions MTGx division with varied business focus • Corporate accelerator for start up media companies • Early-stage partnerships and minority stake investments • Support with mentors, media reach and content rights MTGx Media- Factory • Larger investments in digital companies • Portfolio currently mainly consists of e-sports1 broadcasting companies and YouTube MCNs2 MTGx Ventures • European media alliance for investing in new digital businesses wanting to expand geographically • Invest media space rather than money Media-for- equity program MTGx Ventures MTGx MediaFactory MTGx Media-for- equity program 3
  • 22. 160401 BCG Corporate ventures in Sweden_vSend.pptx 21 MTGx press clippings " Our ambition is to find and develop digital entertainment products that complement our existing ones, as well as to discover brand new concepts." MTGx.se " As an investor, we can provide resources from all parts of our business [...] with marketing power across multiple countries [...] as well as pure development support. Finally, we have the ability to offer financial support for your company." MTGx.se "We think a lot about which areas we should be active in, where we are not active today due to our cultural heritage" SvD Näringsliv " We see a clear interest among start-up companies for developing their products and ideas along MTGx and our digital eco system." Anil Hansjee, Chief Investment Officer MTGx "Along the development of MTGx there has arisen some dissatisfaction among other parts of MTG. Allegedly, colleagues have reacted on the high costs of MTGx, their locales and their privileges. Dagens Media "MTG enters European Media Alliance to grow digital business [...] The alliance creates a strong pan-European footprint that enables its members to invest in consumer-focused digital start-ups, [...] that are looking to expand their geographical footprint." MTG press release, Oct 15 2014 Backup3
  • 23. 160401 BCG Corporate ventures in Sweden_vSend.pptx 22 Volvo focuses on new technologies close to current core Source: Volvo; BCG analysis Linktooperationalcapability Time to impact for BU 1-3 years 4-6 years 7-10 years ClosetocoreCompletelynewAdjacent Investments open up new opportunities for Volvo Volvo venturing goals mainly within adjacent and core segments • Invest in technology-based innovation in adjacent fields • Investments should lead to increased profitability for customers and new business opportunities for Volvo • Investment should have a positive return while contributing to the growth and competitive advantage for Volvo • Portfolio companies currently within e.g. autonomous vehicles, artificial intelligence and online truck fleet management Volvo Group Venture Capital Volvo Group Venture Capital 3
  • 24. 160401 BCG Corporate ventures in Sweden_vSend.pptx 23 Volvo Group Venture Capital press clippings "Our focus is on areas in which technology-based innovation results in solutions that improves the profitability of our customers and enable new business opportunities for the Volvo Group." volvogroup.com It became clear to us we are good [at] investing when we can combine the capabilities of the group with a company that has a new product that is ready for market and ready to be scaled up. [...] That is where our venture model works best.” Johan Carlsson 2012, Former president Volvo Group Venture Capital Backup "Decide where you want to take your bets as a corporate, and which part of the industry you want to specialise on. Specialising focus is the only way to drive deal flow. You will never succeed as a passive investor. The only way to succeed is by doing." Johan Carlsson 2012, Former president Volvo Group Venture Capital "We look at the company’s potential and how we can combine the assets of the company with the capabilities of Volvo Group. To find these companies, we cooperate with an extensive global network of entrepreneurs and other investors" volvogroup.com 3
  • 25. 160401 BCG Corporate ventures in Sweden_vSend.pptx 24 AstraZeneca ext. innovation includes venturing & incubation 1. Video game sports 2. Multi-Channel Network Source: AstraZeneca; Medimmune Ventures; BCG analysis Linktooperationalcapability Time to impact for BU 1-3 years 4-6 years 7-10 years ClosetocoreCompletelynewAdjacent Focus mainly within pharmaceuticals Mostly long-term focus for AstraZeneca • Incubation hub for start-ups and academic groups providing know-how, labs and offices • Objective to expose AstraZeneca to innovation with lower investment risk • Target companies are about to enter clinical phase and should be a suitable collaboration partner BioVenture Hub • Invests in small and large molecules, vaccines, pharmaceutical technologies and platforms • Invests in early-to late-stage products and technologies • IT companies pertaining to discovery, development and commercialization of pharmaceutical products are also of interest Med- immune Ventures Medimmune Ventures BioVenture Hub 3
  • 26. 160401 BCG Corporate ventures in Sweden_vSend.pptx 25 Medimmune Ventures and BioVentureHub press clippings "The hub exposes AstraZeneca to more innovation and science. It stimulates an even more vibrant place to work and generates future collaboration opportunities." azbioventurehub.com "[We] invest in private companies which develop small and large molecules, vaccines, pharmaceutical technologies and platforms. We also seek investments in medical device, diagnostic, imaging and healthcare IT companies which pertain to the discovery, development and commercialization of pharmaceutical products." medimmuneventures.com Backup Medimmune Ventures BioVentureHub "This venture can have a decisive effect on the development of life science in Sweden" Birgitta Losman, President Västra Götaland Development Board "In our case the hub worked as planned. It's given us new partnerships and interactions [...]. You can also engage Astra employees as consultants, which is very valuable." Johannes Hulthe, CEO Antaros Medical, Company at BioVenutreHub in 2015 "MedImmune Ventures invests in companies with early to late stage products and technologies, in early (e.g. seed) to late (e.g. mezzanine) rounds of financing." medimmuneventures.com "We believe that in the current financial environment, there is a growing role for corporate venture capital funds such as MedImmune Ventures" Ron Laufer, senior managing director, MedImmune Ventures 3
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