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Swedish Tech Funding Report
Q1-Q2 2016
2
Swedish Tech Outlook: Diverging views
between early and later stage investors
• Swedish tech startups raised over $1.2B (SEK 10.2B) in Q1-Q2 2016, across 175 deals – thus
surpassing the total investment figures for last year in the first six months alone
• Large increase in number of deals – explained by significant increase in seed rounds
• Large increase in investments from angel investors and non-VC institutional investors, while
traditional venture investors’ (VCs and Corporate VCs) share decreased
• Decrease in median deal size, following flatline in number of later stage rounds
• Number of deals with participation from foreign investors held steady, while US and UK
investors’ dominance was broken
• FinTech and MediaTech most popular verticals by number of deals
OVERVIEW
175Funding rounds
$1.2B(SEK 10.2B) raised
HIGHLIGHTS KEY FIGURES
304Active investors during Q1-Q2 2016
3
Deal overview: More but smaller rounds
INVESTMENT ACTIVITY
0
200
400
600
800
1000
1200
Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
Total investment*
0
50
100
150
200
250
Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
Total investment, outlier adjusted*
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
1.5
1.4
0.8
0.7 0.7
0.6
0
25
50
75
100
0
1
2
Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
Median deal size Deal count
$M Deal count
4
INVESTMENT ACTIVITY
Accelerated increase in smaller rounds
– flatline in growth stage
8
11
2 1
18
11 10
3
25
10
5
3
32
20
1 1
40
29
4
1
57
26
6
0
10
20
30
40
50
60
≤$1m $1.1 - 5M $5.1-25M >$25M
2015 - Q1 2015 - Q2 2015 - Q3 2015 - Q4 2016 - Q1 2016 - Q2
Deal count
Deal size
5
INVESTOR ACTIVITY
108%Increase in active investors compared to Q3-Q4 2015
19%Of the active investors participated in at least two
funding rounds during the period
105
146
304
0
50
100
150
200
250
300
350
Q1-Q2 2015 Q3-Q4 2015 Q1-Q2 2016
Active investors
6
Increase in active investors fueled by rise
in angel investor activity
Investor type by
% of deals
INVESTOR ACTIVITY
60%
20%
11%
5%
2%
1%
Angel
VC
Investment firm, other
Corporation
Accelerator
Corporate VC
37%
47%
51%
29%
60%
20%
0%
25%
50%
75%
100%
Angel investors VC
Share of deal count by investor type
Q1-Q2 2015 Q3-Q4 2015 Q1-Q2 2016
7
FOREIGN INVESTMENT ACTIVITY
Foreign investors are not taking part in the
general increase in deals
42%
25%
18%
0%
25%
50%
75%
100%
Q1-Q2 2015 Q3-Q4 2015 Q1-Q2 2016
Funding rounds with foreign participation (%)
29
27
31
Q1-Q2 2015 Q3-Q4 2015 Q1-Q2 2016
Funding rounds with foreign participation (count)
8
FOREIGN INVESTMENT ACTIVITY
…explained by preference for the flatlined later
stages – sweet spot is >$5M funding rounds
11%
20%
60%
100%
0
20
40
60
80
100
120
0%
25%
50%
75%
100%
≤$1M $1.1 - 5M $5.1 - 25M >$25M
Foreign participation % Total deal count
Deal count
Deal size
Deals with foreign
participation (%)
9
Decreased US and UK dominance
– greater regional spread
FOREIGN INVESTMENT ACTIVITY
27%
20%
14%
12%
8%
6%
6%
6%
Foreign participation by country 2016
USA
Rest of World
UK
Denmark
China
Netherlands
Italy
Norway
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 the first half of 2016, US and UK
investors’ share of foreign participation
dropped by a third to 40%
10
VERTICALS
Top 2 verticals by deal count
FinTech
12%
MediaTech
11%
FinTech and Media remain most favored
verticals by investors
11
METHODOLOGY
What’s included
• This report covers disclosed venture investments in
Swedish private tech companies
• Analysis primarily based on proprietary database with 350+
funding rounds, sorted by disclosure date
• 15+ parameters including deal size, stage, investors and
vertical
• 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, bank loans and other types of funding that is not
intended to result in ownership
Legal note: 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.
Author:
Björn Bergström, Investment Manager
@bergstrom_bjorn
Industrifonden is a Nordic venture capital investor, focusing on early stage tech
and life science companies with international potential. Industrifonden is an
active partner to companies with ground-breaking ideas and capacity to grow.
Industrifonden is an evergreen fund with SEK 4 billion ($500 m) in assets.
#swedishtechreport
@industrifonden
www.industrifonden.com

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Industrifonden Swedish Tech Funding Report Q1-Q2 2016

  • 1. Swedish Tech Funding Report Q1-Q2 2016
  • 2. 2 Swedish Tech Outlook: Diverging views between early and later stage investors • Swedish tech startups raised over $1.2B (SEK 10.2B) in Q1-Q2 2016, across 175 deals – thus surpassing the total investment figures for last year in the first six months alone • Large increase in number of deals – explained by significant increase in seed rounds • Large increase in investments from angel investors and non-VC institutional investors, while traditional venture investors’ (VCs and Corporate VCs) share decreased • Decrease in median deal size, following flatline in number of later stage rounds • Number of deals with participation from foreign investors held steady, while US and UK investors’ dominance was broken • FinTech and MediaTech most popular verticals by number of deals OVERVIEW 175Funding rounds $1.2B(SEK 10.2B) raised HIGHLIGHTS KEY FIGURES 304Active investors during Q1-Q2 2016
  • 3. 3 Deal overview: More but smaller rounds INVESTMENT ACTIVITY 0 200 400 600 800 1000 1200 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Total investment* 0 50 100 150 200 250 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Total investment, outlier adjusted* 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 1.5 1.4 0.8 0.7 0.7 0.6 0 25 50 75 100 0 1 2 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Median deal size Deal count $M Deal count
  • 4. 4 INVESTMENT ACTIVITY Accelerated increase in smaller rounds – flatline in growth stage 8 11 2 1 18 11 10 3 25 10 5 3 32 20 1 1 40 29 4 1 57 26 6 0 10 20 30 40 50 60 ≤$1m $1.1 - 5M $5.1-25M >$25M 2015 - Q1 2015 - Q2 2015 - Q3 2015 - Q4 2016 - Q1 2016 - Q2 Deal count Deal size
  • 5. 5 INVESTOR ACTIVITY 108%Increase in active investors compared to Q3-Q4 2015 19%Of the active investors participated in at least two funding rounds during the period 105 146 304 0 50 100 150 200 250 300 350 Q1-Q2 2015 Q3-Q4 2015 Q1-Q2 2016 Active investors
  • 6. 6 Increase in active investors fueled by rise in angel investor activity Investor type by % of deals INVESTOR ACTIVITY 60% 20% 11% 5% 2% 1% Angel VC Investment firm, other Corporation Accelerator Corporate VC 37% 47% 51% 29% 60% 20% 0% 25% 50% 75% 100% Angel investors VC Share of deal count by investor type Q1-Q2 2015 Q3-Q4 2015 Q1-Q2 2016
  • 7. 7 FOREIGN INVESTMENT ACTIVITY Foreign investors are not taking part in the general increase in deals 42% 25% 18% 0% 25% 50% 75% 100% Q1-Q2 2015 Q3-Q4 2015 Q1-Q2 2016 Funding rounds with foreign participation (%) 29 27 31 Q1-Q2 2015 Q3-Q4 2015 Q1-Q2 2016 Funding rounds with foreign participation (count)
  • 8. 8 FOREIGN INVESTMENT ACTIVITY …explained by preference for the flatlined later stages – sweet spot is >$5M funding rounds 11% 20% 60% 100% 0 20 40 60 80 100 120 0% 25% 50% 75% 100% ≤$1M $1.1 - 5M $5.1 - 25M >$25M Foreign participation % Total deal count Deal count Deal size Deals with foreign participation (%)
  • 9. 9 Decreased US and UK dominance – greater regional spread FOREIGN INVESTMENT ACTIVITY 27% 20% 14% 12% 8% 6% 6% 6% Foreign participation by country 2016 USA Rest of World UK Denmark China Netherlands Italy Norway 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 the first half of 2016, US and UK investors’ share of foreign participation dropped by a third to 40%
  • 10. 10 VERTICALS Top 2 verticals by deal count FinTech 12% MediaTech 11% FinTech and Media remain most favored verticals by investors
  • 11. 11 METHODOLOGY What’s included • This report covers disclosed venture investments in Swedish private tech companies • Analysis primarily based on proprietary database with 350+ funding rounds, sorted by disclosure date • 15+ parameters including deal size, stage, investors and vertical • 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, bank loans and other types of funding that is not intended to result in ownership Legal note: 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. Author: Björn Bergström, Investment Manager @bergstrom_bjorn
  • 12. Industrifonden is a Nordic venture capital investor, focusing on early stage tech and life science companies with international potential. Industrifonden is an active partner to companies with ground-breaking ideas and capacity to grow. Industrifonden is an evergreen fund with SEK 4 billion ($500 m) in assets. #swedishtechreport @industrifonden www.industrifonden.com