Vækstfonden is a Danish state investment fund that promotes growth and innovation in entrepreneurial firms and SMEs. It provides equity, loan capital, and guarantees to support growth loans, growth guarantees, and "get started" loans. Over time it has increased its direct and indirect investments in companies and guarantees provided. It aims to leverage its funds to attract greater private investment. Key lessons learned include the need for ambition and specialization to achieve solid long-term investment returns, selecting the right investment professionals, and using smart subsidies like loans rather than direct equity to support companies while maintaining good governance.

1. Vækstfonden
- An introduction & lessons learned
23 November 2011

2. About Vækstfonden
Promotes growth and innovation in
entrepreneurial firms and SME’s in order to
SME s
achieve greater socio-economic returns
29. november 2011 / page 2

3. Products
EQUITY LOAN CAPITAL
VF
VF Venture VF Funds
Guarantees
Growth Growth ”Get started”
loans
l guarantees loans
l
29. november 2011 / side 3

4. Investment activity (1993-2010)
Phase III
1800
1600
1400
1200
Phase II
DKK million
1000
800
600
Phase
400 I
200
0
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Direct investments Investments in funds Guarantees
29. november 2011 / side 4

5. Accumulated portfolio
Direct & indirect investments:
181 companies
Guarantees:
1.400 companies
29. november 2011 / page 5

6. Initiative for more risk capital
Pension funds
Max EUR 500 million loan Min EUR 167 million Equity X KR
KR.
VÆKST-
FONDEN
DANSK VÆKSTKAPITAL
Funds
Companies
VÆKSTLÅN VÆKSTKAUTION 3 MEZZANINKAUTION
29. november 2011 / side 6

7. VF Funds – Leverage effect
Portfolio companies ‒ EUR 6 bn
(EUR 13 bn with DVK)
EUR 1 bn EUR 5 bn
(EUR 3 bn with DVK) (EUR 10 bn with DVK )
Private funds Other sources of
(VC & small cap) private funding
EUR 0,5 bn EUR 0,5 bn
(EUR 1 bn with DVK) (EUR 2 bn with DVK)
Private
Vækstfonden
investors
29. november 2011 / side 7

8. Learning points
1) Investment returns
2) Selection
3) Ambitions
4) Competences
5) Learning by doing
6) Smart subsidises
/ side

9. 1) Investment returns
It k
I takes a l
long term effort to create a
ff
market where private investorts can make a
solid return!
/ side

10. 1) Investment returns
Pump priming
Move along the
market
Leverage
Le e age to p i ate
private
management
teams
/ side

11. 1) Investment returns
The l
Th alternative:
i
Subsidy based venture tourism!
/ side

12. 2) Selection
Specialisation  Critical mass
/ side

13. 2) Selection
New i
N investments i D
in Denmark and the USA
k d h
160
140
120
100
80 USA
USA
Denmark
Danmark
60
40
20
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
*In proportions to inhabitants
29. november 2011 / side 13

14. 3) Ambitions
Be ambitious
…and agressive!
/ side

15. 4) Competences
Find the right persons!
/ side

16. 5) Learning by doing
Partnerkapital
Equity
q y
together
with
business
angels
/ side

17. 6) Smart subsidises
Subsidising by loans
- and remember god governance
/ side

18. 6) Smart subsidises
The l
Th alternative:
i
Subsidising by equity
/ side