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Swedish Tech Funding Report Q1-Q3 2016
● The Swedish Tech funding climate signals continued strength in the third quarter, adding €142m in investments, bringing total investments in 2016 to €1.3B.
● 2016 is already a record year for Swedish Tech investments with the full year projected to end at > €1.5B in fundings compared to €1B in 2015.
● However Q3 has had no investments over €10m. This could be a sign of lower activity from international investors following the Brexit vote and a slowdown in US Tech valuations.
● FinTech and Health & MedTech are the sectors attracting most capital (Spotify
excluded).
Executive Summary
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● 99 Swedish Tech investments were made in Q3.
● Q3 was slightly down on the first half of 2016 due to the summer holiday season. If seasonally adjusted for an average of two working months in Q3 then the average is 47 investments per month in Q3 up from a monthly average of 39 in the first half of 2016.
● 335 Swedish Tech investments have been made in 2016.
● According to Industrifonden 175 investments were made in all of 2015.
● Q4 investments should see more than 100 investments driven by continued confidence within the Swedish Tech ecosystem as a result of large new funds raised by EQT Ventures and Northzone.
Funding activity in Q3
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● €142m was invested in Swedish Tech in Q3.
● Therefore Q3 total funding was slightly down on Q2 at €154m. But Q3 was higher than Q1 at €125m when the outlier of the Spotify €882m debt finance is excluded.
● Total funding for 2016 stands at €1.3B (including Spotify). Industrifonden reported $1.01B for 2015 thus 2016 is already a record year for total funding and total investments.
● Q4 total funding should surpass Q3 as international investors are attracted to Swedish Tech companies for the following reasons:
○ Lower valuations than US startups; ○ Viewed as lower risk than UK Tech
companies following the Brexit vote; and ○ The world class track record of established
Swedish Tech companies.
Total Funding Q1-Q3
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Quarterly growth
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● There has been significant growth in number of funding rounds since 2015.
● The main increase has been in the number of smaller funding rounds driven by more angel investors and private investors. But all types of funding rounds have grown since the start of 2015.
● The increase is also likely due to better methods for capturing funding round data therefore enhancing the visibility of the growth. Nordic Tech List captures 25% more investments than other reports*.
*Industrifonden, The Nordic Web and Nordic Tech List use similar methodology to cover fundings, although Industrifonden covers fewer sectors and types of investments. The graph on this page shows an average of the three reports, save for Q3 2016 which is just NTL data.
● Q3 has seen an increase in investments between €1-10m at 41 up from 35 in Q1 and 33 in Q2. This was a result of a number of large A rounds discussed further on the next page.
● However in Q3 there was a reduction in the number of investments made at the lower end (€0-1m). This could be a result of less angel investments due to the holiday season.
● More notable is that no Swedish Tech companies have raised funding rounds over €10m in Q3. Again this could be a result of the holiday season or a result of investment decisions being delayed. International investors need to assess the impact of the Brexit vote and valuation slowdown in the US. Adding to that Swedish Tech companies have required less funding as they cut back on growth (Fyndiq, Widespace and others) and focused on profitability (Truecaller and others).
Funding rounds Q1-Q3
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● The top five investments are dominated by health & MedTech startups; Lifesum, Diasend and KRY. This is due to the large funding requirements for Tech companies in this these sectors to fund R&D and high regulatory costs.
● Even with the large funds raised by Swedish VCs the majority of the top five investments were made by non Swedish VCs.
● Lendify was the only top investment round that was predominantly funded by individuals. In Q4 we could see more investments from individuals driven by celebrities starting to invest in Tech like Zlatan Ibrahimovic and Alexander Gustafsson.
● The pool of private investors will also increase following a successful IPO or sale of an established Swedish Tech company such as Spotify, Klarna or iZettle.
Top investments in Q3
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● International investors might have been more active in the top five investments of Q3 but Swedish investors are the most active in investment rounds over €1m. During 2016 Swedish investors, both VCs and private investors, have been the most active in investment rounds over €1m with Almi Invest taking the top spot.
● Swedish individuals Lena Apler and Filip Engelbert & Jonas Nordlander also featured in the most active investors in rounds over €1m.
● It should also be noted that EQT Ventures only closed their record breaking Swedish fund of €556m in May. Northzone also closed their €300m fund in September therefore both VCs firms are likely to complete more investments during Q4.
Most active investors
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Top 5 Industries Q1-Q3
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● FinTech is the sector attracting most investments, so far €90m in 2016.
● This is a result of (1) Klarnas €30m debt financing and (2) large Swedish banks and financial institutions starting to invest in FinTech startups like Tink and Wrapp. This trend is likely to continue in 2017 driven by new regulations such as PSD2.
● As shown previously there was significant funding activity in Health & MedTech sectors during Q3. This makes the sector the second most funded in 2016. Changing regulations in the Swedish healthcare sector is likely to have a significant impact on investor sentiment going forward, specifically in companies such as Kry and Min doktor.
● If Spotify is not excluded the total funding in Media & Music would outperform all other sectors.
Locations
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● Stockholm based Tech companies have accounted for 66% (222) of all investment rounds in 2016.
● If the outlier Spotify investment is excluded then Stockholm based Tech companies accounted for 78% of the value of the investments rounds.
● Malmö/Lund accounted for 11% of total investments (€46m) the same amount as for all of Sweden outside Stockholm.
● During 2016 a number of investment firms have been established with the goal of investing outside of Stockholm like Backing Minds.
● This funding reports is based on the Swedish Tech investments in 2016 and the Nordic Tech List (NTL) graph database has been used for all data. Thank you for all user contributions.
● The report includes all types of disclosed investments in Swedish Tech companies.
● It does not include transactions in listed companies, secondary transactions, bank loans or M&A transactions.
● All amounts are reported in €s to enable relevance to as many users as possible.
● Authors: Howard Riminton and Viktor Ström, Nordic Tech List. Please send all enquires about this report or NTL to [email protected]
Scope & Methodology
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● All data from this report, and more, is accessible at www.nordictechlist.com.
● The aim of NTL is to help grow the Nordic Tech ecosystem both locally and internationally by creating an online platform for everything Nordic Tech. NTL is constantly growing from all of the data and information provided by users, investors and journalists.
● NTL is a free site and anyone who is interested in Nordic Tech can simply create an account and instantly start to contribute by creating company profiles and adding information and data about companies involved in the Nordic Tech ecosystem. For more details about how to use NTL please view the FAQ section.
● NTL is owned and fully funded by Dagens industri. The NTL team sit alongside the highly talented Di Digital team.
● Please send all enquires about this report or NTL to [email protected]
About NTL
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