Comprising strong and stable economies with progressive use of technology in the public and private sectors, an advanced infrastructure and high levels of entrepreneurial activity, the Nordic region is a European hub for venture capital investments. There have been 1,047 deals in the Nordic region since 2007 according to Preqin’s Venture Deals Analyst, with an aggregate deal value of €5.2bn. From 2007 to 2012, the annual aggregate deal value ranged moderately from €434mn to €608mn, but in 2013 it rose significantly to €1.8bn. By comparing venture capital activity in the period from January to mid-June since 2007, 2014 shows impressive aggregate deal value figures over earlier years. €437mn has already been invested in the Nordic region this year, compared to €297mn in 2013 and €173mn in 2012 in the same period, through a similar number of deals (65, 66 and 67 respectively in Jan-mid June 2012, 2013 and 2014).
The Nordic region represents 11% of deals (in terms of number of venture capital financings) that occurred in Europe in 2014 YTD, 10% in 2013, and 12% of European venture deals from 2007-2014 YTD. The aggregate value of venture capital investments in Nordic companies has accounted for 14% of all European deals so far this year, which is quite similar to all other years since 2007, with the exception of 2013 when Nordic deals represented a more notable 28%.
In the Nordic region, a quarter of venture capital deals made in 2014 YTD were in the internet industry; this is a large increase from the range of 8-9% seen in 2008-2010. Just over a fifth (21%) of Nordic venture capital deals so far this year have been in the telecoms industry compared to only 8% in 2013, an increase of 13 percentage points. Although the number of deals occurring is quite high, the aggregate deal size in the telecoms industry is much lower, representing only 11% of the total. Another 21% of deals occurred in the software industry which has consistently received a fairly similar proportion of the total number of investments since 2007. With healthcare representing a further 13%, these four industries dominate the venture capital market, over all other industries which comprise 7% or lower. Interestingly, the clean technology sector represents only 1% of the number of venture capital deals occurring in the region so far this year compared to the 10% of the aggregate value that it accounted for.
With a count of 171 financings accounting for 15% of the total number, angel/seed investments have been the most abundant venture capital rounds in the Nordic region since 2007 in terms of number of deals. However, due to the nature of such investments and their typically smaller size, these deals contributed only 2% of the aggregate deal value. Series A were the second most common with 105 deals valued at an aggregate €413mn. In the same period, 15 financings classed as Series D & later had the highest aggregate value at €562mn, largely due to the $250mn Series F financing of Stockholm-headquartered company Spotify in November 2013. This deal alone accounts for a third of the total value of Series D and later investments.
As well as Spotify, the Nordic region has produced highly successful companies such as Skype, MySQL and ClickTech. The Nordic region holds some status as one of the most advanced geographies in the world in terms of economy, technology and private equity activity, and given the exciting opportunities to be found here, it is likely that investor appetite for deals in the region will be sustained.