an overview of the vc market and vækstfonden
DESCRIPTION
An overview of the VC market and Vækstfonden. 12 March 2010 Uffe Arlø Theilade, Investment Director, Vækstfonden. Agenda. The idea and rationale for VC An introduction to Vækstfonden VC in Denmark Market developments and challenges. Why do we need venture capital?. - PowerPoint PPT PresentationTRANSCRIPT
An overview of the VC market and Vækstfonden
12 March 2010Uffe Arlø Theilade, Investment Director, Vækstfonden
/ side
Agenda
onsdag 19. april 2023 2
1. The idea and rationale for VC2. An introduction to Vækstfonden3. VC in Denmark4. Market developments and challenges
/ side
Why do we need venture capital?
onsdag 19. april 2023 3
/ side 4
Types of finance (risk profiles)
Debt
Quasi-equity
Equity
Traditional companies Technology companies
Debt
Equity
/ sideonsdag 19. april 2023 5
VC Funded Companies in Denmark
20% growth in employment
40% export growth
50% growth in R&D
R&D expected to account for 1.5% of GDP in 2010
/ side 6
VC-backed companies in the US
- $ 1,800 billion revenue
- 16% of GDP
- 10 mil jobs
- 40% of all IPOs
- 3 x R&D activity
- 3 x tax payment
- 2 x export
/ side 7
Venture boosts the economy
/ side
What is Vækstfonden?
onsdag 19. april 2023 8
/ sideonsdag 19. april 2023 9
Who We Are
• Vækstfonden is a government backed investment fund
• Investment focus on Danish early stage companies - both through direct investments and fund-of-funds
• Total asset base around EUR 350 million
• 85 % committed to early stage companies and venture capital funds
• Largest Danish investor within the ICT and life science spaces
/ sideonsdag 19. april 2023 10
• Annual investments of DKK 500 million in 25-30 companies – direct as well as through VC funds
• Loan guarantees on the rise
• Co-funded more than 3,500 companies to the tune of DKK 6.5 billion
Funding Activity
/ sideonsdag 19. april 2023 11
Targeted Financing
Global Growth Companies
InternationalGrowth Companies
Regional Growth Companies
Local Growth Companies
Fund of Funds
Growth Capital
Business Angel Matching
Loan Guarantees
5 15 70+
5
15
1Potential Revenue
Million Euro
Funding NeedMillion Euro
/ side 12
Vækstvirksomheder - 50 mia. kr.
Private ventureselskaber
Andre private finansieringskilder
Vækstfonden Private investorer
4 mia. kr. 6 mia. kr.
10 mia. kr. 40 mia. kr.
Vækstfonden’s leverage effect
/ side
VC in Denmark
onsdag 19. april 2023 13
/ sideonsdag 19. april 2023 14
Main Attractors in the Danish Market
• Strong Research Base
• Entrepreneurial Culture
• Flexible Labour Market
• Dynamic Technology Clusters
/ side 15
VC-backed companies’ attraction of foreign capital (relative to GDP; 2007)
0,00%
0,05%
0,10%
0,15%
0,20%
0,25%
DK S FIN UK IRL NL NO CH E B F P D A I EL
Nationale investorer Udenlandske investorer
/ sideonsdag 19. april 2023 16
Key Venture Capital Players
/ sideonsdag 19. april 2023 17
Geographic Distribution of VC Investment
• Large concentration around Greater Copenhagen
• Generally centered around universities and research institutes
/ sideonsdag 19. april 2023 18
Top 3 Industries in Denmark
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Life Sciences ICT Energy andenvironment
Business andindustrial services
2007 2008
% of Total Amount Invested
/ side
Market developments and challenges
onsdag 19. april 2023 19
/ side
Challenge: Lack of funds, low new/early stage investment activity
onsdag 19. april 2023 20
/ sideonsdag 19. april 2023 21
Annual Capital Raisings By VC Funds
0
100
200
300
400
500
600
700
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
DK
€ Million Total Capital Under ManagementDK: € 2,983 Million
/ sideonsdag 19. april 2023 22
0
500
1000
1500
2000
2500
3000
3500
4000
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
År
Mio
. kr.
- 60%
- 40%
- 20%
0%
20%
40%
60%
80%
100%
120%
140%
I alt (venstre akse) Årlig tilvækst (højre akse)
Total VC Investment activity in Denmark
/ sideonsdag 19. april 2023 23
..Due to Follow-On Investments
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2000 2001 2002 2003 2004 2005 2006 2007 2008
Ny- investeringer Opfølgningsinvesteringer
New Investments Under Pressure
/ sideonsdag 19. april 2023 24
0
20
40
60
80
100
120
140
160
180
200
2000 2001 2002 2003 2004 2005 2006 2007 2008
Seed Start- up Ekspansion Ikke oplyst
Seed Investment at All Time Low
/ side
Challenge: Weak exit options, returns under pressure
onsdag 19. april 2023 25
/ sideonsdag 19. april 2023 26onsdag 19. april 2023 26
The Global Financial Crisis Puts Exit Markets in Reverse
Source: VentureXpert
0
100
200
300
400
500
600
2000 2001 2002 2003 2004 2005 2006 2007 2008
Nu
mb
er
of
Exit
s
IPO Trade Sale
/ sideonsdag 19. april 2023 27onsdag 19. april 2023 27
IPO Valuations Particularly Hard Hit
Source: VentureXpert
/ sideonsdag 19. april 2023 28onsdag 19. april 2023 28
Entry Valuations Falling
Source: VentureXpert
/ sideonsdag 19. april 2023 29onsdag 19. april 2023 29
Holding Periods Rising Steadily
-
1
2
3
4
5
6
7
8
2000 2001 2002 2003 2004 2005 2006 2007 2008
Hold
ing p
eri
od (
years
)
Global Nordic countriesSource: VentureXpert and Vækstfonden
/ sideonsdag 19. april 2023 30 30
• Raising money for new ventures increasingly difficult
• New venture capital funds need to be raised
• Danish VCs under pressure to deliver attractive exits
• Exit timing is crucial
Key Points
/ sideonsdag 19. april 2023 31
Learn More At www.vf.dk