Download - An overview of the VC market and Vækstfonden

An overview of the VC market and Vækstfonden

12 March 2010Uffe Arlø Theilade, Investment Director, Vækstfonden

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Agenda

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1. The idea and rationale for VC2. An introduction to Vækstfonden3. VC in Denmark4. Market developments and challenges

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Why do we need venture capital?


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Types of finance (risk profiles)

Debt

Quasi-equity

Equity

Traditional companies Technology companies

Debt

Equity

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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

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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

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Venture boosts the economy

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What is Vækstfonden?



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


• 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


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

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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

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VC in Denmark



Main Attractors in the Danish Market

• Strong Research Base

• Entrepreneurial Culture

• Flexible Labour Market

• Dynamic Technology Clusters

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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


Key Venture Capital Players


Geographic Distribution of VC Investment

• Large concentration around Greater Copenhagen

• Generally centered around universities and research institutes


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

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Market developments and challenges


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Challenge: Lack of funds, low new/early stage investment activity



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


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


..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


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

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Challenge: Weak exit options, returns under pressure


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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


IPO Valuations Particularly Hard Hit



Entry Valuations Falling



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

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• 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


Learn More At www.vf.dk

Download - An overview of the VC market and Vækstfonden

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