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1.
Business Angels & Venture Capital- The Swedish Experience
Maria Nilsson, Business Angel Relations, SVCA
German Business Angel Day
Halle, 8 October 2007
2.
Business Angels
VentureCapitalists
Buyoutfirms
Business Angels
…supporting the interests of….
3.
Swedish Private Equity in an international perspective
EVCA Yearbook 2007
Private equity investments in % of GDP 2006
1,44
1,26
1,05
0,61 0,60 0,570,45 0,45 0,39 0,37 0,34 0,33 0,31 0,28 0,26 0,23
0,0
0,2
0,4
0,6
0,8
1,0
1,2
1,4
1,6
Sw
eden
Un
ited K
ingdom
Neth
erl
an
ds
Fra
nce
Hu
ngary
Eu
rope
Cze
ch R
epu
blic
Belg
ium
Irela
nd
Spain
Den
mark
Italy
Germ
an
y
Sw
itze
rlan
d
Norw
ay
Fin
lan
d
% av GDP
4.
VC focus on start-up and expansion
2710 9 20 12 12
98
68
163
130
191
418
253 258 260285
492
1 638
0
100
200
300
400
500
2001 2002 2003 2004 2005 2006
Seed Startup Expansion
MEUR
Early-stage investments 2001-2006, amount (MEUR)
Source: SVCA quarterly reports 2001-2006
5.
IPO
Our business angels play a crucial role in the financing value chain
Public financing
BusinessAngels
VentureCapital
BuyoutCapital
Estimations of the Swedish business angel market
3000-5000 business angels in Sweden…
− Whereof approximately 5-10 % female angel investors
….invest approximately 200 MEUR per year
− Whereof approximately 50% of investments in early-stages
6.
Delfinerna i Västerbotten
Uppsala PrivatinvesterareRoslagens Affärsänglar
Kista Investment Network
Östgötaänglar
Värmlands privatinvesterarnätverk
Connect Väst (4 lokala nätverk)
Connect Syd
Connect Skåne
Delfinerna i Skåne
Partners för Utvecklingsinvesteringarinom Life Science (PULS)
Business Angels Syd
Inget geografiskt fokus– Spiltan
Y Network
X-Invest
Connect Östra SverigeAlmi Stockholm
DalaBan
Coach & Capital
North Sea Angels
Coach & Capital Theia
Swedish Business Angel Networks
7.
Expansion6%
Buyout1%
Start-up59%
Seed21%
Pre-seed10%
Source: Activities in Swedish Business Angel Networks 2006, SVCA
14 BANs reported investment activity last year
Approximately 12 MEUR invested through the networks
72 companies received financing through the networks
166 business angels invested in projects presented through the networks
Summary of BAN activities 2006
8.
Some reflections on trends in the Swedish Business Angel Market
Well functioning BANs become more professional
− Requirements on members: membership fee, investment capacity, accessibility, credibility…
− Increased focus on investment process: syndication, standard documentation etc.
A number of business angel funds are getting started, often with a combination of private and public money
Incubators are increasingly building networks of business angels as a way of securing financing for the entrepreneurs
Focus on female business angels
Business angels are receiving a lot of attention in media and in the public debate
9.
Working towards an improved relationship between angels and VC investors
Creating forums where business angels and venture capital representatives can meet
Leveraging the Association’s activities and publications to spread knowledge about each investor group and their respective approach to investments
Working to enhance the professionalism in the business angels investment processes − Transfer of best practice from venture capital processes
− Creating model legal agreements
− Increase understanding of the importance a realistic view on future capital needs
The Association’s Board of Directors is being composed by representatives from all investor groups− BA related issues being taken into account in the overall strategic discussions
Business angel related information included in the quarterly venture capital statistics
10.
Thank you!
More information onwww.svca.se
11
Swedish Business Angels
– German Business Angel DayHalle, 8 October 2007
Nils MånssonInstitute of Economic Research
School of Economics and Management, Lund University, Sweden [email protected]
12
Sampling business angels
• There are no public records of business angels.
• Business angels are only a fraction of the general population (probably 0,05-0,15%).
• Hence, a non representative sample must be used in order to be able to reach a large number of business angels.
• Panel studies are needed to identify trends.
13
The survey study• Mixture of different sub samples.
• 1519 questionnaires sent out.
• So far 617 questionnaires returned (41%).
• 297 active investors (20%).
• High net investors and densely populated areas overrepresented.
14
Finding investments
1%
2%
2%
2%
3%
3%
4%
6%
12%
12%
17%
28%
0% 5% 10% 15% 20% 25% 30% 35%
Accountants
Media
Lawyers
Agents
Banks
Board membership
Relatives
VC firms
Colleagues
Entrepreneurs
BANs
Friends• Informal every day ties as
friends and colleagues are very important.
• BAN plays an important role. Among BAN members 29% of investments are found through BANs.
• Formal ties to lawyers, accountants, banks etc play a subordinate role.
15
The business angels’ investments
The average investor invests 333 000 Euros annually, the median investor 90 000 Euros annually.
6%14%
72%
3% 5%
18%
34% 35%
6% 8%
0%
20%
40%
60%
80%
100%
Seed Start-up Expansion ReplacementCapital
Buy-out
Invested capital Companies invested in
16
Way of exiting
46%
17%
7%
9%
3%
18%
20%
13%
4%
5%
4%
54%
0% 10% 20% 30% 40% 50% 60%
Industrial buyer
Financial buyer
The entrepreneur
Initial Public Offering
Multiple types of buyer
Bankrupcy/liquidation
2006 2003
17
Thank you!
Nils MånssonInstitute of Economic Research
School of Economics and Management, Lund University, Sweden