1.
Business Angels & Venture Capital - The Swedish Experience
Maria Nilsson, Business Angel Relations, SVCA
German Business Angel Day
Halle, 8 October 2007
2.
…supporting the interests of….
Business Business Angels Angels
Venture Capitalists
Buyout firms
3.
Swedish Private Equity in an international perspective
Private equity investments in % of GDP 2006
% av GDP 1,6 1,4 1,2 1,0 0,8 0,6 0,4 0,2
Netherlands Czech Republic United Kingdom Belgium Hungary Denmark Switzerland Europe Germany Sweden Norway Finland Ireland France Spain Italy
0,61 0,60 0,57 0,45 0,45 0,39 0,37 0,34 0,33 0,31 0,28 0,26 0,23 1,44 1,26 1,05
0,0
EVCA Yearbook 2007
4.
VC focus on start-up and expansion
Early-stage investments 2001-2006, amount (MEUR)
MEUR 500
418 492
400
300
285 253 258 260 191
200
98 68 27 10 9
163 130
1 638
100
20
12
12
0
2001 Seed
2002
2003 Startup
2004
2005 Expansion
2006
Source: SVCA quarterly reports 2001-2006
5.
Our business angels play a crucial role in the financing value chain
Venture Capital Buyout Capital
IPO
Business Angels
Public financing
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.
Swedish Business Angel Networks
Inget geografiskt fokus – Spiltan
Delfinerna i Västerbotten Y Network X-Invest Uppsala Privatinvesterare Roslagens Affärsänglar Kista Investment Network Connect Östra Sverige Almi Stockholm Coach & Capital Theia Östgötaänglar
DalaBan Värmlands privatinvesterarnätverk Coach & Capital Connect Väst (4 lokala nätverk) North Sea Angels Connect Syd Partners för Utvecklingsinvesteringar inom Life Science (PULS) Connect Skåne Delfinerna i Skåne Business Angels Syd
7.
Summary of BAN activities 2006
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
Buyout Pre-seed Expansion 1% 10% 6%
Seed 21%
Start-up 59%
Source: Activities in Swedish Business Angel Networks 2006, SVCA
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 on www.svca.se
Swedish Business Angels
– German Business Angel Day Halle, 8 October 2007
Nils Månsson
Institute of Economic Research School of Economics and Management, Lund University, Sweden Nils.Mansson@fek.lu.se
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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.
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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.
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Finding investments
Friends BANs Entrepreneurs Colleagues VC firms Relatives Board membership Banks Agents Lawyers Media Accountants 0%
4% 3% 3% 2% 2% 2% 1% 6% 12% 12% 17% 28%
• 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 35% play a subordinate role.
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5%
10%
15%
20%
25%
30%
The business angels’ investments
The average investor invests 333 000 Euros annually, the median investor 90 000 Euros annually.
100% 80% 60% 40% 20% 0% Seed Start-up Expansion Replacement Capital
15
72%
34% 18% 6% 14%
35%
3%
6%
5%
8%
Buy-out
Invested capital
Companies invested in
Way of exiting
Bankrupcy/liquidation Multiple types of buyer Initial Public Offering The entrepreneur Financial buyer Industrial buyer 0% 10%
4% 3% 5% 4% 9% 18% 54%
7% 13% 17% 20% 46%
20% 2006
30%
40% 2003
16
50%
60%
Thank you!
Nils Månsson
Institute of Economic Research School of Economics and Management, Lund University, Sweden Nils.Mansson@fek.lu.se
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