Although Q1 2017 was a record number for the number of technology exits, this also includes older, more traditional technology companies which have or never would raise venture capital. Therefore, to get a more accurate picture of the exit situation in the Nordics we will now be publishing a VC-backed exit analysis in addition to our more general one.
Immediately we begin to see some differences, with Q1 2017 actually fairly unspectacular after all if we consider that of those 49 total technology exits, just 12 were VC-backed. In fact, this is the second fewest VC-backed exits in a quarter since 2015. Exits have more variables than investments meaning looking at it quarterly doesn’t tell the whole story, even still, it is slightly alarming to see no real growth in the number of VC-backed exits since 2015.
Only 2 of the VC-backed exits came from IPOs, although Q1 is always quieter on the public market front, still, it’s good to see that it remains a viable exit option for Nordic startups and one that I expect to be utilised even further throughout 2017.
However, it was particularly slow for IPOs when you compare to recent previous quarters (barring Q3 2016), but this is likely due to timings rather than any real market forces for us to be concerned about, this quarter will be a better temperature check in that regard.
Only Finland saw more than one VC-backed exit in Q1 outside of Sweden. With 66.6% of the exits, Sweden actually saw a larger share than it does of the investments, so it could be argued that Sweden quite easily represents the best chances of an investment being returned in the Nordics currently. The level of maturity of the ecosystem compared to the others is clearly helping here as well though.
This was the strongest quarter for Sweden for a while though, in fact, it was the second highest ever after Q2 of 2016 when we saw a lot of Swedish tech companies go public. Yet, again though, there is still a lack of any real growth so far. Denmark and Finland are duking it out behind Sweden although never registers any consistent numbers.
Similar to the more generalised technology exits, VC-backed companies predominantly attract the attentions of companies from within the region, although United States and UK-based companies remain a strong option as well.
Of the 12 exits, 4 verticals made an appearance more than once. What’s interesting is that IOT and Automotive haven’t necessarily seen the most investments in recent years, but both featured here alongside the more obvious gaming and retail.
In conclusion, Q1 2017 was a pretty unspectacular quarter for VC-backed exits, with the most concerning statistic being that there has not been much growth in VC-backed exits since 2015, yet the money has kept pouring in. Of course, these things take time, and a liquidity event can take 5-10 years, however, if the investment is going to keep increasing into the region, I’d argue that the exits also need to go in the same direction sooner rather than later, especially as we are now entering year 4 of the significantly increased investment.