As we highlighted the other day, ‘Consumer SaaS’ and ‘Social and Communications’ investments below $500,000 are significantly on the increase. Together, they actually represent 16.67% of all investments in this range, and account for 8% of all investments in the Nordics in 2017.
Although consumer-focused successes have traditionally been the region’s strong point, B2B has been taking the lion’s share of investment in the last couple of years. However, with this increased movement in the early-stage, the pendulum could be set to swing in the other direction once more. In order to get a better understanding of what’s happening across the two dominant B2C verticals (outside of gaming), we analysed where, when and who are making the investments in these two sectors.
*Note, we have not included Gaming in this, as we run separate analyses on that vertical, the most recent can be found here
As one might expect, most of the action in these verticals is happening in Sweden. However, it’s notable that Denmark represents a good proportion of the investment action here, a nation that is typically more synonymous with B2B startups. In contrast, Finland the other Nordic nation with a proud history of B2B successes has seen no investments in this space in 2017, although of course they have seen gaming investments occur. However, outside of these, the B2C space in terms of Consumer SaaS and Social and Communications in Finland is exceptionally quiet, with Sweden and Denmark appearing the most likely places to look for companies in this space.
The reason why we focused on these two verticals earlier in the week was due to their outsized investment performances at the early stage, however, investments are also being made later down the line too, although the activity is generally slower there with less than 10% of investments being made above $5 million. This can also explain the fact that of all 26 investments in this space so far in 2017, only 15% of the funding rounds have included an International investor.
It’s also extremely notable that of the 70+ investors (including angels) who have funded a company in these sectors in 2017, none of them have been repeat investors as of yet within the two verticals. Of course, the time frame is only 6 months, so an investor would have to be reasonably prolific, but at the same time you would expect to see at least several repeat investors.
It is possible though, that this is almost a necessary trend within these verticals, as if you back a messaging app, it’s unlikely (and strange) if you back multiple ones, as they are more likely to compete than say an Enterprise SaaS company would with another (simply as there are more areas to focus on). Therefore, the consumer space is very competitive and as such, this also limits investors participation across their portfolio, particularly within a specific region.
Despite this clear limitation, overall, the appetite for investing in startups in Consumer SaaS and Social and Communications is increasing once-more. And while there are no clear patterns in the data in terms of who is investing in the space, it’s clear that it’s investments and startups in Denmark and Sweden that are currently driving this renaissance, meaning that if you are looking for companies within this space, then you could do worse than starting there.