Although we focus predominantly on investments in the region, there is a measurement that is way more important to an ecosystem’s health, exits. Tomorrow, we will publish our first quarterly report solely focused on VC-backed exits, however, before we do, in order to keep some consistency, we will take a look at the more general picture of technology exits in Q1.
On the surface, it was a great quarter, with 49 exits the most we have recorded, and a return to a rise, after a momentary, minor blip in Q4 2016.
However, as we will dig in further tomorrow, only 1 in 4 of the exits were VC-backed due to a number of more traditional technology companies seeing a liquidity event in Q1. So, although it is a record quarter for the number of exits, there were only 12 VC-backed exits, which is not particularly impressive, especially when you consider that in Q1 2016 there were 15 and in Q4 there were 16.
There were just 2 IPOs in Q1, traditionally a quiet time for companies to go public. Historically, Q2 has always been the most active for this, so we expect more activity over the next couple of months, with Q2 2016’s record high of 6 standing a good chance of being surpassed as First North continues to be a very active and attractive market for Nordic tech companies.
As is the case for investments, Sweden leads the way, in fact, the split looks very similar to the way that funding numbers typically look as well, although this shouldn’t be particularly surprising, as of course we would expect (and certainly hope) to see some level of correlation here.
Companies from within the region continue to be the most active buyers, representing over 60% of the transactions. Interest from American companies remains strong, particularly from the tech giants, as both Google and Microsoft shopped Nordic in Q1 (Limes Audio and Donya Labs respectively) continuing this trend that we’ve witnessed in recent years.
Retail remains a popular vertical for exits, with competing companies in this space regularly going through consolidation of the market. It’s also interesting to see FinTech pop up again, becoming a regular on both our investment and exit charts.
On the surface, Q1 2017 looks great for exits, after all, it was a record quarter. However, dig a little deeper and VC-backed exits were down and that’s what really matters. Taking this into account, we will be publishing our first VC-backed exit report tomorrow, so stay tuned for that.