We’ve already established that Q1 2017 across the region didn’t reach the heights of growth we’ve recently become accustomed to. With Sweden considerably contributing the highest percentage of investments, we delve into their Q1 to see whether this was due to or despite Sweden’s own funding performance.
On the immediate surface, it appears to be despite of it. Sweden recorded the second highest growth percentage from Q1 2016 for the number of investments, with a 28.4% increase, compared to Denmark’s 28.57%. The average for the region was 14.74%, while Norway and Finland both recorded 0% increases.
However, just like every other Nordic country, Q1 2017 still saw less investments than Q4 2016, meaning this was still technically a down quarter.
However, it was not a down-quarter for capital, with Q1 2017 breaching the $300 million+ mark for the first time for a quarter since 2015 (without Spotify). This indicates that a higher number of larger rounds were raised at the beginning of this year than at the end of 2016, demonstrating maturity and progress as an ecosystem.
In fact, 1 in 10 investments were above $5 million and nearly 1 in 4 were above $3 million, as we begin to see strong signs of the large numbers of startups who’d raised pre-seed and seed over the last 12-18 months take in follow-on funding and move comfortably through the funding pipeline.
FinTech continues to be represented strongly, and after losing it’s number one spot to Enterprise SaaS in 2016, is duking it out with them again during the first three months of the year.
It would be remiss of us not to point out that iZettle’s $63.8 million clearly paid a large part in the strong quarter for capital invested, as well as indicating that the majority of 24Storage’s large funding round was in the form of a loan from Collector Bank.
Stockholm represented 54.8% of the Swedish investments in Q1, down from 63.7% seen in 2016. It’s not only clear that investors are beginning to look outside the capital for opportunities, but also that the second and third tier Swedish hubs are also continuing to develop and mature themselves, particularly Malmö, Gothenburg, Linköping, Lund and Uppsala.
Sweden has the lowest percentage of International investors participating in their funding rounds, however, they are also in the position of this not mattering as much as it does elsewhere. Firstly, the sheer number of rounds, particularly at the early-stage, means that International participation is unlikely. Secondly, there is an abundance of local funding sources and funds at the early-stage meaning there is no need to look outside of Sweden.
However, as we’ve shown in previous analyses, International capital is still often needed for the larger-later rounds and as even more Swedish companies begin to move through the funding pipeline, we can expect this percentage to increase slightly.
In conclusion, Q1 2017 was a strong quarter for Sweden, especially compared to the other Nordic countries, bar Denmark. While you may expect the region’s slowdown to be heavily influenced by the country that contributes the most to it, this doesn’t appear to be the case. Most promising is the number of rounds above $3 million, as well as the deployment spread of capital amongst various hubs, positioning Sweden to be on course for another strong funding year in 2017.