In Q3 2016 we tracked 44 Nordic tech exits, a record quarter
Acquisitions dominated in Q3, accounting for 38 of the 44 exits. There were just the 3 IPO’s in Q3, which was a significant drop from Q2’s 8, however Q2 is typically the strongest quarter for companies going public in the Nordics so we shouldn’t be too surprised by this. It should also be noted that there has now been 14 Nordic IPO’s in 2016 so far.
Three mergers hints at local market consolidation, however, two of these actually involved a Nordic company merging with a competitor outside of the region.
As has been the way for the last 18 months, Sweden dominates in terms of the number of exits, as naturally the money that has been pumped in eventually needs to see a liquidity event. Sweden is also the largest and most mature market.
Denmark and Finland both recorded stronger quarters than Q2, with Norway matching Q2’s 5 exits and Iceland unfortunately matching their Q2 of 0.
The percentage of the buyers and sellers both being based in the region continues to increase, as buyers from the United States continues to decrease. This can be seen both as a positive, as proof of a healthy local acquisition market and as a negative, as International interest is always a welcome addition both for capital and exit opportunities.
Interestingly, there were three French acquirers in Q3, matching the current trend of French VC interest in the region increasing.
FinTech leads the way in terms of exits by vertical, as interest and investment in the region has been particularly high over the last 18 months. Enterprise SaaS and Gaming naturally do well, whilst there were three exits apiece in the automotive and food sectors.
VC-backed exits significantly dropped off from Q2’s peak of 48.6%, to a more modest 22.7%. This is largely due to a large number of bootstrapped revenue generating businesses seeing an exit in Q3, typically being acquired by a more traditional older business in the region.
22.7% is actually lower than 2015’s average of 25%, however the first half of this year saw 44.4% of exits as VC-backed, so even with a modest Q4, 2016 should still come out significantly higher than last year, as you would expect with the money continuing to flow into the region.
In conclusion, Q3 should be considered a strong quarter for exits, as after all, this was the most tech exits we’ve recorded in a three month period. However, with a low percentage of them VC-backed, it’s clear that a lot of these exits were due to older, more-legacy like tech companies, so it’s hard to be overly positive as to what this means for the tech startups in the region.
However, one thing’s for sure, 2016 as a whole is still tracking a significant increase in VC-backed exits than 2015 did, meaning things are certainly moving in the right direction, both for investors but also for the strength of the ecosystem.