1.

Business Angels & Venture Capital- The Swedish Experience

Maria Nilsson, Business Angel Relations, SVCA

German Business Angel Day

Halle, 8 October 2007

2.

Business Angels

VentureCapitalists

Buyoutfirms

Business Angels

…supporting the interests of….

3.

Swedish Private Equity in an international perspective

EVCA Yearbook 2007

Private equity investments in % of GDP 2006

1,44

1,26

1,05

0,61 0,60 0,570,45 0,45 0,39 0,37 0,34 0,33 0,31 0,28 0,26 0,23

0,0

0,2

0,4

0,6

0,8

1,0

1,2

1,4

1,6

Sw

eden

Un

ited K

ingdom

Neth

erl

an

ds

Fra

nce

Hu

ngary

Eu

rope

Cze

ch R

epu

blic

Belg

ium

Irela

nd

Spain

Den

mark

Italy

Germ

an

y

Sw

itze

rlan

d

Norw

ay

Fin

lan

d

% av GDP

4.

VC focus on start-up and expansion

2710 9 20 12 12

98

68

163

130

191

418

253 258 260285

492

1 638

0

100

200

300

400

500

2001 2002 2003 2004 2005 2006

Seed Startup Expansion

MEUR

Early-stage investments 2001-2006, amount (MEUR)

Source: SVCA quarterly reports 2001-2006

5.

IPO

Our business angels play a crucial role in the financing value chain

Public financing

BusinessAngels

VentureCapital

BuyoutCapital

Estimations of the Swedish business angel market

3000-5000 business angels in Sweden…

− Whereof approximately 5-10 % female angel investors

….invest approximately 200 MEUR per year

− Whereof approximately 50% of investments in early-stages

6.

Delfinerna i Västerbotten

Uppsala PrivatinvesterareRoslagens Affärsänglar

Kista Investment Network

Östgötaänglar

Värmlands privatinvesterarnätverk

Connect Väst (4 lokala nätverk)

Connect Syd

Connect Skåne

Delfinerna i Skåne

Partners för Utvecklingsinvesteringarinom Life Science (PULS)

Business Angels Syd

Inget geografiskt fokus– Spiltan

Y Network

X-Invest

Connect Östra SverigeAlmi Stockholm

DalaBan

Coach & Capital

North Sea Angels

Coach & Capital Theia

Swedish Business Angel Networks

7.

Expansion6%

Buyout1%

Start-up59%

Seed21%

Pre-seed10%

Source: Activities in Swedish Business Angel Networks 2006, SVCA

14 BANs reported investment activity last year

Approximately 12 MEUR invested through the networks

72 companies received financing through the networks

166 business angels invested in projects presented through the networks

Summary of BAN activities 2006

8.

Some reflections on trends in the Swedish Business Angel Market

Well functioning BANs become more professional

− Requirements on members: membership fee, investment capacity, accessibility, credibility…

− Increased focus on investment process: syndication, standard documentation etc.

A number of business angel funds are getting started, often with a combination of private and public money

Incubators are increasingly building networks of business angels as a way of securing financing for the entrepreneurs

Focus on female business angels

Business angels are receiving a lot of attention in media and in the public debate

9.

Working towards an improved relationship between angels and VC investors

Creating forums where business angels and venture capital representatives can meet

Leveraging the Association’s activities and publications to spread knowledge about each investor group and their respective approach to investments

Working to enhance the professionalism in the business angels investment processes − Transfer of best practice from venture capital processes

− Creating model legal agreements

− Increase understanding of the importance a realistic view on future capital needs

The Association’s Board of Directors is being composed by representatives from all investor groups− BA related issues being taken into account in the overall strategic discussions

Business angel related information included in the quarterly venture capital statistics

10.

Thank you!

More information onwww.svca.se

11

Swedish Business Angels 

– German Business Angel DayHalle, 8 October 2007

Nils MånssonInstitute of Economic Research

School of Economics and Management, Lund University, Sweden Nils.Mansson@fek.lu.se

12

Sampling business angels

• There are no public records of business angels.

• Business angels are only a fraction of the general population (probably 0,05-0,15%).

• Hence, a non representative sample must be used in order to be able to reach a large number of business angels.

• Panel studies are needed to identify trends.

13

The survey study• Mixture of different sub samples.

• 1519 questionnaires sent out.

• So far 617 questionnaires returned (41%).

• 297 active investors (20%).

• High net investors and densely populated areas overrepresented.

14

Finding investments

1%

2%

2%

2%

3%

3%

4%

6%

12%

12%

17%

28%

0% 5% 10% 15% 20% 25% 30% 35%

Accountants

Media

Lawyers

Agents

Banks

Board membership

Relatives

VC firms

Colleagues

Entrepreneurs

BANs

Friends• Informal every day ties as

friends and colleagues are very important.

• BAN plays an important role. Among BAN members 29% of investments are found through BANs.

• Formal ties to lawyers, accountants, banks etc play a subordinate role.

15

The business angels’ investments

The average investor invests 333 000 Euros annually, the median investor 90 000 Euros annually.

6%14%

72%

3% 5%

18%

34% 35%

6% 8%

0%

20%

40%

60%

80%

100%

Seed Start-up Expansion ReplacementCapital

Buy-out

Invested capital Companies invested in

16

Way of exiting

46%

17%

7%

9%

3%

18%

20%

13%

4%

5%

4%

54%

0% 10% 20% 30% 40% 50% 60%

Industrial buyer

Financial buyer

The entrepreneur

Initial Public Offering

Multiple types of buyer

Bankrupcy/liquidation

2006 2003

17

Thank you!

Nils MånssonInstitute of Economic Research

School of Economics and Management, Lund University, Sweden

Nils.Mansson@fek.lu.se