Creandum Nordic Exit Analysis 2015

2014 was the best year ever for Nordic tech exits

•  2014 marked the best year ever in terms of exit value for Nordic companies including three BUSD exits and more than $13 billion in total exit value

•  The Nordic tech opportunity is large and steadily growing, average exit value last 5 years is >$4 billion per year

•  Although the Nordics only represents 2% of global GDP, it represents close to 10% of global BUSD exits

•  Looking at Europe, the Nordic stands for the majority of BUSD exits (53% last 10 years) although the region only attracts around 10% of VC capital

•  Within the Nordics, Sweden is the dominant market, contributing to 50% of the Nordic exit value

•  Digital consumer services is the most valuable sector, but software produces most >$100 million exits and is growing fast

•  Nordic VC allocation is required to capture the value in the region, Nordic VC capital is invested in ~90% of Nordic winners

Copyright Creandum 2015

Creandum exit database

•  Database with ~490 private technology company exits

•  20+ parameters covered including exit value, exit revenue, exit type, years from inception to exit

•  Companies originated from Denmark, Finland, Norway & Sweden

•  Focus on VC & angel investments – no buyout or privatizations

•  Exit value ($m) of companies at time of 1st trade sale or IPO (end of 1st day trading)

•  EXCLUDING Life science, med tech, bio tech, retail, energy (oil & gas etc), environmental and consulting

•  Feel free to use the material but please mention the source

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Nordic entrepreneurs create world class companies and services

3

Sample of recent successful companies & services created by Nordic entrepreneurs

Note: Skype, Soundcloud, SuccessFactors, Playfish, Prezi primarily established outside Nordics


5 308

553 47 289 585

6 292

8 068

1 692 1 665

363

2 262 1 150

303

3 382

13 391

-

2 000

4 000

6 000

8 000

10 000

12 000

14 000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

M&A

IPO

Total Nordic exit value 2000-2014

The Nordic tech opportunity is large and steadily growing

•  Average exit value per year for the last five years is $4.1Bn

•  Total exit market value increased 3x between economic cycle in ’00-’04 and ‘10-’14

•  7.0% of M&As & IPOs represent 80% of total exit value

•  VC investors in 93.3% of exits > $500M and 81.4% of exits > €100M (% of VC backed exits)

MUSD

Exit year

Avg. annual exit value 2000-2004 Avg. annual exit value 2005-2009

4

$1.4Bn

$3.6Bn

$4.1Bn

Avg. annual exit value 2010-2014


12%

13%

Although being a small region, almost 10% of global BUSD exits are Nordic

•  Although accounting for 2% of global GDP, Nordic companies represented 9% of all global BUSD technology exits

5

Nordics

GDP BUSD Exits*

Note: GDP based on 2013 numbers * Share of exits in USD 2005 - 2014

RoEU US

China RoW

2%

9% 4.5x

27%

8%

0.3x

22%

66% 3.0x

1.1x

36%

5%

0.1x

GDP BUSD Exits* GDP BUSD

Exits*

GDP BUSD Exits* GDP BUSD

Exits*


*SoundCloud & Avito: Swedish founders but included in RoE

Billion dollar exits Deloitte Europe Fast-500 companies

The World's Most Valuable Private Tech Companies*

Amount of VC investment

…and constitutes of a disproportionally large portion of the European market Nordics Rest of Europe

Population

6

53% 47%

Share of exits between 2005 - 2014

24%

76%

BUSD software companies founded since 2003*

30%

70%

11%

89%

3%

97%

Share or companies 2014 Share of tech VC 2014

Business Insider: Digital 100 Source: Atomico

28%

8% 64%

Soundcloud & Avito*


The Nordics is one of the world’s most attractive regions for startups

Sources: 1) Forbes 2) INSEAD 3) Worldbank 4) The Global Competitiveness Report 2014-2015 5) Transparency International CPI 2014

Rank Best Countries

To Start a Company1

Global Innovation

Index2

R&D as % of GDP3

Researchers per million

people3

Global Competitive-ness Index4

Corruption Perceptions

Index5

1 Denmark Switzerland Israel Finland Switzerland Denmark

2 Hong Kong United Kingdom Finland Denmark Singapore New Zealand

3 New Zealand Sweden Sweden Singapore United States Finland

4 Ireland Finland Denmark Luxembourg Finland Sweden

5 Sweden Netherlands Germany Norway Germany Norway

6 Canada United States Austria Sweden Japan Switzerland

7 Norway Singapore Slovenia Portugal Hong Kong Singapore

8 Singapore Denmark United States Austria Netherlands Netherlands

9 Switzerland Luxembourg France Slovenia United Kingdom Luxembourg

10 Finland Hong Kong Belgium Germany Sweden Canada

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1 MUSD 50 MUSD 10 MUSD Revenue

The Nordic region consistently produces a significant number of winners

8

Tech exits larger than $100M 2000 - 2004

200

400

600

>1bn

Microcell

Setec Oy


Revenue

9

With a strong trends towards even higher revenues

1 MUSD 50 MUSD 10 MUSD

Tech exits larger than $100M 2005 - 2014

200

400

600

>1bn


0%

10%

20%

30%

40%

50%

60%

Sweden Norway Denmark Finland

Looking within the Nordics, Sweden is the big contributor with 50% of value

10

•  Sweden represents more than 50% of the Nordics, both in terms of number of exits and exit value

•  Large portion (62%) of Norway exit value driven by one IPO (REC $6.5Bn), otherwise less active market the other Nordic countries

•  Finland and Denmark are small but growing in terms of exit value last few years

Nordic exits and exit value per country 2000-2014

263

75 58

91

$23.7Bn

$10.5Bn

$7.4Bn $6.3Bn

Number of IPO

Company value at IPO

Exit value

Number of exits

NOTE: Skype 50/50 Sweden & Denmark, MySQL 50/50 Sweden & Finland


… and dominates in no of exits in all exits sizes

0%

10%

20%

30%

40%

50%

60%

Sweden Norway Finland Denmark

$100 - 499 $500 - 999 $>1,000

32

12

5

9

>100 MUSD Nordic exits per country 2000-2014

•  Sweden represents 55% of all exits larger than 100 MUSD and has most exits in all intervals


Software sector increasingly important, but consumer still dominating in value

12

Distribution of Nordic exits > $100M Number of exits

Total exit value distribution last 5 years Percent of USD value

•  Consumer sector 75% of exit value the last 5 years, although holding a small share in number of exits

•  Nature of consumer products and services wither being a big global hit or nothing at all driving very high exit values compared to other sectors

•  Software increasingly important sector, while hardware is on decline in number of exits and still is not significant in value

71%

25%

4%

Consumer

Software

Hardware

0

2

4

6

8

10

12

Consumer Software Hardware Other*

2000 - 2004 2005 - 2009 2010 - 2014


Last 5 years have seen more than one BUSD exit per year

13

14 16

14

3

3

3

6

0

5

10

15

20

25

2000 - 2004 2005 - 2009 2010 - 2014

$ >1,000

$500-999 Exits

$100 - 499 Exits

>100 MUSD Nordic exits per time interval

•  On average, one BUSD tech company form the Nordics last 10 years

•  2x number of BUSD exits last 5 years vs 10 years before


Trade sale to US most important for large exits

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•  Almost all exit value created in the Nordics is by M&A, especially after IPO market dried up in 2001

•  Most large exits are trade sale to US companies

M&A

Exit intervals in MUSD

Exit value per exit type Share of exit value in USD

Exit distribution per exit size Share of number of exits to each region per exit size interval

440

IPO

M&A value per geography

30%

4%

47%

19%

Inside Country Other Nordic Country US RoW

0%

20%

40%

60%

80%

100%

=< 10 10 -‐ 49 50 -‐ 99 100 -‐ 499 ≥ 500


Nordic VC allocation is required to capture the value of the region

15

•  Nordic VCs present in 85% of all VC-backed exits larger than $100M

•  Nordic VC investors in 71.4% exits > $500M and 85.4% of exits > $100M (% of VC backed)

•  Non-Nordic VCs are on average only represented in 15% Nordic exit deals – very difficult to access the value from outside the region

Share of Nordic exits with VCs from Nordic, UK and Rest of Europe 2000 - 2014

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

>=10 >=50 >=100

Nordic VC US VC RoW VC RoE VC UK VC

MUSD exit value


The Nordics create larger share of unicorns, driven by early global expansion

16

Share of exits per interval >$100MUSD Percent of number of exits

0% 10% 20% 30% 40% 50% 60% 70% 80%

$100-499

$500-999

>=$1,000

Global Nordics

•  Since Nordic is a small market regarding customers the companies are forced to be global form an early stage in order to grow

•  This drives a different distribution of unicorns vs other exits compared to global average

0% 10% 20% 30% 40% 50% 60% 70% 80%

$100 - 499

$500-999

$>=1,000

Note: Global exits for 2014. Nordic exits for since 2010


Wrapping up

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>  Large and growing Nordic tech market

•  $3.9Bn yearly exit value last 10 years

•  A significant part of European and global exits

•  Increased high-quality deal flow

•  Software & consumer sectors dominant and Sweden most important geography

>  Significantly maturing ecosystem

•  More serial entrepreneurs

•  Successful entrepreneurs becoming angel investors

•  Experienced growth company management teams available

•  Few but more experienced investors active in the region


Creandum Nordic Exit Analysis 2015

Technology

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