Transcript Slide 1

An overview of the VC
market and Vækstfonden
12 March 2010
Uffe Arlø Theilade, Investment Director, Vækstfonden
Agenda
1.
2.
3.
4.
The idea and rationale for VC
An introduction to Vækstfonden
VC in Denmark
Market developments and challenges
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Why do we need venture capital?
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Types of finance (risk profiles)
Traditional companies
Debt
Technology companies
Debt
Equity
Quasi-equity
Equity
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VC Funded Companies in Denmark
20% growth in employment
40% export growth
50% growth in R&D
R&D expected to account for 1.5% of GDP in 2010
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VC-backed companies in the US
- $ 1,800 billion revenue
- 16% of GDP
- 10 mil jobs
- 40% of all IPOs
- 3 x R&D activity
- 3 x tax payment
- 2 x export
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Venture boosts the economy
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What is Vækstfonden?
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Who We Are
•
Vækstfonden is a government backed
investment fund
•
Investment focus on Danish early stage
companies - both through direct
investments and fund-of-funds
•
Total asset base around EUR 350 million
•
85 % committed to early stage
companies and venture capital funds
•
Largest Danish investor within the ICT
and life science spaces
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Funding Activity
•
Annual investments of DKK 500
million in 25-30 companies – direct
as well as through VC funds
•
Loan guarantees on the rise
•
Co-funded more than 3,500
companies to the tune of DKK 6.5
billion
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Targeted Financing
Funding Need
Million Euro
Fund of Funds
Global Growth
Companies
15
Growth Capital
International
Growth Companies
Business Angel
Matching
5
Regional Growth
Companies
1
Potential Revenue
Local Growth
Companies
5
Million Euro
15
Loan Guarantees
70+
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Vækstfonden’s leverage effect
Vækstvirksomheder - 50 mia. kr.
10 mia. kr.
40 mia. kr.
Private
ventureselskaber
4 mia. kr.
Vækstfonden
Andre private
finansieringskilder
6 mia. kr.
Private
investorer
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VC in Denmark
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Main Attractors in the Danish Market
•
Strong Research Base
•
Entrepreneurial Culture
•
Flexible Labour Market
•
Dynamic Technology Clusters
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VC-backed companies’ attraction of foreign
capital (relative to GDP; 2007)
0,25%
0,20%
0,15%
0,10%
0,05%
0,00%
DK
S
FIN
UK
IRL
NL
NO
CH
Nationale investorer
E
B
F
P
D
A
I
EL
Udenlandske investorer
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Key Venture Capital Players
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Geographic Distribution of VC Investment
•
Large concentration around Greater
Copenhagen
•
Generally centered around
universities and research institutes
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Top 3 Industries in Denmark
% of Total Amount Invested
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Life Sciences
ICT
Energy and
environment
2007
Business and
industrial services
2008
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Market developments and challenges
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Challenge: Lack of funds, low new/early
stage investment activity
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Annual Capital Raisings By VC Funds
€ Million
Total Capital Under Management
DK: € 2,983 Million
700
600
500
400
300
200
100
0
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
DK
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Total VC Investment activity in Denmark
4000
140%
3500
120%
100%
Mio. kr.
3000
80%
2500
60%
2000
40%
20%
1500
0%
1000
-20%
500
-40%
0
-60%
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
År
I alt (venstre akse)
Årlig tilvækst (højre akse)
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New Investments Under Pressure
..Due to Follow-On Investments
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2000
2001
2002
2003
Ny-investeringer
2004
2005
2006
2007
2008
Opfølgningsinvesteringer
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Seed Investment at All Time Low
200
180
160
140
120
100
80
60
40
20
0
2000
2001
2002
Seed
2003
2004
2005
Start-up
Ekspansion
2006
2007
2008
Ikke oplyst
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Challenge: Weak exit options, returns
under pressure
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The Global Financial
Crisis Puts Exit Markets in Reverse
600
Number of Exits
500
400
300
200
100
0
2000
2001
2002
2003
IPO
2004
2005
2006
2007
2008
Trade Sale
Source: VentureXpert
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IPO Valuations Particularly Hard Hit
3.500
3.000
DKK Million
2.500
2.000
1.500
1.000
500
0
2000
2001
2002
2003
IPO
2004
2005
2006
2007
2008
Trade Sale
Source: VentureXpert
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Entry Valuations Falling
Median of valuations (DKK Million)
1.000
900
800
700
600
500
400
300
200
100
0
2000
2001
2002
Seed & start-up
2003
Early-stage
2004
2005
Expansion
2006
2007
2008
Later stage
Source: VentureXpert
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Holding Periods Rising Steadily
8
Holding period (years)
7
6
5
4
3
2
1
2000
2001
2002
2003
Global
2004
2005
2006
2007
2008
Nordic countries
Source: VentureXpert and Vækstfonden
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Key Points
• Raising money for new ventures
increasingly difficult
• New venture capital funds need to be
raised
• Danish VCs under pressure to deliver
attractive exits
• Exit timing is crucial
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Learn More At www.vf.dk
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