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An overview of the VC market and Vækstfonden

An overview of the VC market and Vækstfonden. 12 March 2010 Uffe Arlø Theilade, Investment Director, Vækstfonden. Agenda. The idea and rationale for VC An introduction to Vækstfonden VC in Denmark Market developments and challenges. Why do we need venture capital?.

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An overview of the VC market and Vækstfonden

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  1. An overview of the VC market and Vækstfonden 12 March 2010 Uffe Arlø Theilade, Investment Director, Vækstfonden

  2. Agenda • The idea and rationale for VC • An introduction to Vækstfonden • VC in Denmark • Market developments and challenges

  3. Why do we need venture capital?

  4. Types of finance (risk profiles) Traditional companies Technology companies Debt Quasi-equity Equity Debt Equity

  5. 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

  6. 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

  7. Venture boosts the economy

  8. What is Vækstfonden?

  9. 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

  10. 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

  11. Targeted Financing Funding Need Million Euro Fund of Funds Growth Capital Business Angel Matching Loan Guarantees Global Growth Companies 15 International Growth Companies 5 Regional Growth Companies 1 Local Growth Companies Potential Revenue Million Euro 5 15 70+

  12. Vækstfonden’s leverage effect Vækstvirksomheder - 50 mia. kr. 10 mia. kr. 40 mia. kr. Private ventureselskaber Andre private finansieringskilder 6 mia. kr. 4 mia. kr. Private investorer Vækstfonden

  13. VC in Denmark

  14. Main Attractors in the Danish Market • Strong Research Base • Entrepreneurial Culture • Flexible Labour Market • Dynamic Technology Clusters

  15. 0,25% 0,20% 0,15% 0,10% 0,05% 0,00% DK S FIN UK IRL NL NO CH E B F P D A I EL Nationale investorer Udenlandske investorer VC-backed companies’ attraction of foreign capital (relative to GDP; 2007)

  16. Key Venture Capital Players

  17. Geographic Distribution of VC Investment • Large concentration around Greater Copenhagen • Generally centered around universities and research institutes

  18. Top 3 Industries in Denmark % of Total Amount Invested

  19. Market developments and challenges

  20. Challenge: Lack of funds, low new/early stage investment activity

  21. Annual Capital Raisings By VC Funds € Million Total Capital Under Management DK: € 2,983 Million

  22. Total VC Investment activity in Denmark

  23. ..Due to Follow-On Investments New Investments Under Pressure

  24. Seed Investment at All Time Low

  25. Challenge: Weak exit options, returns under pressure

  26. The Global Financial Crisis Puts Exit Markets in Reverse Source: VentureXpert 13. november 2014 26

  27. IPO Valuations Particularly Hard Hit Source: VentureXpert 13. november 2014 27

  28. Entry Valuations Falling Source: VentureXpert 13. november 2014 28

  29. Holding Periods Rising Steadily Source: VentureXpert and Vækstfonden 13. november 2014 29

  30. 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 30

  31. Learn More At www.vf.dk

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