2010 01 13 Creandum Nordic Exit Analysis
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Being a VC in the Nordics
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Creandum Nordic Technology Exit Analysis
2
• Database with 280+ private technology company exits • 20+ parameters covered including exit value, exit revenue, exit type,
years from inception to exit etc
• Companies from Denmark, Finland, Norway & Sweden
• Focus on VC and angel investments – no buyout or privatizations
• Exit value (€m) of companies at time of trade sale or IPO
• EXCLUDING Life science, retail, energy (oil & gas etc) & environmental and consulting
• Focus on exit information, not best practice for VC investment • Sources include official information (web sites, press releases,
newspaper articles, annual reports) as well as financial resources & databases*
• Feel free to use material but please mention the source
Copyright Creandum 2009
* VentureOne/Source, EVCA, Thompson, Zephyr, Private Equity Insight, Nordic Unquote, Förvärv & Fusioner
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The Nordics at a Glance
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WEF Global ICT Report
Rank Country Score
1 Denmark 5.85
2 Sweden 5.84
3 USA 5.68
4 Singapore 5.67
5 Switzerland 5.58
6 Finland 5.53
7 Iceland 5.50
8 Norway 5.49
9 Netherlands 5.48
10 Canada 5.41
1 006
1 700
0
1 000
2 000
Nordics California
GDP (US$ bn)
25
34
0
20
40
Nordics California
Population (M)
66
8
0
50
100
Nordics US
Olympic Gold Medals (/million inhabitants)
Copyright Creandum 2009
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A global take on billion dollar tech companies
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• 12 China • 12 US • 10 Europe - 3 in Nordics
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1 000
10 000
100 000
1 000 000
Exit Value (€M) >1 BUSD technology companies last 5 years
Source: Balderton
Copyright Creandum 2009
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The Nordic technology market A very attractive region
• Creating substantial exit value – more than €2Bn per year last 10 years! • Producing significant number of home runs – 34 exits larger than €100 • 25% of European technology exits larger than €100M (2004-2006) • 8% of global technology exits larger than $1Bn last 5 years (vs 2% of invested capital)
Sources: EVCA, Thompson, Dow Jones, Creandum
5
0
10
20
30
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80
=< 10 10 - 49 50 - 99 100 - 499 ≥ 500
Number of IPO
Number of M&A
Exits
Average €114M Median: €20M
M€
Exits of private Nordic technology (ICT) companies between 1998-2009
Copyright Creandum 2009
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0,0
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350,0
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1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Number and average value of exits between 1999-2009
Number of IPO
Number of M&A
Avg Exit Value
Exit market development Timing matters
• Exit opportunity closely connected to general economy situation • M&A represents ~83% of exits and has been dominant since 2001 – similar
development as in US • Norway is the exception in terms of IPO – other Nordic countries dried up after 2001
Sources: EVCA, Thompson, Dow Jones, Creandum
6
Exits M€
Copyright Creandum 2009
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0
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0,0
500,0
1 000,0
1 500,0
2 000,0
2 500,0
3 000,0
3 500,0
4 000,0
1-3 4-6 7-9 10-12 13-15 =>15
Total value
Number of exits
Large value created in early-stage companies…
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• Average age for exited companies is 8.2 years vs 9.1 years for home runs (>100M€) • Exit value is not directly proportional to company age (except for software) • 43% of total exit value created in companies up to 6 years old • Primarily internet companies exited within 3 years
Exits M€
Copyright Creandum 2009
Years from company founded to exit
Total exit value in intervals from company founded to exit (Skype & REC excluded)
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But technology sector is maturing Nordic technology home runs between 1998 - 2003
€1M €50M €10M Revenue
M&A: € 961M
M&A: € 600M
M&A: € 230M
M&A: € 169M
IPO: € 491M
IPO: € 189M
IPO: € 191M
SendIt M&A: € 120M
M&A: € 940M
IPO: € 474M
IPO: € 383M
M&A: € 135M
IPO: € 200M
IPO: € 167M
IPO: € 347M
IPO: € 430M
IPO: € 278M
IPO: € 254M
Avg P/S: 529 Avg Rev: €73M
Copyright Creandum 2009
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But technology sector is maturing Nordic technology home runs between 2004 - 2009
€1M €50M €10M Revenue
M&A: € 2’200M
M&A: € 645M
M&A: € 282M
M&A: € 172M
M&A: € 162M
M&A: € 140M
IPO: € 5’148M
M&A: € 645M
M&A: € 473M
IPO: € 415M
IPO: € 198M
M&A: € 186M M&A: € 109M
M&A: € 100M
Avg P/S: 33 Avg Rev: €115M
IPO: € 328M
M&A: € 222M
Copyright Creandum 2009
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IPO & trade sale to US most important large exit
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• Lack of larger Nordic exit opportunities since IPO-market dried up • Larger exits very dependent on US exit market • VC investors in 100% of exits larger than €500M and 70% of exits larger
than €100M (81% last 3 years) but few include US investors
Exits
M€
Exit value distribution for trade sale & IPO
Exit distribution for trade sale & IPO per exit interval
Copyright Creandum 2009
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0%
10%
20%
30%
40%
50%
60%
Sweden Norway Denmark Finland
Sweden & Norway create majority of exit value
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• Swedish & Norwegian companies represent 67% of exits & 78% of exit value • Large portion of Norway exits through IPO • Denmark mostly strong exit market before 2001 • Finland: some big IPOs before 2001, then small domestic exits
Relative portion of Nordic exits and exit value per country 1999-2008
Number of IPO
Company value at IPO
Copyright Creandum 2009
132
39 33 50
€ 8.8
€ 7.3
€ 2.6 € 1.8
Exit value
Number of exits
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0%
10%
20%
30%
40%
50%
60%
Sweden Norway Denmark Finland
12
• Sweden: without Skype (€2.2Bn) • Norway: without REC (€5.1Bn) • Denmark: without Giga (€940M) • Finland: without SSH (€383M)
Relative portion of Nordic exits and exit value per country 1999-2008
Number of IPO
Company value at IPO
Copyright Creandum 2009
131
38 32
49
€ 6.7
€ 2.1 € 1.6 € 1.5
Exit value
Number of exits
...but without biggest exits Sweden is clear nr 1
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Software & internet services biggest sectors
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41%
23%
14%
8%
5% 1%
8% Software
Internet Services
Systems
Components
Operator
Materials
25%
22%
9%
10%
7%
24%
3%
Copyright Creandum 2009
• Last 3 years, internet services has been even more significant • Software companies are exited in all value intervals • System & components companies are more digital, either large exit or no
exit at all (or fire sale) • Operators create significant exits but are expensive to build
Nr of Exits: 290 Exit value: € 21.8 Bn
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Local differences of where exit value is created
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• Sweden: Internet & software • Norway: Software & materials • Denmark: Components & software • Finland: Software
Copyright Creandum 2009
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Local differences of where exit value is created
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• Sweden without Skype (Internet services): Software & systems • Norway without REC (Materials): Software & internet services • Denmark without Giga (Components): Software • Finland without SSH (Software): Software
Copyright Creandum 2009
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Wrapping up
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• The Nordic region produces great companies
• Sweden & Norway have created majority of exit value
• It takes time to build great companies but if you are not growing you are getting left behind – requires scalability and strong sales focus
• Technology sector is maturing – substantial revenues required
• Internet & software biggest sectors • International footprint is important – the exit market is primarily
outside the Nordic region