1. Being a VC in the Nordics

2. Creandum Nordic Technology Exit Analysis
• 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
* VentureOne/Source, EVCA, Thompson, Zephyr, Private Equity Insight, Nordic Unquote, Förvärv & Fusioner
Copyright Creandum 2009 2

3. The Nordics at a Glance
GDP (US$ bn) Population (M)
2 000 40
1 700 34
25
1 006
1 000 20
0 0
Nordics California Nordics California
Olympic Gold Medals
WEF Global ICT Report (/million inhabitants)
Rank Country Score
100
1 Denmark 5.85
2 Sweden 5.84
66
3 USA 5.68
4 Singapore 5.67
50
5 Switzerland 5.58
6 Finland 5.53
7 Iceland 5.50
8 Norway 5.49 8
9 Netherlands 5.48
0
10 Canada 5.41
Nordics US
Copyright Creandum 2009 3

4. 100
1 000
10 000
100 000
Google 1 000 000
First Solar
Exit Value (€M)
Source: Balderton
REC
QQ (Tencent)
Baidu
Alibaba
Q-Cells
Ctrip
Navteq
Salesforce
Sunpower
Suntech
MetroPCS
Iliad
Focus Media
Tom-Tom
CTC Media
Giant Interactive
LDK Solar
IndiaBulls
Yingli
Copyright Creandum 2009
Betfair
TeleAtlas
Shanda
Skype
YouTube
Omniture
• 12 US
Perfect World Co
>1 BUSD technology companies last 5 years
• 12 China
VistaPrint
SMIC
Netsuite
A global take on billion dollar tech companies
Infinera
MoneySupermarket
• 10 Europe - 3 in Nordics
Rightmove
Riverbed
MySQL
4

5. The Nordic technology market
A very attractive region
Exits Exits of private Nordic technology (ICT) companies between 1998-2009
80
Median: €20M Average €114M
70
60
50
40 Number of IPO
Number of M&A
30
20
10
0
=< 10 10 - 49 50 - 99 100 - 499 ≥ 500 M€
• 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
Copyright Creandum 2009 5

6. Exit market development
Timing matters
Exits Number and average value of exits between 1999-2009 M€
60 350,0
50 300,0
250,0
40
200,0
Number of IPO
30
150,0
Number of M&A
20
100,0
Avg Exit Value
10 50,0
0 0,0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
• 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
Copyright Creandum 2009 6

7. Large value created in early-stage companies…
Total exit value in intervals from company founded to exit (Skype & REC excluded)
M€ Exits
4 000,0 100
3 500,0 90
80
3 000,0
70
2 500,0 60
2 000,0 50 Total value
1 500,0 40 Number of exits
30
1 000,0
20
500,0 10
0,0 0
1-3 4-6 7-9 10-12 13-15 =>15
Years from company founded to exit
• 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
Copyright Creandum 2009 7

8. But technology sector is maturing Avg P/S: 529
Avg Rev: €73M
Nordic technology home runs between 1998 - 2003
M&A: € 940M
M&A: € 961M
IPO: € 491M IPO: € 474M
IPO: € 430M
M&A: € 600M
IPO: € 383M
IPO: € 189M
IPO: € 278M
IPO: € 347M
M&A: € 230M
IPO: € 191M
IPO: € 167M
SendIt IPO: € 254M
M&A: € 169M M&A: € 120M IPO: € 200M
M&A: € 135M
€1M €10M €50M Revenue
Copyright Creandum 2009

9. But technology sector is maturing Avg P/S: 33
Avg Rev: €115M
Nordic technology home runs between 2004 - 2009
M&A: € 645M IPO: € 5’148M
M&A: € 645M
IPO: € 328M M&A: € 473M
IPO: € 415M
M&A: € 282M
M&A: € 222M
M&A: € 2’200M
IPO: € 198M
M&A: € 172M
M&A: € 186M M&A: € 109M
M&A: € 162M
M&A: € 140M M&A: € 100M
€1M €10M €50M Revenue
Copyright Creandum 2009

10. IPO & trade sale to US most important large exit
Exit value distribution Exit distribution for trade sale & IPO per exit interval
for trade sale & IPO Exits
M€
• 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
Copyright Creandum 2009 10

11. Sweden & Norway create majority of exit value
Relative portion of Nordic exits and exit value per country 1999-2008
60%
132
50%
€ 8.8
40%
€ 7.3
30% Number of exits
Exit value
50
20% Number of IPO
39 33 € 2.6 Company value
€ 1.8
10% at IPO
0%
Sweden Norway Denmark Finland
• 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
Copyright Creandum 2009 11

12. ...but without biggest exits Sweden is clear nr 1
Relative portion of Nordic exits and exit value per country 1999-2008
60%
€ 6.7
131
50%
40%
30% Number of exits
Exit value
49
20% € 2.1 Number of IPO
38 € 1.6
32 € 1.5 Company value
10% at IPO
0%
Sweden Norway Denmark Finland
• Sweden: without Skype (€2.2Bn)
• Norway: without REC (€5.1Bn)
• Denmark: without Giga (€940M)
• Finland: without SSH (€383M)
Copyright Creandum 2009 12

13. Software & internet services biggest sectors
Nr of Exits: 290 Exit value: € 21.8 Bn
8% 3%
1% Software
5% 25%
Internet Services 24%
8%
41%
Systems
Components
14%
Operator 7%
22%
Materials
10%
23% 9%
• 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
Copyright Creandum 2009 13

14. Local differences of where exit value is created
• Sweden: Internet & software
• Norway: Software & materials
• Denmark: Components & software
• Finland: Software
Copyright Creandum 2009 14

15. Local differences of where exit value is created
• 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 15

16. Wrapping up
• 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
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