To understand the market that we operate in Creandum maintains a comprehensive exit database that we update on a continuous basis. Every year we analyze the data and summarize our findings in a report (Creandum Nordic Exit Analysis 2015) to communicate the in and outs of the Nordic tech eco-system and to see how the Nordics stacks up against Europe, US and the rest of the world. We do this partly for our own sake but more importantly we do it to promote our impressive tech scene to help attract even more capital, entrepreneurs and talent to the Nordic region.
2014 was a massive year for Nordic tech startups – there were 4 unicorns (BUSD+) companies exited and the total annual exit value was the highest ever (see table below).
In comparison to other geographies (below) – the Nordics continues to punch well above its weight. During the last 10 years the region has accounted for almost 10% of all global BUSD tech exits, trailing only US and China (on an absolute level), while only representing around 2% of GDP. While the US dominates the total number of BUSD exits Nordics has the highest ratio of BUSD to GDP indicating an efficient eco-system in creating really valuable companies.
Within the Nordics, Sweden is the dominant country with more than 50% of exit value and number of exits. Sweden also represents 55% of all exits larger than 100 MUSD further underlying its importance to the Nordic eco-system.
So what about the future? In addition to our strong track record, there are several Nordic tech unicorns in the making – Spotify and Klarna to mention two, as well as Swedish founder-led Soundcloud and Avito that both have raised significant rounds at BUSD valuations.
All-in-all, this is of course great news for the Nordic tech eco-system. Investors are naturally depending on big exits but there are other important and far-reaching implications for the region:
Role models: The successes provide ample inspiration for other entrepreneurs in showing that it is possible to create immensely successful companies
Experience: They also provide extremely valuable experiences for the next generation of entrepreneurs that have had the chance to learn what it takes to build globally successful companies
Capital: As they should, founders typically reap the largest shares of the exit proceeds. Employees also benefit through stock option programs, etc. Many of these will in turn start their own companies or start angel investing thus providing important capital to new startups
As we noted above US (and Silicon Valley) is still where the majority of the BUSD companies are created – and its importance doesn’t stop there. Even for Nordic companies the US represents the by far most important exit market with more than 50% of all exits larger than $100 million being exited to the US, pre-dominantly as trade sales but also as IPOs. This has especially been the case since the Nordic IPO market dried up in the aftermath of the IT bubble in the early 2000s.
Nordic exits (by type, value and buyer location)
No matter how much we would like to see more Nordic companies stay independent, the large dependency on the US for both building a BUSD company and to realize an exit, is the major reason Creandum has established a presence in Silicon Valley & San Francisco. Today 20% of our team is based on the US west coast with the purpose of helping our portfolio companies reach its full potential – and hopefully ending up on upcoming lists of BUSD exits.
Link to the complete report here: Creandum Nordic Exit Analysis 2015