2010 01 13 Creandum Nordic Exit Analysis

Being a VC in the Nordics

Creandum Nordic Technology Exit Analysis

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• 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

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

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1 700

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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)


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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Exit Value (€M) >1 BUSD technology companies last 5 years

Source: Balderton


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

40

50

60

70

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


0,0

50,0

100,0

150,0

200,0

250,0

300,0

350,0

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10

20

30

40

50

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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

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Exits M€


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20

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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€


Years from company founded to exit

Total exit value in intervals from company founded to exit (Skype & REC excluded)

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


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


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


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


132

39 33 50

€ 8.8

€ 7.3

€ 2.6 € 1.8

Exit value

Number of exits

0%

10%

20%

30%

40%

50%

60%

Sweden Norway Denmark Finland

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•  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


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

Software & internet services biggest sectors

13

41%

23%

14%

8%

5% 1%

8% Software

Internet Services

Systems

Components

Operator

Materials

25%

22%

9%

10%

7%

24%

3%


•  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

Local differences of where exit value is created

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•  Sweden: Internet & software •  Norway: Software & materials •  Denmark: Components & software •  Finland: Software


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


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