Technopolis Online Reports: Finnish high-tech growth companies raised almost â‚¬51 million in the first half of 2009â€”a 17% decrease from the first half of 2008. In addition, Q2 2009 decreased more than 50% compared to the prior year.
Technopolis Online Reports: Finnish high-tech growth companies raised almost €51 million in the first half of 2009—a 17% decrease from the first half of 2008. In addition, Q2 2009 decreased more than 50% compared to the prior year.
The following are the findings of the Quarterly Survey, conducted by Technopolis Online, which is at the forefront of high-tech venture capital research in
Overview – In the first half of 2009, 29 Finnish high-tech companies raised approximately €51 million from angel and venture capital investors. The amount raised was 17% below the amount raised by 34 companies in the first half of 2008, and 74% below the amount raised by 26 companies in the second half of 2008. The second quarter of 2009 was the lowest quarter recorded since 2007.
“There is a clear impact of the global slowdown in venture capital investing that we see in other markets like the
In the first half of the year, 11 companies attracted more than €1 million each. Of these, three companies raised €5 to €10 million each: Eniram, Silecs, and EpiCrystals. Only one company raised over €10 million: Imbera Electronics. The size of an average financing round was approximately €1.8 million, about the same as in the first half of 2008 and about the same when comparied to €7.5 million in the second half of 2008 which was skewed by two relatively large transactions.
H1 2009 Highlights:
Investments by sector – Software companies were able to attract more investments than any other industry (11), similar to the situation in H1 2008. Altogether, software companies raised almost €12 million, a decrease from €15.5 million in the first half of 2008. Nanotechnology companies managed to raise more capital, with three companies closing deals worth €12.7 million, setting the average investment size at €4.2 million. Finally, the ICT Hardware & Semiconductor industry received slightly more than €12 million, almost completely due to Imbera Electronics´ €11.3m investment round. Overall, the average investment per company was €1.8 million in the first half. An interesting note is that only one investment was made into a company classified primarily as a Cleantech company however, many of the investments had clear Cleantech applications, like Eniram (software for improving the trimming of cruise ships, reducing oil consumption and carbon emissions).
Regional distribution – During H1 2009, about 65% of the number of investments were received by companies that had headquarters in the capital region. In euro terms, the share was even greater, with capital region-based companies attracting over €37 million and 72.9% of all invested euros. This was a significant difference compared to H1 2008 when capital region-based companies received 56% of all privately invested euros. Venture capital raised by capital region-based companies was €34 million, so interestingly enough companies from
Stage distribution – Seed and early stage companies were able to attract 27 investment rounds, a number we consider relatively high, given the economic conditions, but low relative to the number of investment opportunities in
Investments by type of investor – We have seen some remarkable changes from the previous year in the type of investor. Domestic venture capitalists were the largest single category of investor in H1 2009, though the €24,5 million they contributed was only slightly above the €22m contributed by foreign venture investors. Our other classification, angel investors (nearly exclusively domestic) were estimated to contribute €4 million. There were only 6 clear international investments in H1 2009 which made the average size of foreign investment much larger than domestic venture capitalists´ average investments (€3.7 vs. €1.3 million). In H1 2008, international investors invested venture capitalists invested €12.2 million and angel investors €6.2 million. Varying greatly from the H1 2009 figure, in H1 2008 domestic investors made as much as 70% of investment into Finnish high-tech companies.
Most active investors – The most active investors were based in
Other Results from Our Data
No Exits – Perhaps the biggest worry is that there are no significant exits in our dataset. In fact, no exits have been reported from any venture-backed growth company in H1 2009. While there was some minor action in the angel-backed merger and acquisition market, there were certainly no noteworthy larger deals reported. Until there is a functioning exit market – both IPO’s and trade sales – venture capital will by definition be scarce since pension funds and insurance companies will stay away from the venture capital asset class. We see positive signs of action in the recent moves of the NASDAQ/OMX. It is becoming more active in raising the number of Finnish listed companies on the First North Exchange (three Finnish companies compared to over a hundred in
Many companies are seeking funds – On our radar screen, we see over 50 companies actively raising money, and we expect that there are some more that are unknown to us. Many companies have scaled back the amount of investment they are seeking, and they are operating in “survival mode” until both product and capital markets become more attractive. The “sweet spot” of venture capital target fundraising seems to be in the 2-3 million euro range, with “fallback survival options” around 300,000-500,000 euros. This means that there is a stock of fundraising demand in excess of €100 million heading into the second half of the year.
No new venture capital funds or new venture capital management companies were set up in H1 2009. And while numerous international venture capitalists were shopping in
There are a few interesting international benchmarks for Finnish venture capital numbers, now that H1 2009 venture capital numbers have been reported in several key markets. In
We begin with investments reported in the press, using the assumption that a round is completed on the day when it is announced in the press. We then add all investments that are recorded by the teams in Technopolis Ventures’ 6 locations around
About Technopolis Online – Technopolis Online is the most comprehensive investment database of the investment patterns in the Finnish high tech industry, combining validated company data and the latest financing rounds to provide a platform for visibility, business intelligence, and transparent market information. By offering an unparalleled depth of market information in
Read the full release with diagrams at http://www.technopolis.fi/docs/graf/TPO_Report_H1_2009_20082009.pdf
The Finnish version of this report is available upon request.
For further details, please contact:
Will Cardwell, CEO will.cardwell[at]technopolis[dot]fi
Karri Hautanen, Head of Services & Technopolis Online karri.hautanen[at]technopolis[dot]fi.
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