Twenty nine Finnish high-tech growth companies raised almost EUR51m in the first half of 2009 – a 17 per cent decrease from the first half of 2008, according to a survey by Technopolis
Twenty nine Finnish high-tech growth companies raised almost EUR51m in the first half of 2009 – a 17 per cent decrease from the first half of 2008, according to a survey by Technopolis Online.
The amount raised was 17 per cent below the amount raised by 34 companies in the first half of 2008, and 74 per cent 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 US, Israel and India,’ says Will Cardwell, chief executive of Technopolis Ventures. ‘We do not have the large bellwether transactions in Finland this year that we had in companies like WinWinD and Blyk in 2008. We see more than 50 companies seeking to raise funds right now in the Finnish market, and we hope that the environment will improve in the second half of the year. Likewise, we hope to see the significant exits that have been lacking for several years start to return in the second half of the year, since there are certainly a number of firms well-positioned for exit as the economic climate begins to rebound.’
In the first half of the year, 11 companies attracted more than EUR1m each. Of these, three companies raised EUR5m to EUR10m each: Eniram, Silecs, and EpiCrystals. Only one company raised over EUR10m: Imbera Electronics.
The size of an average financing round was approximately EUR1.8m, about the same as in the first half of 2008 and about the same when compared to EUR7.5m in the second half of 2008 which was skewed by two relatively large transactions.
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 EUR12m, a decrease from EUR15.5m in the first half of 2008.
During H1 2009, about 65 per cent 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 EUR37m and 72.9 per cent of all invested euros. This was a significant difference compared to H1 2008 when capital region-based companies received 56 per cent of all privately invested euros.
Seed and early stage companies were able to attract 27 investment rounds, a relatively high number given the economic conditions, but low relative to the number of investment opportunities in Finland. Early stage companies accounted for a majority of the number of investments. They attracted 93 per cent of all investments in H1 2009. The average overall investment size of EUR1.8m was not significantly different from the average early stage investment, which was EUR1.7m – ranging from EUR150,000 up to EUR11m. Overall, venture capital companies and private investors did not drastically change their stage preferences during the first half, according to the data.
The survey found big 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 EUR24.5m they contributed was only slightly above the EUR22m contributed by foreign venture investors. Angel investors (nearly exclusively domestic) were estimated to contribute EUR4m. There were only six clear international investments in H1 2009 which made the average size of foreign investment much larger than domestic venture capitalists’ average investments (EUR3.7m vs. EUR1.3m). In H1 2008, international investors invested venture capitalists invested EUR12.2m and angel investors EUR6.2m. Varying greatly from the H1 2009 figure, in H1 2008 domestic investors made as much as 70 per cent of investment into Finnish high-tech companies.
Technopolis Ventures says the biggest worry is that there are no significant exits in its dataset. In fact, no exits have been reported from any venture-backed growth company in H1 2009.
Many companies are seeking funds – over 50 companies are actively raising money, and the firm expects that there are some more that are unknown to it. 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.
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 Finland, there were very few known investments.
