Swedish Tech Funding

Report Q1-Q2 2017

Industrifonden is a Nordic evergreen venture capital investor with $500M in

assets, partnering with early-stage tech and life science companies with

international potential. Industrifonden-backed companies include Qlik, Arcam,

Soundtrack Your Brand, Fishbrain, Qapital and Funnel

#swedishtechreport

@Industrifonden

www.Industrifonden.com

3

Disrupted bankers and digitized doctors –2017 keeps the fire burningIn the first half of 2017 we experienced a continuedgrowth in deployed capital, while last year’s strongincrease in number of deals leveled off. This wasprimarily driven by a slight decrease in seed rounds andan uptick in Series A and B rounds.

Interestingly, despite the continued growth of investedcapital and the upwards shift of round sizes, the share offunding rounds with participation from internationalinvestors decreased to 15%. This is the lowest sharesince we started this tracking and points to a strongdomestic funding climate, even for bigger size ticketsbeyond Series A rounds. Of the international investorsthat did invest in Sweden, UK investors were the mostbullish and claimed the top spot for the first time, racingpast their American peers.

Just like in previous years, the most popular sector forventure funding was FinTech which cemented its positionin the top. More interesting to note, however, was thisyear’s runner-up sector Digital Health, which has risenfrom being virtually non-existent just a few years ago tonow gaining massive interest. This was manifested in Q1through AMRA’s $9M funding from investors includingPfizer Ventures, Industrifonden and Novo Nordisk, and in

Q2 by Kry and MinDoktor’s $20M+ rounds from investorsincluding Accel, Index Ventures and EQT Ventures.

To peg companies up for coming growth rounds, angelinvestors remain crucial to the ecosystem and in thisedition we have taken a closer look into the space. Ananalysis of the 20 most active angel investors in Swedenreveals that there is plenty of smart money to go around,as a vast majority of the investors are former founders.Together they are bringing experience from raisingmassive VC rounds and creating a combined $15+ billionin exit value.

OVERVIEW

222Funding rounds (Q3-Q4 2016: 224)

$560M(SEK 4.9B) raised (Q3-Q4 2016: $390M)

KEY FIGURES

340Active investors (Q3-Q4 2016: 349)

Björn Bergström

Tech Investor

Industrifonden

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Stabilized levels in number of rounds –continued increase in invested capital

INVESTMENT ACTIVITY

Note: The outlier adjusted graph excludes Spotify’s funding rounds in Q2 2015 and Q1 2016 to provide a more comparable trend line than the total investment graph

$M $M$M Deal count

102

700

233

104

1110

134179 211

277 281

0

200

400

600

800

1000

1200

Q12015

Q22015

Q32015

Q42015

Q12016

Q22016

Q32016

Q42016

Q12017

Q22017

Total investment*

102

169

233

104117

134

179

211

277 281

0

50

100

150

200

250

300

Q12015

Q22015

Q32015

Q42015

Q12016

Q22016

Q32016

Q42016

Q12017

Q22017

Total investment, outlier adjusted*

1,51,4

0,8 0,70,7 0,7

1,2

0,8

1 1

0

20

40

60

80

100

120

140

0

1

2

Q12015

Q22015

Q32015

Q42015

Q12016

Q22016

Q32016

Q42016

Q12017

Q22017

Median deal size Deal count

5

INVESTMENT ACTIVITY

Early stage has stabilized after previous years’ explosive growth – later stage sees slight increase

811

2 1

19

15

6

2

26

10

4 3

32

20

1 1

41

29

41

62

27

4

4240

9

61

47

9

1

50

44

12

1

4543

10

1

0

10

20

30

40

50

60

70

<$1M $1.1-5M $5.1-25M >$25M

2015 - Q1 2015 - Q2 2015 - Q3 2015 - Q4 2016 - Q1 2016 - Q2 2016 - Q3 2016 - Q4 2017 - Q1 2017 - Q2

Deal count

Deal size

00

6

INVESTOR ACTIVITY

-3%Change in active investors Q1-Q2 2017 compared to

Q3-Q4 2016

15%Of the active investors participated in at least two

funding rounds during Q1-Q2 2017

105

146

310

349 340

0

50

100

150

200

250

300

350

400

Q1-Q2 2015 Q3-Q4 2015 Q1-Q2 2016 Q3-Q4 2016 Q1-Q2 2017

Active investors

7

Angel investors and VCs remain most active backers of tech startups

Investor type by

% of deals

Q1-Q2 2017

INVESTOR ACTIVITY

37%

47%51%

29%

60%

20%

56%

23%

56%

20%

0%

25%

50%

75%

100%

Angel investors VC

Share of deal count by investor type

Q1-Q2 2015 Q3-Q4 2015 Q1-Q2 2016 Q3-Q4 2016 Q1-Q2 2017

56%

20%

12%

6%

3% 3%

Angel

VC

Investment firm, other

Corporation

Corporate VC

Accelerator

8

FOREIGN INVESTMENT ACTIVITY

Domestic investors continue to dominate funding rounds

42%

25%

18%21%

15%

0%

25%

50%

75%

100%

Q1-Q2 2015 Q3-Q4 2015 Q1-Q2 2016 Q3-Q4 2016 Q1-Q2 2017

Funding rounds with foreign participation (%)

2927

32

47

33

Q1-Q2 2015 Q3-Q4 2015 Q1-Q2 2016 Q3-Q4 2016 Q1-Q2 2017

Funding rounds with foreign participation (count)

9

FOREIGN INVESTMENT ACTIVITY

…even beyond seed stage where foreign investors typically enter

5%

16%

45%

100%

0

10

20

30

40

50

60

70

80

90

100

0%

25%

50%

75%

100%

≤$1M $1.1 - 5M $5.1 - 25M >$25M

Foreign participation % Total deal count

Deals with foreign

participation (%)Deal count

10

While overall foreign investment slowed, UK investors claimed top spot after doubling their share

FOREIGN INVESTMENT ACTIVITY

33%

25%

19%

10%

7%

6%

Foreign participation 2015

USA

UK

RoW

Germany

Finland

Denmark

29%

18%

18%

10%

9%

7%

6%4%

Foreign participation 2016

USA

UK

Rest of World

Denmark

Germany

Norway

Finland

China

38%

18%8%

8%

6%

6%

4%4%

4% 4%

Foreign participation Q1-Q2 2017

UK

USA

Norway

Rest of World

Denmark

Finland

Netherlands

Germany

Spain

Iceland

11

VERTICALS

Top 2 verticals by deal count

FinTech

13%

Digital Health

10%

FinTech remained hottest sector, while Digital Health claimed the runner up position for the first time

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FUNDRAISING TRENDS

The rundown on Sweden’s most active angel investors Q1-Q2 2017

Executives

10%

In the spotlight: Top 20 angel investors

3Average no. of investments during

Q1-Q2 2017

60%

Founders

Professional backgroundInvestment data

Artists & Athletes

Educational background

65%

30%

5%

Tech / Engineering

Business

Other

Previous achievements

$15B+Total realized exit value during the angel

investors’ active operational careers

30%

35%Have founded a VC-backed company

35%Of the top 20 angel investors also

featured in the top 20 in 2016 and / or

2015

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METHODOLOGY

What’s included• This report covers disclosed venture investments in

Swedish private tech companies

• Analysis primarily based on proprietary database with 600+

funding rounds

• Both first-time and follow-on investments are included

• Deals are tracked in SEK but reported here in USD. If

originally reported in other currencies, conversion is based

upon exchange rate per date of disclosure. Aggregate

figures are subject to change due to currency fluctuation

What’s not included• Investments in life science, med tech, bio tech, retail,

and consulting

• Secondary transactions, investments in subsidiaries and

M&A transactions

• Equity crowdfunding and investments in public

companies of any kind, including listing rounds in

conjunction with IPO’s

• Grants, bonds, bank loans and any other types of

funding that is not intended to result in ownership

An end-note to keep our lawyers happy: The information contained in this report has not been independently verified as to its accuracy. No representation or warranty, express or implied, is given by Industrifonden or any of its

directors, partners, officers, affiliates, employees, advisers or agents as to the accuracy or completeness of the contents of this report or any other document or information supplied or any opinions or projections expressed

herein or therein, nor is any such party under any obligation to update the report or correct any inaccuracies or omissions in it which may exist or become apparent.