1. Experience f
E i from
30 years of
investments
Claes de Neergaard CEO
2. A presentation in th
t ti i three parts
t
1.
1 Industrifonden d
I d t if d and our role i th S di h
l in the Swedish
venture capital landscape
2. The role of government in the support of
g pp
commercialization
3. Lessons learned from 32 years of
investment
in estment operations
3. We invest i S di h growth companies
W i t in Swedish th i
SOLD
SOLD
4. Industrifonden in brief
I d t if d i b i f
One f the largest i
O of th l t investors i small S di h
t in ll Swedish
growth companies
Total assets of SEK 3,8 billion
,
Investments currently in some 90 companies
Staff of 28, four branches
Acts on strict commercial terms
Independent trust established by
government i 1979
t in
6. Special f t
S i l features
Single
Si l country
t
Multisector
Early t
E l stage
Multiple financing tools
Evergreen fund with a long-term investment horizon
Financial strength, can invest 5-190 MSEK
per company
Active minority investor; partner to entrepreneurs
and private investors
p
7. 32 years with I d t if d
ith Industrifonden
Equity for SME
Loans and grants devlopment and
to small expansion
enterprises
t i
Soft loans to
large companies
1996-
1990
1995
1979
1989
8. Our purpose
Industrifondens mission i t promote i d t i l growth and
I d t if d i i is to t industrial th d
development in Sweden by financing SME:s on commercial
terms.
Operational objectives:
– Industrifonden shall complement the market and collaborate with
private investors with the aim of investing about 60 percent of its
equity in companies.
– Value creation: A combination of a return on equity exceeding the
five-year treasury bond yield and social economic return.
– Costs shall not exceed 2,5 percent of total assets.
9. 450
400
General index Swedish stock exchange
Feb 20, 1980-Nov 21, 2011
350
300
250
200
150
100
50
AFGX index 100 = 1995-12- 29
1995 12
0
80.02.20 82.02.20 84.02.20 86.02.20 88.02.20 90.02.20 92.02.20 94.02.20 96.02.20 98.02.20 00.02.20 02.02.20 04.02.20 06.02.20 08.02.20 10.02.20
10. Profit/loss and returns
P fit/l d t
Profit/loss, MSEK Return on equity, %
1 000 25
21,7%
%
800 20
600 737 15
400 10
200 5
0 0
-200 -5
-400 -10
06/07 07/08 08/09 09/10 10/11
12. The l f
Th role of government
t
The enabling Fund Seed Development and
framework of funds capital expansion capital
13. Development and d
D l t d dynamics of companies
i f i
New business activity
Median country
Job growth in the Number of new
business sector start-ups Sweden
Value-added growth No of new companies
in the business sector with employees
Productivity
P d ti it growth i
th in Percentage of emerging
P t f i
the business sector companies (employees)
Percentage of emerging
companies (turnover)
14. Access t fi
A to financing
i Median country
Sweden
Effective average
corporate tax
Costs for closing Effective marginal corporate tax
bus esses
businesses
Obstacles for trade and Access to bank financing
investments
Entrepreneurial obstacles Domestic lending to private sector
Expansion stage Size of stock market
private equity
Early stage private equity
16. Some l
S lessons l
learned
d
The l f
Th role of government
t
Overall responsibility for a smooth and effective
financing system
g y
Distinguish between general SME financing
needs and those of high tech Go Globals
The annual cost of commercialization is small in
relation to R&D
Tax incentives for private investors needed
If SME growth is a top priority, dare to act,
experiment and develop successful models
VC is not the only answer for creating a buoyant
SME sector
17. Financing of new companies in Sweden
Bank loans
24% Customers
12%
New capital from
previous owner
12%
Suppliers
6%
Regional funds
6%
Company cash flow Other sources
35% 4%
Venture C it l
V t Capital
1%
18. Some l
S lessons l
learned
d
The l f VC i
Th role of VC-investors
t
The VC industry carries too many risks,
g
governance much better in Buy Out
y
Relation founder/investors must be managed
Syndication fine when everything smells
roses, but can be a pain when difficulties
arise
Fewer local and regional VC funds partially
replaced by
Super Angels and private investment
companies
International VC:s
Adds sector competence and business skills
19. Some l
S lessons l
learned
d
Role f
R l of government owned i
t d investors:
t
Be strong where market is thin
Always respect strict commercial criteria!
Attract the best staff with market conditions.
But, there are other drivers than carry for
making a good job!
Partnership with the private sector,
co-finance on the same conditions
Long-term investments based on evergreen
structures very precious
State supported funds-of-funds and direct
investment vehicles in seed, start and growth
are crucial for the formation and growth of
new companies.
20. Invests in large
g
companies while
they are small
claes.de.neergaard@industrifonden.se
www.industrifonden.se
