A presentation of the Creandum Nordic Tech Exit Analysis

1. Backing the companies of tomorrow
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Creandum Nordic Technology Exit Analysis
1

2. Creandum exit database
• Database with ~400 private technology company exits (~250 with exit value)
• 20+ parameters covered including exit value, exit revenue, exit type, years from
inception to exit
• Companies from Denmark, Finland, Norway & Sweden
• Focus on VC & angel investments – no buyout or privatizations
• Exit value (€m) of companies at time of trade sale or IPO (end of 1st day trading)
• EXCLUDING Life science, med tech, bio tech, retail, energy (oil & gas etc) &
environmental and consulting
• Sources include official information (web sites, press releases, newspaper
articles, annual reports) as well as financial resources & databases
• Feel free to use the material but please mention the source
• The database is good but not complete – total exit values are likely to be higher
Copyright Creandum 2011 2

3. Nordic technology firms represent a significant portion of global BUSD exits
• Nordic companies represented 9% of all BUSD Technology Exits 2005-2009
global billion dollar technology exits during 9%
6%
2005 – 2009
• In terms of M&A exit value for VC-backed
18%
technology companies, the Nordics
represented ~18% compared to the US 35%
during the same period (but only 5% of
active VC firms & likely even lower
percentage of capital)
• Sample of recent significant BUSD Nordic
32%
company exits:
Nordic (3) US (11)
Rest of Europe (6) China (12)
IPO: $6.7Bn M&A: $2.75Bn
Others (2)
IPO: $1Bn M&A: $1Bn
Sources: NVCA, EVCA, Thompson, Dow Jones, Creandum, Balderton
Copyright Creandum 2011 3

4. and a disproportionally large portion of Europe
Deloitte Europe
Billion dollar exits Fast-500 companies Amount of VC investment
27,6%
33,0% 14,0%
2005-2009:
Nordics
Rest of Europe
Europe’s 100 largest Olympic gold
software companies medals:)* Population
22,0% 3,5%
21,0%
*Includes all gold medals between 1896-2010 for existing and previous European countries
Sources: EVCA, Thompson, Dow Jones, Creandum, Truffle, Deloitte, International Olympic Committee
Copyright Creandum 2011 4

5. Nordic entrepreneurs create world class companies & services
Sample of recent successful companies & services created by Nordic entrepreneurs
Creandum Note: Skype, Soundcloud, SuccessFactors, Playfish primarily established outside Nordics
Copyright Creandum 2011 5

6. The Nordics is one of the world’s most attractive regions for a VC
Best Countries Global Researchers Global Corruption
R&D as % of
Rank To Start a Innovation per 1000 Competitive- Perceptions
GDP3
Company1 Index2 employed3 ness Index4 Index5
1 Denmark Iceland Israel Finland Switzerland Denmark
2 Canada Sweden Sweden Iceland Sweden New Zealand
3 United States Hong Kong Finland Denmark Singapore Singapore
4 Sweden Switzerland United States Sweden United States Finland
5 New Zealand Denmark Denmark Norway Germany Sweden
6 Ireland Finland Austria Austria Japan Canada
7 Switzerland Singapore Iceland United Kingdom Finland Netherlands
8 Norway Netherlands France Estonia Netherlands Australia
9 Iceland New Zealand Belgium Slovenia Denmark Switzerland
10 Netherlands Norway United Kingdom Luxembourg Canada Norway
Sources: 1) Small Business Administration's Office of Advocacy 2) INSEAD 3) OECD 2010 Factbook
4) World Economic Forum 5) Transparency International CPI 2010
Copyright Creandum 2011 6

7. and the Nordic tech opportunity is big and increasing
MEUR Total Nordic exit value 1998-2011
7 000,0
6 000,0
5 000,0
4 000,0
3 000,0 €2.4Bn
2 000,0
€1.4Bn
1 000,0
0,0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Exit year
Avg. annual exit value 1998-2004 Avg. annual exit value 2005-2011
• Average exit value per year for the last seven years is €2.4Bn
• Total exit market value increased 72% between economic cycle in ‘98-’04 and ‘05-’11
• 17% of M&As & IPOs represent 82% of total exit value
• VC investors in 100% of exits > €500M and 73% of exits > €100M (% of total exits)
Sources: EVCA, Thompson, Dow Jones, Creandum
Copyright Creandum 2011 7

8. The Nordic region consistently produces a significant number of winners
Tech exits larger than €100M 1998 - 2004
M&A: 940 MEUR
IPO: 514 MEUR IPO: 474 MEUR
M&A: 961 MEUR
IPO: 491 MEUR
IPO: 383 MEUR
M&A: 600 MEUR IPO: 189 MEUR IPO: 347 MEUR
IPO: 430 MEUR
M&A: 284 MEUR
IPO: 200 MEUR
IPO: 191 MEUR
M&A: 230 MEUR
IPO: 167 MEUR IPO: 278 MEUR
SendIt
M&A: 120 MEUR M&A: 150 MEUR*
M&A: 169 MEUR
IPO: 254 MEUR
M&A: 135 MEUR
Revenue
1 MEUR 10 MEUR 50 MEUR
Median P/S: 15
Median Rev: 27 MEUR
*Part of Kelkoo exit
Sources: Creandum
Copyright Creandum 2011 8

9. and the trend is towards more solid businesses with considerable revenues
Tech exits larger than €100M 2005 - 2011
IPO: 5’148 MEUR IPO: 732 MEUR
M&A: 645 MEUR
M&A: 282 MEUR M&A: 645 MEUR M&A: 473 MEUR
M&A: 2’200 MEUR M&A: 258 MEUR
IPO: 415 MEUR
M&A: 222 MEUR
M&A: 172 MEUR
IPO: 198 MEUR M&A: 196 MEUR
M&A: 162 MEUR
M&A: 194 MEUR
IPO: 160 MEUR
M&A: 140 MEUR
M&A: 186 MEUR
M&A: 121 MEUR M&A: 109 MEUR M&A: 100 MEUR
Revenue
1 MEUR 10 MEUR 50 MEUR
Median P/S: 6
Median Rev: 53 MEUR
Sources: Creandum
Copyright Creandum 2011 9

10. Sector considerations: Consumer and software increasingly important
Distribution of Nordic Total exit value distribution last 5
exits > €100M years for selected sectors
14
12
11,4%
10
Hardware
8 45,4% Software
6
43,3% Consumer
4
2
0
Consumer Software Hardware Other *
1998-2004 2005-2010
• Significant increase in value creation in consumer sector and
decrease in hardware and software
• Consumer and software close to 90% of value created in
selected sectors
• Emerging new sectors (other) likely to generate value as well
*REC IPO valued at 5,143 MEUR.
Sources: NVCA, EVCA, Thompson, Dow Jones, Creandum, Balderton
CONFIDENTIAL 10

11. Geo considerations: Sweden most important geography with 42% of value
% of Nordic exits and exit value per country 1998-2011
60%
208
50%
€10.9Bn
40%
€8.2Bn
Number of exits
30%
Exit value
20% 70 Number of IPO
52 €3.9Bn Company value at IPO
42 €3.1Bn
10%
0%
Sweden Norway Denmark Finland
• Swedish & Norwegian companies represent 70% of exits & 73% of exit value
• Large portion (62%) of Norway exit value through one IPO (REC €5.1Bn)
• Denmark & Finland continually decreasing in importance since 2001
Skype 50/50 Sweden & Denmark, MySQL 50/50 Sweden & Finland
Copyright Creandum 2011 11

12. IPO and trade sale to US most important for large exits
Exit value distribution for trade Nr of exits for trade sale &
sale & IPO (of total exit value) IPO per exit interval
% of Exits
8%
100%
90%
80%
RoW
70%
US
60%
49%
34%
Other
nordic
country
50%
40%
Inside
country
30%
IPO
20%
10%
0%
Exit
=<
10
10
-­‐
49
50
-­‐
99
100
-­‐
499
≥
500
intervals
3%
6%
in M€
• Lack of larger Nordic exit opportunities since IPO-market dried up after 2000
• Larger exits very dependent on US exit market
• VC investors in 100% of exits larger than €500M and 73% of exits larger than
€100M (% of total exits)
Copyright Creandum 2011 12

13. Nordic VC allocation is required to capture the value of the region
% of Nordic exits with VCs from Nordic,
% of Nordic exits with VCs from Nordic,
UK & Rest of Europe 1996 - 2010
UK & Rest of Europe 1996 - 2010
100.0%
80.0% Nordic VC
US VC
60.0% RoW VC
RoE VC
40.0%
UK VC
20.0%
0.0% Exit value
Intervals (MEUR)
>=10 >=50 >=100
• Nordic VCs present in ~90% of all VC-backed exits larger than €100M
• Non-Nordic VCs are on average only represented in 1.3 Nordic exit deals each –
very difficult to access the value from outside the region
Sources: EVCA, Thompson, Dow Jones, Creandum
Copyright Creandum 2011 13

14. Wrapping up
> Large and growing Nordic tech market
• €2.4Bn yearly exit value last 7 years
• A significant part of European and global exit
• Increased high-quality deal flow
• Software & consumer sectors dominant and Sweden
most important geography
> Significantly maturing ecosystem
• More serial entrepreneurs
• Successful entrepreneurs becoming angel investors
• Experienced growth company management teams
available
• Few but more experienced investors active in the region
CONFIDENTIAL 14