4. VC & Growth deals: High level of activity continued in 2022
In 2022, 359 transactions were completed by venture funds in Nordic start-ups and growth companies. The amount invested in the segment remained high, with €2.2 billion in total. Compared to the average for 2017-2021, the invested amount was up 52 %, but down 25 % compared to 2021. The high activity level of 2021 continued in the first half of 2022, before slowing down in the second half of 2022.
“The Nordic venture and growth market has made impressive progress, with the number of deals exceeding 300 for the first time in 2019, and continuing to do so for four years in a row. Overall, we have seen an acceleration within the professionalisation of the venture sphere, driven by more venture firms and greater competition among them”, says Espen Langeland, CEO of Argentum.
359
Investments by seed, venture and growth funds in Nordic companies in 2022.
The number of venture deals remained high in 2022, after a record-breaking number of deals in 2021. The high activity level from 2021 was maintained in the first half of 2022. However, activity was reduced in the second half of the year. The activity did not experience a hard stop in the wake of uncertainty, even though activity slowed down somewhat in the second half of 2022. The number of venture and growth deals surpassed 300 for the first time in 2019, and for the fourth straight year the number of deals was well above 300. The number of deals fell from 447 in 2021 to 359 in 2022, but the activity remained high. Compared to the previous five years, the number of investments is up 10 %.
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€2.2 bn
Amount invested in Nordic venture and growth in 2022.
“Although there was a decrease in investment activity in the latter half of 2022, the Nordic venture and growth market continues to attract significant investment. The record-breaking amount of capital raised in 2022 has put many funds in a strong position to make promising investments in the coming years”, says Espen Langeland, CEO of Argentum.
Seven of the ten largest deals involve tech companies
Below are the ten most significant transactions during the year. Seven were in the ICT sector , two were within the consumer sector and one was within cleantech. Eight of the ten largest deals were completed in the first half of 2022.
ICT
- In February, Finland’s RELEX Solutions raised EUR 500 million in a round led by Blackstone Growth. The finance round is a Finnish record.
- The Finnish software company Aiven raised USD 210 million in a round led by Eurazeo.
The transaction valued the open-source company at USD 3 billion (read more). - In March, Ardoq raised USD 125 million from EQT Growth and One Peak Partners, among others. The transaction valued the Norwegian company at more than USD 300 million (read more).
- The Swedish provider of logistics technology, Instabox, raised EUR 120 million.
The round was led by Verdane and ended with a unicorn valuation (over USD 1 billion). - The Finnish iPhone repair company Swappie raised EUR 108 million in February. The round was led by Verdane, together with existing investors Lifeline Ventures, Inventure, Reaktor Ventures and TESI (read more).
- In February, MariaDB raised USD 102 million in funding led by Invicta Growth, with participation from another new investor, Angel Pond Holding Corporation (read more).
- Smart energy provider Tibber raised USD 100 million in a round led by Summa Equity. Investors such as Balderton Capital, Eight Road Ventures and Schibsted Ventures also participated in the round (read more).
Consumer
- The Norwegian grocery delivery startup Oda raised USD 151 million in December. The round valued the company at USD 353 million, and new investors Summa Equity and Verdane participated in the round (read more).
- In December, the Swedish company NORNORM raised EUR 110 million in a round led by Verdane. NORNORM is a subscription-based furnishing service that enables businesses to move from single-use office furniture to a circular model (read more).
Cleantech
- Nysnø Climate Investments invested in Morrow Batteries, which has plans for sustainable battery cell production. The company raised EUR 100 million in the financing round, which was led by Siemens Financial Services and ABB.
ICT remains the most attractive sector for VC and growth funds
The ICT sector is still attracting the most investments from venture and growth investors. The sector attracted 55 % of investments in the segment, which is about the same share of investments as in the previous two years. The share has stabilised at around 50-55 %, after the five-year period of 2014-2018 in which the sector attracted around 60 %. Compared to the number of deals in the previous five years, investments increased by 4 %, but decreased by 10 % compared to 2021.
Growth in industrials
Industrials was the only major sector that experienced an increase in investments compared to 2021, with a record-breaking 39 deals. Industrials attracted 11 % of venture and growth investments, compared to 8 % in 2021. Compared to the average for the previous five years, this was an increase of 52 %, and an increase of 11 % compared to 2021.
Closely behind we find health care and life science and the consumer sector, each with 10 % of investments. Both sectors attracted fewer investments than in 2021. Health care and life science investments fell by 23 % compared to the average for the previous five years, and fell by 47 % compared to 2021. Although investments in the consumer sector fell by 20 % compared to 2021, investments in the sector are high compared to historical levels. Compared to the period 2017-2021, the average number of investments in the sector is up by 25 %.
Financials is another sector that attracted a significant number of investments, attracting 7 % of investments. This is a reduction of 42 % from 2021, but the sector is still an important one for venture and growth deals.
39
Number of venture investments in industrials in 2022. This is 3 percentage points up on the average for the same period in the previous five years.
Health care and life science attracted less attention from investors, compared to the pandemic years
The health care and life science sector attracted 10 % of all venture investments, which was fewer than in 2021. According to our statistics, the sector experienced a fall of 47 %, compared to the average for the previous five years. Hadean Ventures specialises within the health care and life science sector, and Founding Partner Ingrid Teigland Akay is not worried that the sector will become irrelevant any time soon:
“Macro trends make this an exciting sector. A number of rising medical needs are not covered by current medicines and technologies, which includes the field of chronic diseases. The population is ageing, and even more people are getting these chronic diseases. We also know that welfare systems have limited resources, so we need new effective treatments and new technologies to handle the challenges ahead”, she explains.
Teigland Akay describes the upswing of the sector during the pandemic as “sector tourism”, which offers an explanation as to why we have seen a fall in our numbers for this sector:
“The pandemic also enticed other generalist investors to invest in health. We refer to this as sector tourism. This meant that the sector received much more capital and had an upswing at the beginning of the pandemic. We believe that, regardless of fluctuations, this is an interesting sector – mainly because of the underlying trend creating a need for innovation”, she adds.
According to Teigland Akay, success within this sector requires specialised competence:
“The entire investment team is specialised in life science and health care. We all have a background in either scientific research or clinical work. This is absolutely crucial to enable us to conduct a thorough analysis of the investment cases”, she says.
She continues by explaining why long-term owners are important for this particular sector:
“Drug development is capital-intensive and high risk, but, as specialist investors, we are set up to handle that. We are also probably better equipped in the capital drought because we are so used to thinking long-term. I think it is an advantage for the companies that the owners are aware of the nature of this sector”, she adds.
Uncertainty spread in the second half of the year
Many of the GPs we have talked to referred to greater uncertainty in the market last year. Ingrid Teigland Akay, Founding Partner of Hadean Ventures, describes this as a turbulent year:
“It was a very turbulent year. A lot happened that created uncertainty in the market. We saw many of our peers slow down and become more cautious. When it came to investments, people sat on the fence to assess the situation. We were also a little cautious. Our investments last year were made at the beginning of the year, and were a result of long and thorough processes. We had a very strong deal-flow and worked on a number of processes throughout the year, but we saw that, in particular, syndication with other investors took longer than before”, says Teigland Akay.
The Norwegian market experiences growth
All Nordic countries experienced a decrease in the number of venture and growth deals except for the Norwegian market, which experienced a significant increase in the number of investments:
- Norwegian companies attracted 28 % of the deals in the region, compared to an average of 17 % in the previous five years. The number of transactions was 12 % higher in 2022 than in the record year of 2021, and 82 % higher than the average for the period 2017-2021.
- Swedish companies still attracted the most investments, with 125 investments in 2022. Sweden accounted for 35 % of the market, with a decrease of 25 % compared to 2021, but an increase of 2 % compared to the previous five years.
- In Denmark, the number of investments fell by 46 % in 2022, from an extraordinarily high level in 2021. Compared to the average for the previous five years, the reduction was 9 %. Danish companies attracted only 16 % of the venture transactions, which is lower than usual.
- Activity in Finnish VC experienced a moderate decrease of 10 % in 2022 compared to 2021, and a 6 % decrease compared to the average for the previous five years. The Finnish market did not experience particularly high activity in 2021, and the activity had remained quite stable for the previous five years.
If we look at the share of the invested amount, the distribution across the Nordic countries differs from the number of deals. Finland attracted the largest amount of investments, but Finland had the second lowest number of investments among the four Nordic countries. In other words, the average investment in Finnish companies was a lot larger than in the other countries. Norway is second in terms of the amount invested with 29 %, which compares to the 28 % when we look at Norway’s share in terms of number of investments. Sweden attracted the highest number of investments but only 21 % of the amount invested (see graph above). Denmark only attracted 14 % of the amount invested.
Non-Nordic managers’s share fell from 2021: The share of international investors in the Nordics was 32 % in 2022, down from 40 % in 2021. The share of non-Nordic investors is high, in a historical perspective.
Fewer non-Nordic GPs, but more deals by Norwegian GPs
Investments from Nordic GPs remained relatively stable, falling from 268 to 243 deals. Compared to 2021, the share of non-Nordic GPs fell considerably, from 40 % in 2021 to 32 % in 2022. However, the share of non-Nordic managers remained at levels seen in the years before 2021, and was high compared to historical levels. The number of US and UK investors fell considerably from 2021. Investments from US GPs fell by 51 % from 2021, and by 31 % for UK GPs. Investments from GPs from the rest of the world experienced a more moderate decline of 11 %.
Swedish fund managers were, as usual, the most active in 2022, making up 26 % of venture investments. The number of investments remained stable, decreasing from 114 in 2021 to 92 in 2022. Compared to the average for the previous five years, the number of investments from Swedish GPs was up 5 %.
For the first time, the Norwegian GPs were the second most active in the Nordics. Norwegian fund managers accounted for 19 % of Nordic venture deals. Investments from Norwegian GPs increased by 10 % from 2021 and, compared to the average for the previous five years, the number of investments was up by 38 %.
Finnish fund managers also increased their investments in Nordic venture, up by 17 % compared to 2021, but down by 9 % when compared to the average for the previous five years. The number of investments from Danish GPs fell by 35 % compared to 2021, but increased by 1 % compared to the average for the previous five years.