6. VC & Growth exits: Record-low exit activity
The number of exits fell to record-low levels after an upswing in 2021. VC exits experienced a temporary increase in 2021 after low activity for some years, but in 2022 the activity decreased to even lower levels. Seven of ten exits involved ICT companies.
Exit activity in the Nordic venture segment fell sharply in 2022. The number of VC-backed exits decreased by 57 % compared to 2021, and by 42 % compared to the average for the previous five years. The number of exits in Nordic venture is at a record-low, and has never been lower in a single year since Argentum first began tracking the Nordic market in 2007.
Over time, there has been a decreasing trend in exit activity within the venture and growth segment, with the exception of 2021 when activity rose considerably. In 2022, activity fell again. The decreasing exit activity may be due to several factors. One factor has been the revaluation of early stage companies, where valuations fell in 2022. Another factor may be longer holding periods for venture funds.
“We are currently seeing rising interest rates and market unrest, which contributes to lower investment activity and exits, particularly within the venture phase.”
Ingrid Teigland Akay, who is a Partner at Hadean Ventures, explains that the uncertainty in the market has also played a role in the exit activity:
“We did not make any exits in 2022. We had a couple of early bids by players aiming to take advantage of the turbulent market, but not at a level at which we would proceed”, she says.
“The turbulence makes many people cautious, but this also creates new opportunities. We feel that we are very well positioned with a new fund in a turbulent market”, she adds.
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Lowest number of exits on record: In 2022, VC funds made 44 exits from Nordic companies. This follows the decreasing trend since 2017, with 2021 standing out as an exception from the downward trend.
Notable exits in the VC & Growth segments
Notable venture exits during the year include:
- The accounting app, Bokio, was sold to Visma by Creandum. The transaction valued the company at over SEK 1 billion (read more).
- Leadfeeder was merged with Echobot in a transaction that valued the company at EUR 180 million. The sellers of Leadfeeder were, among others, Endeit Capital, Superhero Capital and Vendep Capital (read more).
- Industrifonden sold InRiver to the fund manager THL Partners. InRiver operates within product information management and raised SEK 4 billion (read more).
- CapMan sold the Finnish semiconductor specialist, Picosun. The sale of the 200-employee company is CapMan’s largest-ever sale (read more).
- Norwegian Papirfly was sold to Verdane by Standout Capital. The software company is one of the leading European companies in brand management (read more).
- In January 2022, Instabox acquired Porterbuddy. Instabox, a portfolio company of Creades and EQT, agreed to acquire Porterbuddy from Verdane and Canica (read more).
Majority of exits involved tech companies
In the venture segment, most exited companies involved companies in the ICT sector. Of all exited companies, 70 % were ICT companies, compared to an average of 63 % of exits in the previous five years (see the total sector overview below). Compared to the average share in the previous five years, the number of exits involving ICT companies decreased by 36 % in 2022.
The second-largest sector was industrials, with 10 % of exits. Exits in the sector include Porterbuddy, which Verdane exited in January 2022. The number of exits in industrials was down 38 % from 2021, and down 34 % compared to the average for the previous five years.
Consumer companies accounted for 9 % of exits, making it the third largest sector in terms of number of exits. Exits include Danish company GamerzClass, which was sold by byFounders and Vækstfonden to Metafy.
ICT sector dominating: ICT exits accounted for 70 % of exits in the venture segment, followed by industrials and consumer companies.
The number of exits fell across all four Nordic countries. Most exit transactions involved Finnish companies, as in 2021, accounting for 36 % of exits. However, the number of exits in Finnish companies was down 62 % compared to 2021 and down 29 % compared to the average for the previous five years. Swedish companies accounted for 31 % of exits, down 56 % compared to 2021. Norway experienced the smallest relative decrease among the Nordic countries, with a decrease of 21 % compared to 2021, accounting for 22 % of the Nordic exit market. Danish companies were involved in 11 % of exits (see graph below).
Most venture exits were sales to industrial buyers (trade sales). However, the share of trade sales was 55 %, compared to an average share of 71 % during the previous five years. Secondary exits had an equivalent increase in the share of venture exits, making 27 % of venture exits in 2022. Compared to the average share of 8 % of exits for the previous five years, secondary exits are becoming more common in the venture and growth segment (see graph).
Increase in secondary exits: Secondary exits made up 28 % of venture exits in 2022, compared to an average share of 8 % of exits in the previous five years The most popular exit strategy in 2021 was trade sale, with 55% of exits. However, compared to the average in the previous five years, this is a relatively low level (down from 71 %, see graph).