Venture Capital Market in Sweden
As a venture capitalist Efraim Landa understands how important it is to provide funds for businesses which demonstrate great potential to be successful. Effi Enterprises is a VC firm which invests in such companies and works closely with them to provide them expertise which comes from many years of experience. Many times companies have potential, but lack the funding to make the necessary expansions or changes that are necessary to go to that next level. VC funding provides this opportunity for a business and then once it is successful enough to be sold or go public the VC firm will make a return on the initial investment which gave the company the boost that was needed to succeed.
What Attracts VC Firms to Sweden?
In Europe, Sweden is one of the most appealing destinations sought out by foreign investors. The main reason for this seems to be the highly educated population of the country and the global mindset of Swedish companies and entrepreneurs. Over the last few years there have been many Swedish companies which were able to attract literally billions of dollars for growth capital and start-up companies. This is one area in Europe which sees venture capital funds from Europe, the US and other Nordic countries as well. This growth has been steady at 20 percent for nearly a decade. When that is compared with the annual yields in the US as well as Europe’s 12 percent it is quite impressive. Nordic companies are very well known for their successful and innovative communication and information companies even though the leading industry remains biotech. Biotech leads when it comes to the number of investments and the amount of capital that is invested. Investments in life sciences have continued to increase dramatically.
What are the challenges for Sweden’s VC industry?
It’s easy to understand why so much foreign VC funding ends up in Sweden when considering the high and stable returns that are experienced year after year. Nearly 70 percent of the venture capital in Sweden comes from international sources. Investors also have a high level of respect for the high standards Sweden holds for technology, education, research and training. In Sweden the challenge comes earlier in the process with the entrepreneurial spirit. For many years the country has seen domination by larger companies in the public sector which simply means there are very few role models for entrepreneurs to follow. This is one area that the government is well aware of and is looking for ways to invest in to bring about change. Some of the larger businesses such as ABB and Ericsson have offered a relatively decent training ground for the smaller businesses to follow; but because the country is small in size, diversification and exports must be considered very early in the life of the business.
What does the future look like for Swedish VC?
Sweden has been very important to the field of life science and it has helped them build the connections with some very large pharmaceutical companies which have provided essential training. There are companies in Sweden which deal with every single link in the pharmaceutical chain started at innovation and development all the way through to clinical research and testing to final production. Another area which is likely to continue to develop in Sweden and bring success is the IT industry. There are a couple of large Swedish companies which have received large investments from Silicon Valley. Most experts do not feel that there will be another huge IT bubble like was evident a few years back; and since the entrepreneurs and VC firms are more experienced and know how to take intelligent risks, the chances for success are highly increased in the mature IT industry. For future development, Sweden is working on environmental technology which is likely to be one of the largest waves of the not too distant future. Sweden plans to be in on it and thrive.