Teddie Wardi from Atomico at NordicNext

Thanks, Neil, for having me. I must say it's an interesting choice of venue here. I think this is an old courthouse, and the previous time I had to appear in a court was appealing a traffic violation in the U.S., and I must just hope that the presentation today is going to be more successful. So the topic is a bit of a data-driven look at Nordic tech, not from the exit side because no one really knows what's happening there. It's more from the funding side. And we all see that recently, or actually for quite a long time, the internal tech media has been building the Nordics as this amazing region which represents like 2% of the world's GDP. But produces a completely outsized amount of successful tech companies, unicorns, and other mythical creatures. However, if you look at the data in detail in these reports, most of it is actually pretty spotty at best. And Tomiko, as Neil mentioned, we are fairly data-driven, and we've noticed that the Nordic Web and Neil have been the best source for funding around data in the Nordics. So we wanted to have a quick talk about the Nordics. And we'll have a quick look at slicing that data in various ways, seeing if we can pull out any insights that you guys might find valuable, or at least that would confirm some of the kind of things that are being said about the Nordics. So first just looking a little bit on the funding trends. So this data is basically from early 2014 up until the end of last month, so it's fairly up-to-date. So obviously Nordics is not the biggest market in the world. And a lot of it is driven by a couple of outliers. So we can see that music streaming is a very capital-efficient business, that Spotify has raised like one-thirds of all the venture money that have gone in the region over the last two and a half years, and that really skews a lot of statistics. But even not accounting for Spotify, we can see that there is definitely an upward trend in the money deployed. But if you look at the number of rounds, I think that's the more interesting insight, that there is like a really, really big ramp-up in the number of deals getting done in the Nordics. And if you're looking at the same data on like last 12 months basis to give a bit more smoother view of what's happening, we can see that there's definitely a quick ramp-up. The second quarter data is basically April and May quarterized for the whole quarter. And so I guess the takeaway here is that there hasn't really been a sign of any kind of cooling down in the Nordics. Compared to what has happened in the US, for example. However, this quarter is going to be instrumental in seeing what's going to happen. Obviously, again, if Spotify decides to raise more money, then this whole thing will look quite different. There's a number of other kind of larger deals that have happened, like TradeShift, Klarna, that kind of larger deals, but nothing really stands out as much as Spotify. So geographically, we can see that Sweden is obviously a big shareholder. We're seeing But obviously, again, Spotify here as well, but it's overall leading the pack here. And it's been pretty constant across the time period. But Denmark and Finland are actually fighting for the second place, both in a number of rounds and also deployed, especially if we're looking at 2015. Actually, I think if you look at calendar year 2015, Denmark has actually beat Finland in a period because I'm from Finland. I decided not to implement that time period in this analysis. So let's see what happens this year. Stage-wise, obviously we have everything from Angel to Series D, and then nothing before G, and then there's a lot of unclassified rounds. And this is for calendar year 15, just to get some consistency. So the interesting takeaway here is that you can see a pretty equal amount of money is deployed across stages in the Nordics. But then you'll get a number of deals. You can see that the late-stage funding market in the Nordics is actually a really, really small market. So you can see there's like 12 Series Bs, 6 Series Cs, and it's just like a handful of deals getting done. So it's very anecdotal. And then another takeaway here is that the number of Angel and Seed rounds is pretty big compared to A's, and at least it's good for everyone to remember these are companies that want to raise A rounds within the next... six to 24 months. So there's a lot of stuff coming through the pipeline, and we see that there might be an even bigger Series A crunch in the Nordics than in some other regions that we've been observing. This is a bit of a messy chart, but it shows that there's a number of sectors that represent... that the Nordics consists of. So there's a pretty healthy diversity of businesses. Enterprise software and SaaS, this kind of underpins a lot of the stuff that happens here. But there's some things that have kind of increased and some things have stagnated. There's some new categories like VR, AR, kind of came out of nowhere within the last 12 months. Interesting enough, like food tech or food and drink, as it's called here, has, you know, there was like nothing happening ever until the last three quarters, at least according to data. So that's pretty interesting. There's a couple of other highlights here. So energy, VR, local services, HR tech have been the fastest growing sectors in the Nordics. The stagnating ones include social slash communications, hardware, education tech, travel and transport, and some things like SaaS, again, and security, for example, have stayed pretty stable. Looking at the countries, people always say in the media that the Nordic tech hubs have a very diverse composition of startups, that there's like a different characteristic to everything. And then, you know, this confirms that to some extent. So enterprise software is big in everywhere, except, a number in everywhere, except really Sweden. Sweden has a pretty unique composition. So there's, I guess, this is also a kind of Spotify effect. There's a lot of entertainment media startups being built in Sweden. And Sweden is clearly, is the fintech hub of the Nordics. And it's quite active. I guess gaming in Finland is still big. It's kind of, you know, it's not the hottest thing anymore, I think like three, four years ago, there were like 200 gaming companies in Finland. Like everyone, you know, and their grandmother had a gaming company, but time is already over. But Denmark, for example, has a lot of retail tech, which is quite interesting. Norway, just the sample size is pretty small, but it's mostly enterprise entertainment retail. Then looking at investors, how many VCs do we have in the room today? Okay, so that's a majority. I hope I don't offend anyone with any of this stuff. So first of all, this is just an overview logo slide that's showing that we have a pretty nice, diverse ecosystem of investors located in the Nordics or investors that kind of, you know, cover the Nordics by flying in from all parts of the world, whether it be London, New York, Bay Area, or even somewhere in Asia. So there are these Nordic-focused funds. By the way, just, you know, don't kill me if you notice your logo is missing. This is just an indicative. Okay. So there's some data coming after. But Nordic-focused funds, you know, a healthy mix from seed to growth stage. We have a number of international investors, mostly London-based, but also from outside, who cover the region. And then we have the late-stage guys. But it's good to also remember, because there's such a small amount of late-stage run re-happening. There's like, you know, six series Cs and so forth. A lot of the late-stage international guys have done like one or two deals. So there's not a massive pattern of one of these guys really covering the Nordics more actively than others. It's, I guess, late-stage, the capital markets are pretty global, so it's more opportunistic. And there's a good mix of corporates as well as accelerators, incubators, co-working spaces. So looking at who the most active ones are, I guess as most assume, North Southern and Crandomar are really the most active dealmakers in the region, followed by Sunstone, Steed, Almy, and so forth. The European guys' index is leading the pack. Wellington is pretty active. Dawn, Bellerton, very active. And then Active Venture Partners, as the name says, has been quite active as well. But, you know, these guys really come from anywhere. I think Atomico could really do better here, so we're trying. I'm trying really hard. And then the U.S. investor Sequoia is a big logo there. However, it's good to remember that Sequoia has a U.S. fund, a Sequoia Israel, a Sequoia India. So, you know, it's not really coming all from one place. Do we just decide map? I want a little bit of the co-investments, who's working together, who's friends and who's not. So, Bolton, clearly, some can comment here. He clearly loves to do deals with Crandom and not really anyone else. But also, so this is like, you know, non-Nordic and Nordic pairs. But if you're looking at the Nordic pairing, interesting enough, Crandom and North Zone are the most common co-investment pair. So, you know, even if they're kind of targeting heavily the same market, it seems to be all very friendly. And this shows where the venture investors are coming from. So, this is based on, you know, investors who have done at least one deal in the Nordic. So, we can see that the number of different investors from the U.S. is actually high. It's even higher than the U.K. But again, there's not a lot of consistent coverage. Like, someone has done a deal there, and that's about it. People always say that there's a massive late-stage funding gap in Europe. I think that's a narrative that Tomiko is touting as well. It's even more true for the Nordics. So, we can see here that this is a proportion of rounds that have Nordic versus non-Nordic investors in them. So, on the other side, seed is pretty much done all locally, which makes sense. But then, you know, the big rounds, growth 20 million onwards, almost always has a non-Nordic investor. And it's interesting to see how this actually changed. I don't have a slide on the time period, but this is actually what happened here. It's actually gotten worse over the last couple of years than it was before. So, it's not the trend that I would have expected. And Nordic Venture, in terms of the venture funds that are based in Nordics, it's still an extremely small portion of the global venture fundraising. So, you know, you can barely see it on the stack chart on the left. And even in the context of Europe, Nordic venture fundraising is really small, even though an outsized amount of large software companies are coming from the region. And the chart on the right shows, it's not really Apple's oranges, obviously, but shows the VC fundraisings and the capital deployed in the area. So, we can really see that the money, the bulk of the money is coming from somewhere else than the local venture funds. Then, a couple of insights on Series A's. So, Series A, for me, is the most exciting part of the venture industry because there's kind of this conversion from seed to Series A. But then, on the other hand, like all the latest stages, yes, that's a few of them, and it's more global. So, I think this is the interesting bit to see how the local ecosystem works. The size of the Nordic Series A actually compares pretty favorably to Europe and to the US. So, I was expecting there to be a bigger gap here, except in the last couple of quarters, smaller rounds have been made. And also, it's interesting to see how Europe is actually pretty much on par with the US on the mean Series A sizes and medians are pretty much indicating the same thing. And by country, obviously, Sweden is still leading. But here, Finland and Denmark have a much wider gap. So, actually, it seems that Denmark's position in the ranking is driven by later stage fundraising, and Finland is having more of the early stage companies. So, it's interesting how this is going to convert to later stage. for Finland over the next couple of years. And then on capital deploy, it's the same. Iceland is obviously extremely small. I don't know how the Icelandic venture scene is doing now. I heard like a year ago, there's about three venture funds being founded locally. So, expecting there could be a lot of competition for these deals. And by investor, looking at the most active on the left, Nordstrom, Crandom, Sunstone, pretty much equally. The average Series A is the same. OpenOcean, Van Boorten, these two guys here are doing smaller Series As for some reason. And then, obviously, EQT has a high mean there, but they really just started. So, it's kind of hard to compare them. So, this is a quick look at the fundings and the Series A. So, the kind of too long, didn't read version of this is, you know, no signs of slowdown, except now there might be a Series A crunch is to be expected, unless something rapidly changes in the Series A funding market. Again, there's a lot of large funds like EQT who could potentially bridge the gap and fund all these companies, but we'll see what happens. Series B plus market is really, really small. So, even though there's a lot of talk by a lot of growth stage investors globally, and they say that they cover a lot of Nordics, like there's, you know, six deals getting done. So, it's probably not going to be a lot of work. And sectors are pretty diverse. And then finally, kind of late stage funding gap in terms of local investors is still very real. And the trend is not really improving that. Thanks.