Equity financing of early stage growth firms in Skåne

Abstract

This master's thesis attempts to map the equity market of Skåne for
early stage growth companies. The providers of capital in this market are
primarily venture capital rms, business angels and family oces. Family
oces are excluded from the study in favor of the other two investor
categories, of which business angels is the category most thoroughly investigated.
The study was done in four phases: In the rst phase, a general overview
of the system was established through 9 interviews with key persons, familiar
with and knowledgeable about the innovation system in Skåne, as well
as through a literature study. In the second phase, deeper knowledge was
sought through interviews with investors, both venture capital rms and
business angels. A total of 8 business angels and 5 venture capitalists were
interviewed. In the third phase, two questionnaire were constructed and
distributed. One of them was targeted at business angels and distributed
with the help of Skåne's two largest business angel networks: Connect Skåne
and Almi Delnerna. The second one was targeted at venture capital rms,
identied through interviews and the websites of the national venture capital
associations in Sweden, Norway, Denmark, Finland and Germany. A
total of 150 business angels received the survey, of which 73 responded. Of
the 71 venture capital rms, 15 responded. In the fourth and nal phase,
the data collected from the questionnaires was analysed using Microsoft
Excel and IBM SPSS, and interpreted with support from the interviews.
More than half of the business angels were found to be protable and
over 40 % stated that they had been more protable than the stock market
index returns of 8 %. This nding was contrary to the belief put forward
during many of the interviews. Two factors appeared to correlate signi-
cantly with the business angels level of success: The development stage of
the rm they invested in, and to what extent investors used their gut feeling
and trusted the entrepreneur by letting him or her keep a larger share of
the rm. However, the causality of these relations cannot be established
without further research.
Business angels were also mapped into 3 dierent groups using the factors
above: Early stage nanciers, early stage motivators and late stage
motivators. Of these, the late stage motivators were the most successful
and the early stage nanciers the least successful.
The venture capital rms could not be researched as extensively as
the business angels, and no measures of success were collected. However,
considering statistics from the Swedish Venture Capital Association, the
industry appears to be in decline, considering the decreasing amount of
capital raised and invested the last couple of years. The ndings in this
study about the high age of the average fund and the high representation
of state owned rms point in the same direction. A relatively large part of
the funds' resources were found to be invested, further indicating that new
investments will be less frequent in the future.
A more pleasant nding was that a majority of the venture capital rms
in the study indicated that they could take lead on investments in Skåne.
Many tendencies and correlations were found, generating theories and
hypotheses to be tested.

• author: Fogelström, Karl and Nilsson, Christoffer
• supervisor: Gösta Wijk
• organization: Production Management
• course: MIO920
• year: 2013
• type: M1 - University Diploma
• subject: Technology and Engineering
• keywords: Venture Capital, Business Angel, Business Angel Network, Connect Skåne, Almi Delnerna, Equity Financing, Early Stage Growth Firm, Scania, Skåne, Protability, Financing. ii
• other publication id: 13/5470
• language: English
• id: 4024563
• date added to LUP: 2013-09-13 15:35:22
• date last changed: 2013-09-13 15:35:22