VC Market in Scandinavia
An emerging business usually needs two things: funding and knowledge. Efraim Landa established the venture capital firm, Effi enterprises in order to provide both mentorship and funding to start-up businesses. A VC firm will provide the funding that is needed to help firmly establish a business in exchange for equity in the company. The typical goal is that a business should be able to go from its inception to an Initial Public Offering (IPO) within about 10 years. Usually, it will mature in approximately 6 or 7 years. The VC firm provides the funds needed as well as the expertise to help establish the business until it is ready to make an IPO; or until it is acquired by another business for a profit. The venture capital firm will work closely with the business to ensure that it has adequate funding and expertise in order to become successful. This investment is made by a VC firm will provide the necessary funding and knowledge in exchange for a percentage of the business’ profits.
History of the Venture Capital Market in Scandinavia
The 70s and 80s saw a growth of venture capitalist activities in the region. Even though each of the countries in the region operated separately, the VC industry grew because of the number of start-ups in the region. During these decades, the region was experiencing lower interest rates and a booming stock market. The positive market was an encouraging factor for many investors. One of the biggest hindrances in the region was that each of the countries developed independently of one another and did not allow for very much global interaction. They also had legislation which limited the amount of capital which could be invested.
Venture Capital Market in Scandinavia Today
The region is moving toward an international market and they are becoming more competitive among themselves. Communities are leaning toward the promotion of activities and transactions across the regional nations. This has been a big boost for the economy of the area. The region has expanded its support of entrepreneurial companies in the last few years and allowed for more flow of international venture capital investments. The networking with foreign markets has been very beneficial but there have been some remaining challenges. One of the challenges to the VC market in the area is that VC activity is very highly concentrated into certain regions and almost non-existent in others. Investors tend to stay loyal to their own nation and have prevented public investors from interacting with international companies. Sweden is one region that has begun to diversify geographically but there are still some policies which are constricting. There is a slow growth of VC opportunities in the area but presently, entrepreneurship has been down and is in need of stimulation.
Future State of the Venture Capital Market in Scandinavia
The general consensus is that the region is just beginning to open up with new enterprises. As the region is reaching out to get involved on an international level, it is expected to spawn more competitiveness which will attract international funding opportunities. In order to create a dynamic force, the region needs to come together and fuse entrepreneurship, innovation and financing. Once they can actively engage in the international scene and learn to work across their own borders, there should be a rise in venture capital activities which can bring a huge economic boost to the area. Once the region is able to break out past their borders and obtain more international financing they will be able to establish themselves as a very strong competitive global force.
Posted on March 18, 2013, in Business financing, economics, Effi Enterprises, financial history, investing, VC financing, Venture Capital and tagged VC history, VC market, Venture Capital. Bookmark the permalink. Leave a comment.