Earlier this week we established that the numbers of investments in the Nordics have increased fourfold from just two years ago, as well as previously noting that the amount of capital in Nordic startups increased from $846.44 million in 2014 to $1.82 billion in 2015.
In our country specific analyses we indicated which countries were the main beneficiaries of the extra capital and investments, but until now we have not looked at which stages the additional money is going into.
To get a better understanding of where it is going, we've looked at the size of all investments in Q1 2015 compared to Q1 of 2016.
*Investments up until Friday 11th March have been included and please bear in mind that there are still a couple of weeks of the quarter to go
Even with a couple of weeks of the quarter to go, Q1 2016 has already seen 65 more investments than Q1 2015 (120 versus 55), an 118% increase year on year, but at what stages are these investments being made compared to last year?
*Undisclosed amounts were included in the total number of investments (above), but left out of the subsequent analysis
*With pre-seed, seed and Series A rounds ever harder to define, we've used investment sizes for the most accurate picture, and will use round definitions as a loose term
It's clear to see that the biggest increase is at an angel/pre-seed stage, and the majority of the extra money is coming in as a first investment into Nordic startups in the <$500,000 stage. This is likely due to increased attention on the region, alerting local investors to the opportunities that exist, as well as the creation of more startups in the region, as more and more people in the Nordics realise that not only is creating your own company an option, it's also an increasingly attractive one. It should also be noted that our sources continuously improve, so it is more than fair to consider that a couple of extra early stage investments in 2016 could be due to this.
The second biggest increase percentage wise is in the $5-$10 million bracket as Q1 2016 has seen 6 investments within this size range compared to just 2 in Q1 2015. This indicates that the number of good-sized Series A's has been significantly higher so far this year than it was at this point last year, encouraging news for the 153 Nordic startups who raised a seed round in 2015.
Other than the $5-10 million bracket, all of the other increases in investments came at the earliest stages, as $500,000-$1M grew 77% year on year, $1-$3M 61% and $3-5M 50%, with the most investments in Q1 2015 and 2016 both occurring in the $1-3 million bracket.
Not only did the number of investments at the later stages not increase, they actually have decreased year on year for investments above $20 million (unless we see some bigger rounds in the next couple of weeks).
And as the chart above so clearly demonstrates, although there is a massive increase in the number of investments happening at the early stages, there is no increase in investments above and beyond $10 million, in fact, the momentum falls away completely.
This is further illustrated by looking at the total amount invested in the Nordics in the respective quarters.
So, although the number of investments are significantly higher in Q1 2016, the capital raised is more than likely to end up lower than Q1 2015, not just because the majority of the additional investments are happening at an earlier stage, but also because less investments are being made at a later stage, something which is certainly worth us keeping an eye on going forward.
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