Last week we took a look at Q1-Q3 2014 vs. Q1-Q3 2015, in order to get a sense of just how much more venture capital is flowing into the Nordics this year compared to last. It made for some interesting reading, and presented an encouraging picture for the Nordic startup ecosystem.
However, what part does Q3 play in this, and although YOY investment may be growing, has it decelerated throughout the year? Or did Q3 manage to keep the momentum from the first half of the year going? Enough questions, let's get to the answers.
As aways, this analysis was based upon our own proprietary data collection of funding and exits in the region, using a wide variety of sources including local media, monitoring press releases and relying on our own network across the Nordics. Our data is also supplemented and cross referenced by sources including Tech.eu and Crunchbase.
In Q3 Nordic tech startups saw 80 investments totalling $329.98M
Rather tellingly, 75% of the total amount was accounted for by the ten largest investments of the quarter.
The top 10 presents a pretty decent snapshot of the quarter as a whole, as Sweden continued to attract big investment, while all of the Nordic countries bar Denmark had at least one company featured in the top 10 largest investments.
It was a slow quarter for Denmark in terms of venture capital, a point further demonstrated by the breakdown of the amount of funding by country.
The relatively high portion claimed by Iceland was mainly due to renewable energy startup CRI raising $45.5M. Clearly then, this breakdown by country can be severely skewed by one large investment, so we are best off looking at number of investments per country for a more accurate view of where the money coming into the Nordics is going.
The picture for Denmark is certainly a little rosier when using this metric, and actually it paints a picture which I would say is more accurate of where all the respective ecosystems are right now in terms of their ability to attract capital.
We've already seen that 75% of the total went to just ten companies raising big rounds, but what was the split in terms of early and late-stage funding from the investments made in Q3?
Early-stage funding took 70% of the investments, as is to be expected, with 25% classified as pre-seed ($400,000 or below) and 46.25% seed. Although there were a healthy amount of Series A, B's and C's were in short supply, with 2 and 0 respectively, and a solitary Series D from iZettle.
In terms of the areas the money was invested in, the money was dispersed a little more evenly in Q3, with no standout vertical.
Hardware tops the verticals invested in for the first time since we started doing these quarterly analyses, however, the usual suspects, health and wellness, gaming, enterprise SaaS and fintech all still feature.
Now lets take a look at each individual countries biggest investments and at what stage their companies raised money in Q3.
Back to the region as a whole, what did the average round size look like in Q3?
The average seed round is pretty consistent with Q1 and Q2, however, Series A was noticeably higher this quarter, compared to $4M and $5.26M in Q1 and Q2 respectively, but this is most likely due to the fact that 50% of the Series A's were raised by Swedish companies, who typically raise larger amounts at this stage than their Nordic counterparts. The Series B was the highest it has been in a quarter in 2015 although not too much can be read into this as there were only two Series B investments in Q3.
As I alluded to at the beginning, we've already compared this point of 2015 to last year, but what about this specific quarter to Q3 of last year?
Q3 2015 vs. Q3 2014 is pretty much following the same trajectory of growth we have witnessed throughout 2015, as investment increased 153%. It's also worth noting that we tracked 80 investments in 2015 compared to 43 in the equivalent quarter last year, almost an increase of x2.
In conclusion, although it pales in comparison to Q2 due to Spotify's $526M monster round, Q3 maintains the strong growth in capital that Nordic startups have benefited from in 2015.
Q1-Q3 in 2014 accounted for 71.85% of the total amount of capital in 2014, if we applied that logic to this year, then Nordic startups are on course to raise $2.02 billion by the end of the year, meaning not only would it be the first time they'd raised more than 1 billion in one year, they'd double it, oh, and London would be in its sights....
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