92 investments totalling $153.2 million
Q3 2016 was another strong one for Sweden, essentially matching the heights of Q2 when it came to the number of investments, putting them on course to breach 350 investments in 2016.
The amount of funding this quarter was less than Q2 from (basically) the same amount of investments hinting at more pre-seed/seed investments in Q3. However, Q3 still saw nearly $50 million more than Q1 (excluding Spotify).
The majority of investments in Q3 came at the $1-3 million mark, demonstrating the ability of Swedish companies, as well as the availability of capital in Sweden, to raise a decent sized seed round. With just 8.7% of the investments above $5 million, there is a small concern regarding a trend in 2016 that has seen little activity in Sweden in terms of larger, later investments.
This can particularly be seen at the $10million+ mark, when you compare the quarter to Q2 2016 and Q3 2015, with less activity clearly demonstrated. One silver lining is that there was more activity at the $5-10 million size this quarter than there was in the other two.
The two Swedish investments that were $10 million+ were Universal Avenue and Lifesum and both featured in the top ten investments in the region in Q3. It's unusual for Sweden to only claim two spots there, normally they represent six or seven spots there, again demonstrating how this quarter was particularly quieter for larger investments.
Retail dominated in Q3, a vertical that Sweden has often excelled in, with other usual suspects like Enterprise SaaS and Gaming also performing strongly for investments. Interestingly, FinTech, the vertical that had dominated investments in Sweden for the last twelve months, considerably dropped off in Q3, recording just 7 investments.
The capital city captured 65% of the investments in Q3, with Gothenburg also having a strong quarter with 16.3% of Swedish investments. In comparison to previous quarters, it was a fairly quiet one for Malmö, with just the four investments.
With the majority of investments happening below $3 million, it is no surprise that domestic investors provided most of the capital in Q3, with Sweden home to a plethora of local pre-seed/seed investors. It should be noted that It is due to a lot of local activity rather than a lack of International interest that results in this split.
There is no doubting that Q3 was another strong one for Sweden, however concerns remain about the lack of later, larger investments in 2016, meaning 2017 could see a slowdown in investments as a potential pipeline problem surfaces.
However, with one quarter remaining of the year, and investments increasing at the $1-3 million, there is still hope that we will begin to see Series A investments happening for the multitude of companies who have raised pre-seed/seed in the last 18 months.