OECD ROUNDTABLE CONFERENCE: SME COMPETITIVENESS Cesme, Turkey 10-11 May 2001 CURRENT STATE OF THE VENTURE CAPITAL SECTOR IN FINLAND Olavi ÄNKÖ Ministry.

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Presentation transcript:

OECD ROUNDTABLE CONFERENCE: SME COMPETITIVENESS Cesme, Turkey May 2001 CURRENT STATE OF THE VENTURE CAPITAL SECTOR IN FINLAND Olavi ÄNKÖ Ministry of Trade and Industry

Advantages of venture capital  Provides a solid capital base for the future - to meet company´s growth and development plans  Venture capitalist is a true business partner, sharing in your risks and rewards, with practical advice and expertise (as required) to assist your business success  There is usually no repayment during the term of investment and usually no interest costs - therefore no detrimental impact on cash flow  There will usually be no charges on your business assets and no personal quarantees  Increases the credibility of the business

Finland: Funds Managed 1991 – 2000 (FVCA) FIM Million

Fund Investments 1991 – 2000 (FVCA) FIM Million

Stage Distribution of Fund Investments in Finland 2000 (FIM) (FVCA)

Stage Distribution of Fund Investments in Finland 2000 (number) (FVCA)

Exits 1994 – 2000 (FVCA) Million invested

Finland: Stage distribution of vc-portfolio by type of venture capitalists 1997 (FIM) (FVCA)

Finland: Stage distribution of vc-portfolio by type of venture capitalists 2000 (FIM) (FVCA)

FINLAND: MAIN ENTERPRISE POLICY MEASURES TEKES (technology) FINNVERA Plc (smes) (export) REGIONAL T&E CENTRES (smes) ENTER- PRISES GRANT PROGRAMS SERVICES VENTURE CAPITAL RISK LOANS GUARANTEES FINPRO (international markets) MTI/Olavi ÄNKÖ SITRA (new tech, innovation) FIN. INDUSTRY INVESTMENT Ltd (vc-finance)

VC-INSTITUTIONS’ INVESTMENT POLICIES (MTI 21/2000) INSTITUTION:MAIN FOCUS:FINANCING TYPES: COMMITED CAPITAL (M €): FINANCED: FINLAND: INDUSTRY INVESTMENT Ltd FUNDS FINANCING SEED AND GROWTH STAGE TECHNOL. SHARE CAPITAL, CONVERTIBLES, REDEEMABLE INSTITUTION: 103 PRIVAT CO-INV: 750 LEVER. RATIO: 7.25 FUNDS: 26 SMES: 170 FINLAND: SITRA START-UPS REGIONAL FUNDS SHARE CAPITAL CAPITAL LOANS CONVERTIBLES INSTIT: 70FUNDS: 38 SMES: 99 CANADA: BUSINESS DEVEL. BANK KNOWLEGEBASED COMPANIES IN STRATEGIC POSIT. SHARE CAPITAL QUASI-EQUITY WARRANTS INSTIT: 153 PRIVATE: 581 LEV. RATIO: 3.80 FUNDS: 1 SMES: 47 FRANCE: CDC PME PRIVATE VC-FUNDS FOR START-UPS AND DEVELOPING COMP SHARE CAPITALINSTIT: 110 PRIVATE: 999 LEV. RATIO: 8.84 FUNDS: 53 SMES: 70 FRANCE: CDC FPCR FUNDS INVESTING IN YOUNG (<7 YEAR ) COMPANIES SHARE CAPITALINSTIT: 95 PRIVATE: 316 LEV. RATIO: 3.33 FUNDS: 15 GERMANY: t b g, DtA, TECNOLOGIE- BETEIL. GESELLS. YOUNG (<5 YEAR), SMALL ( <50 EMP,<7 M€) TECNOLOGY COMP. SHARE CAPITAL (SILENT PARTNER) INSTIT: 760 PRIVATE: 2738 LEV. RATIO: 3.60 SMES: 1393 GERMANY: KfW, KREDITANST. FÜR WIEDERAUFBAU VC-MARKET FOR EARLY STAGE INNOVATIVE FIRMS REFIN. VENTURES VC LOANS VC GUARANTEES INSTIT: 584 NORWAY: SND INVEST COMPANIES AT ALL STAGES SHARE CAPITAL SUBORDIN. LOANS INSTIT: 170FUNDS: 6 SMES: 158 O. Änkö

Financial instruments and risk (FVCA) Risk and return low Risk and return high FORM OF CAPITAL INSTRUMENTS ORDER OF PREFERENCY IN BANKRUPTCY DEBT Interest free debt Short-term debt Long-term debt Debentures I I I I MEZZANINE Debentures Debentures (convertibles and options) Subordinated loan Subordinated loan (convertibles and options) Preferred shares (no parting right) II III IV EQUITY Equity Preferred shares (parting right) Other restricted equity Unrestricted equity (Incl. reserves etc.) V V V V