Economic footprint of Swedish venture capital

Venture capital (VC) provides a unique type of funding, bringing small innovative high-potential start-ups to the market to gain scale. Therefore, VC plays a crucial role in economic growth and high-value job creation. Only a minority of start-ups qualify for VC, nevertheless the four largest companies today VC-backed early.

The strong position of Sweden within life science and ICT provide a strong starting point for Swedish venture capital to grow in the coming years. Concretely, we assess that Swedish venture capital has the potential to double in size. We estimate this would lead to a boost in the Swedish GDP of 0.8%.

To reach the full potential of Swedish VC action is needed – both from the industry itself as well as political changes:  

• First, it is important to further engage institutional investors. To do so, we recommend the VC sector to improve and standardise performance reporting to make VC an easily accessible asset class.
• Second, the Swedish government should consider a tax reform to make the expected pay-off in case of success correspond to the huge risk starting up a company entail. This involves creating an attractive option taxation scheme as well as review the taxation of closely held companies.

The study is commissioned by Swedish Private Equity and Venture Capital Association (SVCA).