Evaluating impact of investment worth 2.4 billion SEK

Companies need money to start, grow, and develop their business. To support this growth, the Swedish Agency for Economic and Regional Growth has since 2009 financially supported small and medium-sized enterprises (SMEs) through 11 new, regional co-investment funds. The investment has national impact and is one of the agency’s biggest projects to date. With a total of 2.4 billion coming from both funds and private co-investors, they strive to contribute to company growth through the development of new markets, products and processes.

But will the regional venture capital co-investment funds contribute to the same impacts in practice as in theory? Ramboll is on the case.

Uncertainty calls for research

Ramboll Management Consulting won the Swedish project due to our extensive experience within theory-driven society evaluations, and specialist expertise within the financing and venture capital area.

So far, the funds have invested in 313 companies, but the question remains whether these investments will contribute to growth. Moreover, will these co-investment funds contribute to increased competencies and goodwill to invest among private co-investors?

To answer some of these questions, Ramboll will in collaboration with academia, run and conduct research to clarify their impact on both society and SMEs through on-going learning evaluations of each of the eleven capital funds.

Positive indications of long-term growth

So far, the answer to the overarching question of whether the funds contribute to a growth, which would not have taken place in their absence, is still unclear. But indications are positive, says project manager in Ramboll Sweden, Marcus Wåhlstedt:

- When the venture capital funds were established, we did not know what impact they would achieve or how they would achieve them. But there are indications that they have indeed helped address an identified equity gap and attracted private co-investments.

Surely, we will all be little wiser by 2016, when Ramboll has finalised their research. And hopefully, the funds will contribute to the overarching goal of a smart, sustainable and inclusive Swedish growth.

What are regional venture capital co-investment funds?

In 2009, eleven regional venture capital co-investment funds were established in Sweden to address a financing gap in the early stages of SME development. The venture capital funds are run as projects within a framework of 8 regional Structural Fund programmes and financed by the European Regional Development Fund and a number of regional financiers. In each investment, they have to co-invest with private venture capital actors.

The funds function as active support and provide not only capital but also commitment and expertise in portfolio companies.

 

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