Benchmarking government support for venture capital: Sweden

Recent trends in the national VC market

The Venture Capital (VC) ecosystem in Sweden began developing in the 1970s, initially driven by government-backed funds focused on industrial innovation. Private VC funds emerged in the 1980s and 1990s, with a focus on technology and telecommunications. The sector faced challenges during the dot-com crisis in the 2000s causing VC investment volumes to decline significantly. In the mid-2000s, the industry began to recover but was hit again by the 2008 financial crisis. From 2009 to 2017, VC activity remained stable but relatively low. Since 2018, VC activity has experienced accelerated growth. In 2021, investments reached EUR 0.99 billion, a 78% increase compared to 2020. This growth was driven by a surge in foreign investments, which increased by 63.6%, and growth in Swedish private fund investments, which rose by 44.3%. Conversely, government fund investments declined by 3.7% in 2021 (Tillvaxtanalys, 2023[1]). In 2022, VC growth was sustained with volumes reaching EUR 1 billion. In 2023, however, VC investments experienced a significant decline, mirroring global trends, with volumes below 2020 levels (EUR 0.45 billion).

The recent growth has been fuelled by significant increases in late-stage VC investments, which grew from 0.04% of GDP in 2018 to 0.08% in 2022. In contrast, investments in start-ups and early-stage companies have remained relatively stable, accounting for 0.02% to 0.06% of GDP over the same period (Panel B). However, in 2023, late stage and start-up stages declined the most, with each at 0.03% as a percent of GDP (Dealroom, 2022[2]).

Sector wise, ICT is by far the largest recipient of VC, in line with the traditional focus on this sector since before the 2000s. In 2021, this sector received EUR 0.44 billion, which is twice as much as the biotech and healthcare sectors received.

Figure 1. Venture and growth capital investments in Sweden

Note: Data from Panel A and B correspond to investments allocated to Swedish companies. It includes only venture capital investments by formal fund managers, including private equity funds making private equity investments. Investments by business angels, incubators, infrastructure funds, real estate funds, distress debt funds, primary funds-of-funds or secondary funds-of-funds are excluded.

Source: Venture Capital Statistics OECD Data Explorer (OECD, 2024[3]).

The role of the government in the national VC market

The Swedish government has played a crucial role in developing the country’s VC ecosystem since the 1970s. The earliest government involvement began with the establishment of Företagskapital in 1973, a VC firm jointly owned by the state and commercial banks. Initially, its main focus was on financing business succession in family-owned firms, but it later evolved into a VC firm (Cetindamar and Jacobsson, 2000[4]). In 1979, Industrifonden was created as an independent foundation to support SMEs in sectors deemed critical for Sweden’s economic growth and technological progress. The 1980s saw the government establish six regional VC funds, though these were criticized for poor performance due to a lack of expertise, insufficient advisory support for investee firms, and their use in maintaining employment in uncompetitive firms (Tillvaxtanalys, 2013[5]).

In the 2000s, the focus of the discussion around government-backed VC shifted from evaluating achievements to determining how these funds should invest. Recommendations included focusing on early-stage financing through fund-of-fund structures that could leverage private sector expertise. In line with these recommendations, the government launched Almi Invest in 2009 as an early-stage public VC firm fully owned by Almi Företagspartner.

In 2014, the Swedish National Audit Office evaluated the VC system and concluded that the division of responsibilities among the various government funds was unclear. As a result, a 2015 investigation proposed a fund-of-funds model to encourage the creation of VC funds co-financed by public and private resources and managed by private teams (Tillvaxtanalys, 2013[5]). In 2016, the government established Saminvest AB, a fund-of-funds aimed at addressing gaps in VC financing, simplifying the funding system, and improving resource efficiency. Saminvest also integrated two existing state-owned VC funds, Fouriertransform and Inlandsinnovation, as its subsidiaries (Halme et al., 2022[6]). The same year, the Swedish Venture Initiative was launched by the EIF in collaboration with the Swedish Agency for Economic and Regional Growth to support early-stage high-growth enterprises, marking one of the EIF’s first investments in a Swedish fund-of-funds (EIF, 2016[7]). .

The participation of the Swedish government in total VC investments have declined over the years. Between 2011 and 2013, it accounted for 25% on average while stood at 6% in 2021. This indicates a reduced reliance on public funding and an increasing role for private and foreign investors in the Swedish VC ecosystem (Tillvaxtanalys, 2023[1]).

Direct investment activities

As mentioned above, Industrifonden has been one of the earliest VC programmes in Sweden. Established in 1979, it focuses on supporting SMEs in sectors critical for technological advancements. It partners with innovators and entrepreneurs to invest in early-stage companies, ranging from seed to A-round funding. Typical initial investments range between SEK 10-50 million, with smaller amounts considered for exceptional technologies in the earlier stages. It operates as a minority investor, offering financial support, strategic advice and access to networks. All investments are made on commercial terms, with no single investment exceeding 5% of the fund's total assets. Over the years, Industrifonden has transitioned from a focus on traditional industrial sectors to investing in diverse fields such as deep-tech, life sciences, and transformative technologies. Its evergreen structure ensures that profits from investments are reinvested into new ventures, creating a sustainable cycle of innovation funding (Industrifonden, 2023[8]). This structure enables the fund to prioritize long-term goals over short-term returns, aligning with the lengthy timeframes required for fundamental innovation development (Industrifonden, 2022[9]).

Almi Invest is another important government programme investing directly in innovative SMEs in tech, life sciences, and industrial sectors. It is owned by Almi Företagspartner, a government agency that supports SMEs with financing and advisory services. Almi Invest is partially funded by the EU, Almi Företagspartner, and operates through eight regional VC companies and one national GreenTech VC company. Investments range from SEK 1 million to SEK 10 million, with Almi Invest always acting as a minority investor and the investment horizon typically lasts five to seven years. Surveys from 2018–2019 indicate positive outcomes for companies that received Almi Invest’s support: 72% reported faster time-to-market for their products or services, 77% found it easier to attract additional venture capital, and 77% considered Almi Invest's investment critical to their success (Almi Invest, 2023[10]) (Halme et al., 2022[6]). .

Almi Invest also operates through Almi Invest GreenTech. The fund addresses the challenges SMEs face in the energy and environment sectors, such as high capital requirements, complex risk assessments, and lengthy commercialization processes. It invests in renewable energy, smart grids, biogas, agritech, environmentally friendly materials, and sensor networks. The fund is co-financed by Almi Företagspartner, Almi Invest, the Swedish Energy Agency, and the European Regional Development Fund. Initially launched with SEK 650 million to invest in around 50 companies by 2023, as of Q4 2024, the fund manages SEK 3.5 billion and has invested in around 900 companies since its inception (Almi Invest, 2024[11]). Investments typically range between SEK 5 million and SEK 30 million per company, with Almi GreenTech always taking a minority shareholder role (Almi Invest, 2023[10]) (Almi Invest, 2018[12]).

Indirect investment activities

The main public actor conducting indirect investments in the VC industry in Sweden is Saminvest. Established in 2016 as a fund-of-funds, it has the objective of stimulating the supply of VC in underfunded segments of the business population. The fund operates as an evergreen system, reinvesting returns and capital into its operations (Saminvest, 2023[13]) . It also serves to streamline and clarify the government-backed VC financing system, addressing inefficiencies highlighted by evaluations in 2014 and 2015. To achieve this, Saminvest incorporated two state-owned VC funds, Fouriertransform and Inlandsinnovation, as subsidiaries (Halme et al., 2022[6]).

The core activities of Saminvest involve investing in privately managed VC funds and business angel programs, focusing on pre-seed to early expansion phases, but excluding buy-outs. Since starting operations in 2017, Saminvest has committed SEK 3.95 billion, investing in 19 VC funds and 10 business angel syndicates. In 2022 alone, it committed SEK 955 million to five new VC funds and one angel syndicate. The funded companies span sectors including tech (46%), life sciences (28%), impact investments (21%), and climate-related ventures (5%). Of the 181 companies indirectly funded through Saminvest, 17% have female CEOs, and 18% of board members are female, reflecting efforts to promote diversity (Saminvest, 2023[13]) (Saminvest, 2022[14]).

Saminvest also promotes Angel investments through the Angel Investor Programme. This programme, initiated by the Ministry of Trade and Industry, aims to strengthen the investor community. It operates in two steps: first, Saminvest collaborates with angel investors to create an angel investing corporation, which builds a portfolio of start-ups participating in an incubator program. In the second step, angel investors assess the portfolio companies and make follow-on investments in selected companies through an affiliate joint investment company, Annexstruktur AB, a Saminvest subsidiary (Saminvest, 2023[15]). In 2022, Saminvest committed SEK 46 million to Propel Capital VI, a new generation of angel investment companies. That same year, Saminvest expanded its indirect financing programs for business angels through incubators. As a result, 251 companies benefited from Saminvest’s indirect support, with 28% of these companies having female founders (Saminvest, 2022[14]).

In addition to Saminvest, the Swedish government launched with SEK 582 million, the Swedish Venture Initiative. which is a collaboration between the EIF and the Swedish Agency for Economic and Regional Growth. Its goal is to enhance access to equity capital for Swedish early-stage, high-growth SMEs. The initiative was among the first fund-of-funds supported by the EIF, combining resources from the European Structural and Investment Funds (ESIF) and the European Fund for Strategic Investments (EFSI) (EIF, 2016[16]).

The initiative targets funds investing in companies in their seed, early, or expansion stages, with potential for follow-on investments. Investments are co-financed by SVI and EIF in a 2:1 ratio. Private investors contribute at least 50% plus SEK 1 at the fund level. Investments are distributed pari-passu, with a fund duration of 10 years and two potential one-year extensions upon approval. To ensure portfolio diversification, no more than 15% of a fund's size can be allocated to a single investee (EIF - European Regional Development Fund, 2016[17]).

References

[11] Almi Invest (2024), This is how venture capital works with Almi Invest, https://www.almi.se/en/venture-capital/this-is-how-venture-capital-works-with-almi-invest/.

[10] Almi Invest (2023), About Almi Invest, https://www.almi.se/en/almi-invest/about-almi-invest/.

[12] Almi Invest (2018), Almi Invest raises SEK 650 million for a GreenTech venture capital fund, https://www.almi.se/en/almi-invest/news/almi-nvest-raises-sek-650-million-for-a-greentech-venture-capital-fund/.

[4] Cetindamar, D. and S. Jacobsson (2000), The Swedish venture capital industry: An infant, adolescent or grown-up?, https://doi.org/10.1080/136910600295819.

[2] Dealroom (2022), Sweden Tech Ecosystem: Report 2021, https://dealroom.co/uploaded/2022/02/Dealroom-sweden-tech-report-feb-2022-final-4.pdf.

[16] EIF (2016), Over SEK 1 billion of equity finance for early-stage enterprises through the Swedish Venture Initiative, https://www.eif.org/what_we_do/equity/news/2016/efsi_swedish_venture_initiative.htm.

[7] EIF (2016), Swedish Venture Initiative (SVI), https://www.eif.org/what_we_do/resources/swedish_venture_initiative/index.htm.

[17] EIF - European Regional Development Fund (2016), Call for Expression of Interest No.SVI-2016/01 to select Financial Intermediaries that will receive resources from the Swedish Venture Initiative and EIF co-investment to implement the following Financial Instrument: Early Stage Venture Capital Fund, https://www.eif.org/what_we_do/resources/swedish_venture_initiative/svi_call_for_eoi.pdf.

[6] Halme, K. et al. (2022), Appendix 1: International Benchmarking, Ministry of Economic Affairs and Employment, https://tesi.fi/wp-content/uploads/2023/03/Corporate-Governance-Statement-2022_final.pdf.

[8] Industrifonden (2023), Bringing Nordic breakthrough innovations to the world, https://industrifonden.com/our-story/#whatwelookfor.

[9] Industrifonden (2022), Extracts from the Annual Report, https://industrifonden.com/wp-content/uploads/2023/01/2021-22-Annual-Report-Extracts.pdf.

[3] OECD (2024), OECD Data Explorer Venture Capital Investments, https://data-explorer.oecd.org/vis?df[ds]=DisseminateFinalDMZ&df[id]=DSD_VC%40DF_VC_INV&df[ag]=OECD.SDD.TPS&dq=FRA...USD_EXC.A&pd=2007%2C&to[TIME_PERIOD]=false&vw=tb.

[13] Saminvest (2023), About us, https://www.saminvest.se/om-saminvest/.

[15] Saminvest (2023), Angel Investor Programme, https://www.saminvest.se/en/angel-investor-programme/.

[14] Saminvest (2022), Annual Report 2022, https://www.saminvest.se/finansiell-information/.

[1] Tillvaxtanalys (2023), Venture capital investments in Swedish companies 2021, https://www.tillvaxtanalys.se/download/18.32a3a532185c4d04b19d6a6/1674490349601/Statistik_2023_01%20Riskkapitalstatistik%202021.docx.pdf.

[5] Tillvaxtanalys (2013), Firms´responses to private and government sponsored Venture Capital, https://www.tillvaxtanalys.se/download/18.62dd45451715a00666f1c822/1586366168820/pm_2017_02_Firms%C2%B4responses%20to%20private-%20and%20government-sponsored%20Venture%20Capital.pdf.

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The full paper is available in English: OECD (2025), Benchmarking government support for Venture Capital: A comparative analysis, OECD SME and Entrepreneurship Papers, OECD Publishing, Paris, https://doi.org/10.1787/81e53985-en

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