Is Venture Capital a bubble in Sweden?

I was reading Dagens Industri yesterday on the plane back from Paris, and on the front page stood this dramatic statement: Venture Capital is a bubble (Riskkapitalitet är en bubbla). A very pessimistic article indeed, as it predicts that venture capital firms are "at the brink of becoming the millennium’s first financial bubble". Journalistic sensationalism apart, the situation seems quite serious indeed: as of today, the value of the equity funds Swedish controlled in Sweden almost reaches the overall value of the Stockholm Stock Exchange!

As the article underlines, The Swedish Private Equity & Venture Capital Association (Svenska Riskkapital Föreningen) explains this situation by the difficulty of VCs to find proper exits for their portfolio companies in the "ice-cold" stock exchange (around 180 companies would be in this situation), which instead undergo exchanges and over-valuations between VC and equity firms.

While the article stresses on the political involvement to regulate the situation, its conclusion especially drew my attention, as it defines VCs as "talented young guys who don't want to be in the 'old boys network'". I'm not convinced that such description gives justice to the work they do, but at least it shows the importance of a good balance between them and the "old boys", i.e. industrial buyers.

Comments

[Henrik Torstensson]

The article is really focusing on a so called 'private equity bubble', not (early stage) venture capital. The Swedish language is not very good at separating the two.

I do not think Marcus Storch has anything to do with Skandia, btw.

[Ludovic Copéré]

Thanks for clarifying, Henrik! I've updated the post; it seems however that I could make use of a Swedish-English financial vocabulary list. Drop me a line If you know of some.