Effects and experiences

– final evaluation of the Swedish regional co-investments funds 2009–2015

Growth Analysis [Tillväxtanalys, the Swedish Agency for Growth Policy Analysis] has been commissioned by the Government to evaluate the Regional Co-Investment Funds programme. Our final report demonstrates major regional differences in the business sector and in capital supply structures, constituting a challenge when combined with unclear formulation of goals.

It is possible to identify two main paths in the programme: create growth in a number of investee businesses, and improve the regional infrastructure for entrepreneurial financing (structure for risk finance). The assignment to the funds needs to be clarified about that in order to become more effective.

It is actually too early to evaluate the effects of the initiative at this time. Yet the following can be stated: No identifiable differences between the investee businesses and the control group arise during the first two years following the investment. In years three and four after the investment, however, there are certain positive signs indicating that the investee businesses may have increased their number of employees. At present, there are indications of improvements in the regional infrastructure for entrepreneurial financing.

Growth Analysis is proposing two alternative changes to the programme in order to increase its effectiveness: streamlining to achieve growth in investee businesses, or a contextually adapted initiative.

Growth Analysis also intends to return with follow-up studies. An impact study when more investment data is available, an in-depth method description regarding how regional structures for risk finance can be described, measured and improved, as well as an exit study.

The studied initiative – regional co-investment funds

The background to the initiative is the perception that there is a “capital gap/equity gap” –an imbalance between the existing risk capital available on the market and the demands of the companies. If interpreted as a situation where investment-ready companies with considerable growth potential fail to find financing, such a “gap” can be viewed as an obstacle to growth. Added to this is the European Commission's declaration of intent to change funds in the structural fund programmes from direct grants to other forms of financing, such as loans, loan guarantee schemes and venture capital. Together, this gave rise to a policy initiative with eleven (originally twelve) regional co-investment funds, which together cover all eight of Sweden's NUTS 2 areas. The initiative (round 1) has continued during the period 2009–15 within the framework of the regional structural fund programmes.[1]

The public sector is investing (via the regional funds) a maximum of 50 per cent and the private sector a minimum of 50 per cent in each individual investment. The target group comprises micro, small and medium-sized companies (SMEs), and the investments must supplement the market – not crowd out existing private investments – and relate primarily to the early stages. The investment interval normally ranges from SEK 1–10 million (approx. EUR 110,000–1.1 million).[2]

The funds' capital base amounts to SEK 1.4 billion (approx. EUR 154 million)[3]. The capital has two sources, with one half coming from the European Regional Development Fund and the other half from public regional financiers (regional associations, county administrative boards, regional Almi Corporate Partners, etc.). Consequently, at least as much again must be added to this in the form of anticipated private, commercial co-financing.

The objective is partially unclear. Two main paths can be identified: create growth in a number of investee businesses, and improve the regional infrastructure for entrepreneurial financing (structure for risk finance). An express ambition was that the capital should revolve, i.e. enable the investors to continue investing from the realised capital gains of the investments already made; however, no specific return requirement had been specified for the funds.

Growth Analysis' assignment

In the 2009 appropriation directions, the Agency was commissioned to evaluate the regional CIF initiative. The evaluation must be able to act as a basis for learning prior to any future initiatives of a similar nature. Attention to the Swedish policy initiative must be supplemented with experiences from international research and empiricism with Swedish policy relevance.

Previous reporting

Three interim reports published in 2010[4], 2011[5] and 2013[6]. In addition to the ongoing policy action, the emphasis of the reports is on relevant international experience and policy discussions. Summaries from these interim reports are also presented in this final report (chapter 3).

Final Report

This final evaluation studies both (early) effects on the investee businesses, as well as whether any changes can be observed in the regional structure for risk finance. The initiative is also summarised with the aid of descriptive statistics.

Growth Analysis has procured two consultancy teams that have contributed with supporting material for the report: Damvad Analytics (appendix 1 – quantitative approach) and Oxford Research (appendix 2 – qualitative approach). Note: The both appendices are only available in Swedish and therefore not included in this English version of the report.


The funds have invested in accordance with the existing requirements. In total, nearly SEK 3.4 billion (approx. EUR 374 million) has been invested in 320 companies around Sweden since 2009. Ten per cent of the companies have gone bankrupt. The funds have exited from 45 companies. Major differences in the conditions in the regions and the investment profile of the funds are emerging. The eight NUTS 2 regions are not homogeneous, but the programme is “geographically blind”, i.e. the ground rules and “toolboxes” are the same for all funds, irrespective of regional conditions.

The initiative's geographic design means that “new” players are involved, with little – or no – previous experience of venture capital. In around 70 per cent of the total number of investment decisions, private co-financing can be linked to players other than companies whose primary task is the investment of capital. The regional format also means that the financing instrument is available to new segments of companies, often without previous experience of venture capital. All in all, this entails a need for supplementary policy instruments, such as training programmes for investors and initiatives that are aimed at increasing companies' investability. However, we cannot see any such structured operation being conducted.

When it comes to tangible effects in investee businesses, it is too early to draw any actual conclusions (incomplete data and short “exposure time”). In years three and four after the investment, however, there are certain positive signs indicating that the investee businesses may have increased their number of employees. This may be an indication of preparations for future growth. At the same time there is, as expected, a large spread among the companies, and the indication of an average increase is due to a few successful investee businesses.

Measuring position and changes in the regional structure for risk finance is a complex task. All in all, however, assessments from regional key individuals, the funds themselves, the investee businesses and private co-financiers indicate that the majority of the regions have experienced positive development in their capital supply structures. This picture is not uniform, however, but also indicates differences both between the regions and within various parts of a region's structure. We are also witnessing that the funds have implemented structure-building initiatives to varying extents. However, the empirical data does not allow any assessment of causality between these initiatives from the funds and the structural changes in the regions.

Two main paths in the programme (growth in a number of investee businesses and improving the regional structure for risk finance) are identified, but with no order of preference. They are perceived as imprecise and need to be clarified. Some funds have implemented extensive, direct initiatives and conducted concrete work in order to encourage both co-investment and demand for investment, while others only work indirectly with structure building. Some view themselves as regional development players, while others see themselves as traditional venture capital players. However, the level of management fees is the same for all the funds – three per cent – regardless of the regional conditions.

Proposals and recommendations

Growth Analysis recommends that:

  • The formulation of goals is reviewed and clarified, and that a developed intervention logic is devised.
  • The programme is streamlined to:
    • solely a tapered assignment in relation to the investee businesses' growth with no ambition in respect of structural building or
    • a contextually adapted initiative that is allowed to vary between a strict venture capital instrument and a broader, more development-oriented instrument, depending on regional conditions.
  • Supplementary, supporting initiatives on both the supply and demand side are implemented. When it comes to policy instruments, we suggest more of a coherent system approach and less of a “silo mentality”.
  • The quality of the investment data that is continually registered is improved so that both monitoring and evaluations can be performed with better precision.

Future studies

Growth Analysis intends to return in 2018 with a follow-up study. By this time, the investment data for all the years should be in place, and there should also be a longer “exposure period” for the investments in the investee businesses.

Growth Analysis also intends to return with a more in-depth report of method character, on the theme of the regional structure for risk finance (the infrastructure for entrepreneurial financing). There is a need to develop knowledge about how such a structure can be understood and measured, as well as the extent to which it can be altered through policy initiatives.

As the number of investee businesses grows, discussions about exits are also becoming increasingly significant. Issues such as e.g. exit routes, strategies, handling “living deads”[7] and geographic aspects must be dealt with. Growth Analysis intends to return with a more in-depth report that includes an overview of current knowledge and international experience.

[1] A second round (“Fund II”) with more or less the same conditions has been launched at the end of 2015.

[2] Exchange rate Swedish kronor (SEK) → euro (EUR) as at April 6th 2016 (

[3] This is the total public financing. After “deductions” for management fees, approx. SEK 1.2 billion (approx. EUR 130 million) remains for investments, according to Tillväxtverket's financing plan. (Tillväxtverket is the Swedish Agency for Economic and Regional Growth and the managing agency for the initiative). See Tillväxtverket (2010), ”Förutsättningar för fondprojektens genomförande” [”Conditions for the implementation of fund projects”].

[4] Growth Analysis, (2010), “Staten och riskkapitalet” [“The State and risk capital”].

[5] Growth Analysis, (2011), “Kompetent capital – Tre länder, tre försök” [“Competent capital? – Three countries, three attempts”].

[6] Growth Analysis, (2013), “Affärsänglar, riskkapitalfonder och policyportföljer” [“Business angels, co-investment funds and policy portfolios”].

[7] Companies that are underperforming in relation to expectations – they are surviving on the market, but have no potential for growth.

Effects and experiences – final evaluation of the Swedish regional co-investments funds 2009–2015

Serial number: Report 2016:03

Reference number: 2009/055

Download the report Pdf, 6.6 MB.


Håll dig uppdaterad, prenumerera på vårt nyhetsbrev