Funding and Investment Sweden & Stockholm

Overview funding (source: own draft)

The general start-up scene in Stockholm is strong; there are many successful examples and unicorns (Spotify, Skype, Mojang, King). Although there are many Venture Capital Funds (VCs), game companies have a more difficult position because in general it is harder to invest in games. Games are hit- driven and VCs are still rather cautious to invest in game start-ups. However, there have been many success stories within the game industry.
Several people have become rich and some of these people have become angel investors and are interested in investing in game companies. There have recently been a number of senior people leaving their jobs at big companies and starting their own game studios. These start-ups are in a better position when looking for funding, because they have an experienced team – people who have ‘done it’ before.

Intellectual property is what has been driving investments in Swedish game companies. Among some major business transactions during since 2015, out of these, over 60% happened out of the buyer’s interest in the seller’s IP.

During 2019 there was 39 reported investments and acquisitions for over EUR 400 million on the Swedish market. In 29 of these transactions, a Swedish company was the buyer.From January to October 2020 there were 21 reported investments and acquisitions on the Swedish market for the value of 1 Billion EUR. (SOURCE: GAME DEVELOPER INDEX 2020)

There are virtually no public funds focusing fully on game companies. However, a game start-up can fit in some public funding that are supporting start-ups in general. These funds often assess companies based on the level of innovation, which is something rather complex when it comes to games, so the game start-ups often need added value (e.g. diverse team, focus on education / health, etc.).

Below are some of the public funding sources identified:

CREATIVE EUROPE (Kreativa Europa)
  • Who: cultural and creative European production companies – for games studios: having produced a commercially distributed video game in the past two years
  • What: eligible costs: the cost of personnel working under an employment contract, subsistence allowances, costs of travel, depreciation cost of equipment, cost of consumables and supplies, costs entailed by other contracts awarded by the beneficiary, costs arising directly from requirements linked to the performance of the action, costs relating to pre-financing guarantee lodged by the beneficiary of the grant, costs relating to external audits, non-deductible value added tax (“VAT”)
  • Nature: grant
  • Size & conditions: estimated 3.78 m € is available for co-financing (up to 50%); between 10,000 € and 150,000 € per project; 50% of the grant is transferred within the first 30 days; regarding video games:
    - support for video game production companies with proven experience and interested in developing a narrative storytelling video game, regardless of platform or expected distribution method
    - video game companies that are original, innovative, creative, and culturally diverse
    - are substantially interactive with a narrative component
    - are ambitious in terms of gameplay, user experience, and artistic expression
    - the works should also have decent commercial prospects, as well as the potential to access European and international markets
  • Geographical scope: EU Member States as well as non-EU countries (Albania, Bosnia and Herzegovina, The former Yugoslav, Republic of Macedonia, Georgia, Iceland, Norway, Moldova, Montenegro, Serbia, Ukraine)
  • Time scales: 1 call per year, from call to deadline: 3 months, decision making within 4-5 months, 30-month projects
  • Track records: (2014-): estimated number of companies that received grants 10
ALMI BUSINESS LOAN (Almi Företagslån)
  • Who: companies with up to 250 employees in all industries
  • What: companies with a new phase of development, new companies with a valid business idea, companies that are on their way to expand internationally, companies that want to buy other companies, brand new companies, innovation projects
  • Nature: loan
  • Size & conditions: micro loan – can finance the entire capital requirement; corporate loans – Almi usually enters with 30%, a bank 30% and the entrepreneur 30%; innovation loan – up to 300,000 SEK, Almi can co-finance up to a maximum of 50% of the total capital requirement, where co-financing can be done with estimated projected time in the project at a value of SEK 250 per hour; loans amounting to 300,000 SEK- at least half of the co-financing must be in form of capital, either equity, bank or other external financier; Amortization of the loan is adjusted to the company’s development and financial situation. In order to compensate for the higher risk and not to compete with the banks, Almi takes an interest rate above average bank interest rates.
  • Geographical scope: national (SE)
  • Time scales: continuously
  • Other: furing 2016, 4,681 companies were granted a loan worth in total 3.324 m SEK

Private equity funds with interest in video games

  • Who: friven entrepreneurs with business ideas that can build future growth companies, across a broad range of industries. The company has to be new (up to 6 years old) or in an early expansion phase; the business idea should be scalable, innovative and meet a large customer demand regionally or nationally. It is also an advantage if the company’s innovation has an international growth potential and can be Sweden’s promising export company.
  • What: support includes an access to experienced investment managers, a capital and a network.
  • Nature: private equity fund
  • Size & conditions: managed capital: 3 billion SEK, first investment round in a company is between 300,000 SEK- 2 m SEK, Almi always goes in as an active minority owner (a representation in a board and/or advice), in order to provide the best possible value growth in the company; together with their investment partners Almi can participate in a number of follow-up investments, where Almi Invest invests a total of up to 10 m SEK per company
  • Geographical scope: national (SE)
  • Time scales: n/n
  • Other: appr. 70 new investments every year, which is around 7% of all the companies that apply; there have been a few game companies who have received an investment from Almi; has invested approximately 1.2 bn in approximately 400 growth companies in various industries
SPINTOP VENTURES Spintop Ventures is an investment firm founded in 2009 and owned by accomplished tech entrepreneurs, industrialists and seasoned investors.
  • Who: companies in what is usually labelled the ICT or TIME sector, Information and Communications Technology and Digital Media.
  • What: investment stage: seed, early and later stage, Investment sector: technology
  • Nature: private equity fund
  • Size & conditions: Investment size: one investment of 3.1 m € realized in 2014
  • Geographical scope: Nordic countries
  • Time scales: n/a
  • Other: supported game company: Small Giant Game
  • Who: “Companies of tomorrow”, powering innovation in different sectors
  • What: investment stage: seed, early and later stage, Investment sectors: consumer services, software, games, financial technology, hardware
  • Nature: private equity fund
  • Size & conditions: investment split: 48% seed, 39%, 13% later. From 400,000 € to more than 50 m €, Investment conditions: initial investment can be as small as a couple of hundred thousand euros and can go up to 10 m € over the life cycle of a company.
  • Geographical scope: offices in Stockholm, Berlin and San Francisco
  • Time scales: n/a
  • Other: the Creandum funds have invested in companies before with tens of millions of euros in revenue. Once the Creandum funds invest in a company, Creandum takes an active role as advisor and all of Creandum team contributes time, expertise, and extensive networks to help the company succeed. Creandum is based in Stockholm, Berlin and Palo Alto. The Creandum funds have invested in over 50 companies being the first institutional investor in companies such as Spotify, Vivino, Cint, Edgeware, IPtronics, iZettle, Videoplaza, Xeneta and many more.

Amplifier Game Investor

Amplifier Game Investor is part of Embracer Group which was formerly known as THQ Nordic AB. With its head office based in Karlstad, Sweden, Embracer Group has a global presence through its six operative groups: THQ Nordic GmbH, Koch Media GmbH/Deep Silver, Coffee Stain AB, Amplifier Game Invest, Saber Interactive and DECA Games. The Group has 45 internal game development studios and is engaging more than 4,000 employees and contracted employers in more than 40 countries.
  • Who: Independent game studios
  • What: The team consists of experienced game producers alongside business executives from the industry so the support includes business development and market intelligence, but also the actual game development progress.
  • Nature: Private equity fund
  • Size & conditions
  • Geographical scope: Nordics
  • Time scales: The ambition is to make four to six investments per year

Status: 2020