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Obstacles to Nordic Venture Capital Funds - Promoting a common Nordic venture capital market (Updated version 2011)

  • Publisert 13.02.2012
This is a new version of the “Obstacles to Nordic Venture Capital Funds” report first published in November 2006 and updated in 2007 and 2009.

Since publication of the original report, discussions regarding these issues have been ongoing in various forms in the Nordic countries. Although positive changes have been made in several of the countries, new obstacles in different forms have also emerged.


The overall recommendations from the original report are therefore to a large extent still valid and with the Nordic venture capital market currently under severe pressure, the discussion about the conditions and regulations for venture capital has become even more important.


The number of venture capital funds in the Nordic region and the amount of capital managed by them have decreased substantially over recent years due to several factors. 


A well functioning venture capital market is an important engine for economic growth and the creation of new industries, companies and employment in the Nordic countries. Furthermore, a venture capital market helps to attract international capital to the region.


Today, these facts has been acknowledged by all the Nordic countries and efforts have been made to improve the regulations for the venture capital market in the Nordic countries as well as on a European level. An important part of the regulations for venture capital relates to legal and taxation issues pertaining to transnational investments into venture capital funds.


There is today broad European consensus that there would be far more cross border investment in funds if the funds encountered fewer obstacles to cross border capital raising. This is a significant problem, especially for smaller growing venture capital funds.


In the Nordic countries there are different kinds of obstacles to venture capital funds receiving transnational investments. The purpose of this report is to describe the status in each country and thereby also function as a Nordic best practice study.


In addition to transnational obstacles, other regulations also pose a threat to the market. In several of the Nordic countries the profit of venture capital firms, often called carried interest, is now being taxed or under the risk of being taxed as salary instead of as capital income. This strongly affects the attractiveness of the venture capital model.


Implications of new EU regulations for the private equity industry, the directive on Alternative Investment Fund Managers (“AIFM”), are also mentioned in the report. These are critical issues for the progress of the Nordic private equity market and will have to be addressed by all Nordic administrations.


The first part of the report contains overall common Nordic recommendations and provides an overview of the importance of as well as the present status of the Nordic venture capital market. The second part of the report contains detailed updated status reports and national recommendations regarding obstacles in each Nordic country.


Since the report is part of the Nordic Council of Ministers’ efforts to promote a common and well functioning Nordic venture capital market, the term venture capital is used throughout the report. The legal aspects valid for venture capital equally apply to the buyout segment or other parts of the private equity asset class. 


 ISBN 978-82-8277-004-0


Erik Johansson (editor) Anders Myklebust
Peter Alhanko Martin Nilsson
Paulus Hidén Sigurd Opedal
Erna Sif Jónsdóttir Anders Endicott Pedersen
Janne Juusela Jyrki Tähtinen
Finn J. Lernø Vala Valtýsdóttir
Carl-Peter Mattsson Nicolai Ørsted