US vs. EU Exits

The success of a Venture Capital fund is highly dependent on its ability to create high valuation exits. A recent study (by Hege et al, 2006), based on 508 exits of US and EU based VC funded companies found that:

  • US based companies generally generate higher returns to the investors than their EU based counter parts
  • EU IPO exits yield returns similar to those in the US!
  • The median valuations in M&A transactions are three times higher in the US compared to those in the EU.

One consideration for the higher US valuations, as well as higher number of transactions in M&A exits is that over 60 percent of the market capitalization for publicly traded technology companies world wide, resides in North America.

The Nexit Experience

The Nexit Bridge offers a method of utilizing the arbitrage between the lower venture capital valuations in the Nordic region and higher M&A exit valuations in the US. To date Nexit Ventures has produced four trade sale exits, all of them have taken place in the US, with the P/S (Price per Sales ratio) varying from 4 to 11, and the one with the highest return multiple, being 10, was a Finnish company. In regards its current portfolio, Nexit has had discussions with potential acquirers from the US, Asia and Europe including Israel, as well as serious discussions regarding potential listings on public markets on all three continents. Having the network and industry insight to find buyers globally, is necessary for maximize returns.