Regional Co-investment Funds


This entry is an excerpt from the OECD’s International Compendium of Entrepreneurship Policies (2020), which contains 16 case studies from 12 OECD countries. The Compendium examines the rationale for entrepreneurship policy, presents a typology of policy approaches and highlights principles for policy success. Case studies span policies for regulations and taxation, entrepreneurship education and training, advice and coaching, access to finance, internationalization, innovation, and holistic packages for ecosystem building. (OECD Publishing, Paris,

The in-depth case study summarized below explores how Sweden's regional venture capital funds match private sector investment. The initiative was launched in 2009 by the Swedish Agency for Growth Policy Analysis (Tillväxtverket) to address an imbalance between available risk capital and the needs of startups.

Investment funds were launched in Sweden in response to the European Commission changing the EU Structural Fund programs from direct grants to lending and investment instruments (e.g., loans and loan guarantee, and venture capital (Tillväxtverket, 2014).


Tillväxtverket designed Sweden's Regional Co-investment Funds to improve access to finance during a startups early development stages and to support their growth. The program sought to increase the supply of revolving capital and improve regional financing structures in addition to developing the competences of entrepreneurship finance firms and strengthen collaboration among funders.

The 11 (initially 12) funds were established to invest in early stage micro-, small- and medium-sized enterprises (MSMEs). Individual fund capital bases ranged from SEK 36 million to SEK 200 million (approx. EUR 4.2 million and EUR 23.2 million). From the launch of the funds to June 2015 approximately SEK 3.4 billion (EUR 322 million) was invested in 320 portfolio companies. Public funds accounted for approximately SEK 1.4 billion (EUR 133 million) and private funds for SEK 2 billion (EUR 189 million). About half of the public funding was provided by the European Regional Development Fund, the rest was provided by public regional fund providers (e.g. regional organizations, county councils, Almi Invest).

During each investment round, the public sector invested up to 50% and private investors at least 50%. Investments typically ranged from SEK 1 million to SEK 10 million (approximately EUR 110,000 to EUR 1.1 million). Firms with up to 249 employees were eligible for investments. Investments were carried out in different ways. In most cases, companies reached out to the fund. In some cases fund managers actively pursued an investments. In a few cases, private sector investors brought a potential portfolio company to the fund.

The government aimed to complement the market (not crowd-out private investment) by developing a stable and sustainable revolving capital base that did not shrink in the long-term.


Tillväxtverket was responsible for the program, which operated within the framework of Sweden’s eight regional EU Structural Fund programs. Fund management involved four other organizations:

  • Almi Invest (an independent public venture capital company),
  • Innovationsbron (an investment fund),
  • Norrlandsfonden (a trust fund), and
  • The Sixth AP Fund (a state-owned pension fund).

Program timeline: 2009-2020

The Regional Co-investment Fund was launched on 1 January 2009 and planned to operate for 6 years (until 31 December 2014). In 2012, the program was extended until 30 September 2015 and follow-on investments in existing portfolio companies were extended to 31 August 2020 after which all shareholdings were divested.


Tillväxtverket published an evaluation report in 2016 and an assessment report covering the Regional Co-Investment Funds and two other Swedish risk capital initiatives in 2019.

The 2016 evaluation included both quantitative and qualitative data and input from a panel of international experts. The Funds impact on companies was measured by comparing a control group of firms that did not receive investments through the Fund, matched to recipient companies according to standard characteristics (sales, size, productivity, age of the company, industry, etc.).

Companies were asked to report on how they used the investment (e.g. skills acquisition, product development, operating expenses) and to evaluate the impact the investment had on different aspects of their business activities (expansion, future financing opportunity, staff growth, etc.). Companies were also asked to rate their needs for non-financial support and to what extent these needs were met by the fund and private co-investors.

KPIs monitored included the following:

  • Portfolio company characteristics (sector, size, turnover, location, etc.)

  • Portfolio company allotments of venture capital investments

  • Portfolio company assessment of the impact of the venture capital investments on the company

  • Portfolio company assessments of the need for non-financial support and contributions from private and public investors

  • Survival rates by sector

  • Turnover compared to the control group

  • Number of employees compared to the control group


The 320 portfolio firms had the following average characteristics in the year preceding receiving an investment from the Fund:

  • Annual turnover: SEK 6.3 million (EUR 69 million)

  • Number of employees: 6.8 persons

  • Productivity (value added per employee): SEK 334,000 (EUR 36,740)

  • Capital intensity (fixed assets/employee): SEK 801,000 (EUR 88,110)

Compared to a control group of similar firms receiving an investment from other funds, firms supported by the Regional Co-Investment Fund were spread among considerably more sectors.

Overall, about 80% of co-investors were from Sweden (50% came from the same region as the fund and 30% came from other regions). Foreign investors participated in about 6% of deals but they invested in larger amounts, accounting for just over 10% of the total value of investments. It was not possible to determine the location of the remaining 12% of investors.

Tillväxtverket's most recent evaluation highlighted five key findings:

  • Funds were invested in accordance with requirements. Nearly SEK 3.4 billion (approximately EUR 374 million) were invested in 320 companies since 2009 with exits from 45 companies (as of 2016). About 10% of companies went bankrupt.

  • The Funds engaged new actors in the venture capital market. Only about 30% of the total number of investment decisions were made by companies whose primary objective is investing capital. The regional structure of the initiative allowed new segments of recipient firms to access risk capital.

  • It was too early to draw conclusions about the tangible effects for businesses receiving and investment. However, an overall increase in employment was observed these businesses. It is not clear if this was due to widespread employment trends or new jobs being created by a few successful firms.

  • The majority of regions experienced positive capital supply structures but this was not uniform across and within regions. The empirical data did not allow for a causal assessment of the program and structural changes within the regions.

  • The program identified two main pathways, i.e. growth in the number of businesses receiving investments and improving the regional structure for risk finance. There did not seem to be a priority between either. Some regional funds saw themselves as regional development players, while others saw themselves as traditional venture capital investors.

The evaluators recommended:

  • Reviewing and clarifying of the program goals and developing an intervention logic chart.

  • Streamlining the program to:

    • Focus solely on the business growth with no ambition in respect of structural building, or

    • Adjust the model to allow variation between a strict venture capital instrument and a broader regional development instrument, depending on regional context.

  • Implement supplementary initiatives on both the supply and demand side to construct a more coherent system.

  • Improve the quality of registered investment data to improve monitoring and evaluation.


The main challenge implementing the program was that the objectives for the making individual investments (either to support a firm with growth potential or to strengthen regional capital supply structures) were not clear. The lack of a logical framework for how the Funds’ investments were to impact capital markets and firm performance resulted in different funds prioritizing different types of investments. This created challenges in evaluating the extent to which investments met the twin objectives. A logical framework was developed midstream to guide assessing program impact.

A second challenge some fund managers encountered related to the broad variation in framework conditions across regions. Industrial structures in some regions led to limited demand: the predominance of large firms, traditional sectors, or a lack of business competencies in firms were identified as factors limiting demand for venture capital. Some regions also had a limited pre-existing supply of venture capital, which made it more difficult for fund managers to identify private sector co-investors.

A third challenge was the limited amount of funding allocated to administrative activities (3%), which restricted the regional funds’ ability to make investments aimed at structural improvements. This challenge affected the various regional funds differently: regions where the funds manage large portfolios with relatively small investments were more affected because such a portfolio structure are costlier. These portfolios are often found in sparsely populated regions where the need for structural development investments is also the largest.

Lessons for other ecosystems:

Tillväxtverket's evaluations highlighted the difficulty of measuring impact of risk capital and business angel interventions because of the uncertain timeframe in which the effects appear. Nevertheless, the evaluators pointed to some key lessons:

  • Evaluations should be able to measure impact over long periods of timenot just in the short and medium terms. This is because impact is expected to occur over a long timeframe, both on individual firms and ecosystems.

  • Policy needs to recognize and adapt to the growing importance of informal capital, including business angels. Informal capital should be considered a potentially important investment source for entrepreneurship and should be targeted alongside formal investors. For example, business angels accounted for more than 40% of private investors in the regional co-investment funds.

  • Policymakers need to design venture capital and private equity development measures as components in a cohesive financing system. Measures to strengthen the supply side should complement measures that improve investor readiness. Similarly, policies that increase the capital supplies must consider exit issues.

  • Policies aimed at affecting individual firms and reinforce capital markets should set clear goals for different activities and assign resources accordingly. Initial program planning documents should include a logic framework detailing expected mechanisms involved from activities to impact. The framework should also include proposed KPIs for each mechanism.


Global Entrepreneurship Network
United States
Global Entrepreneurship Network
United States