In Sweden there is a big confusion in terminology surrounding different types of Investment companies, the Swedish journalists of the leading papers and even the politicians can’t tell Venture Capital companies apart from private equity firms and other types of corporate finances business’, they are all grouped under the term “Riskkapital” (“Risk Capital”, which is the Swedish expression for Venture Capital).
For the past year there have been a debate in Sweden about “Riskkapital bolag” (Venture Capital companies) and their moral. The first thing I think about how investing in startups could be that amoral? Are they all funding startups that will pollute the world, borderline criminal business, or something else terrible?
The debate is really not about VC firms, but about investments companies such as private equity firms that do take-overs of well established companies and break them up. Most people I know i the UK or US would not think of these types of investment companies when I say VC (which is the closest translation to “Riskkapital”), and most Swedish entrepreneurs or people in the Swedish corporate finance sector wouldn’t either. Take a look at the one the larger private equity firms in Sweden, EQT, mentioned in DN today, the describe themselves correctly in English as a private equity group on their website, and they are an investment fund / company not a Venture Capital firm. Why can’t the Swedish journalists get the terminology right?
So why does this matter? Well when I tell my mom that there is a need for more VC’s in Sweden and a climate more like the one I see in London, she says, isn’t that those companies that buy up Volvo to break it apart? And I have to explain it and say “No, it’s the companies that will fund a future Skype or the like (which all of the Swedish “VC’s” where to risk averse to invest in by the way, so Skype have never had even a part of it’s corporate structure in Sweden, but in Luxembourg, where the investors were willing to take a risk).”