Efficiency DGF’s operational costs are in line with the “market” and DGF operates efficiently. The evaluation shows that despite the differences in costs between comparable international public financial institutions, it is assessed that DGF’s costs – when compared to the level of costs in terms of wage levels, financing activities and the book value of the assets under management – are at the level where they are expected to be relative to the other institutions. This applies both to DGF’s investment activities and to DGF’s loan and guarantee activities. However, it is extremely difficult to estimate the costs related to value created (efficiency) from ongoing investment activities. The net value created is apparent only when there is an exit. At this point, the market puts a price on the company/project. Only then is it possible to calculate total investments vs the value created (sale price) and thus determine the net value creation. The implication of this is that efficiency is measured as costs relative to others and not relative to net value creation.
In the case of VC-investments, the evaluation shows that DGF has contributed to the development of the Danish VC market. In particular, the increased focus on investments through FoF structures supports the professionalisation and development of the Danish VC ecosystem. This is supported by the interviews conducted as part of the evaluation. Several respondents consider it beneficial when DGF invests in a fund, since DGF’s presence can help to attract private investors. As such, DGF has had and continues to have a positive effect on the development of potential high-growth companies. Furthermore, DGF is perceived in the market as a cornerstone investor, meaning that DGFs investments attract private investments that would not otherwise have been made. In the case of loans and guarantees, DGF’s loan guarantee scheme serves as a contra-cyclical business-policy instrument and during the recent crisis functioned as such by securing companies’ access to financing. Furthermore, the DGF loan guarantee scheme is widely distributed throughout Denmark and there has been no specific sectorial focus in the scheme. In 2011, the growth guarantee was equally
Effect and Impact
distributed between sectors. This illustrates that
DGF has had a positive effect on SMEs’ access to
DGF does not focus on specific sectors or geo-
both equity and debt financing.
graphical areas when administering the scheme. This is an important conclusion, since too narrow a
The Danish VC-market has developed positively
scope would move DGF away from its justification
and in line with the objective of DGF. This is espe-
that is that DGF through its activities minimize mar-
cially the case in relation to its indirect investments,
ket failures. Furthermore, unlike VC investments,
which has supported this process.
the loan guarantee scheme does not require the same specialisation and thus it can be used much
The loan and guarantee products have also had a
more widely as an instrument to help SMEs grow. It
positive effect. There is demand for the products
is advisable to have the demand for loans drive the
and they are widely distributed throughout Den-
scheme and not target it on a specific sector. This
mark. Loan products are demand-driven and not
gives broader access to the loans and ensures that
target specific sectors. Finally, it is encouraging that
more firms have the opportunity to access these
the instruments used as a contra cyclical policy in-
loans.
strument.
EVALUATION OF THE DANISH GROWTH FUND | DAMVAD.COM
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