Figures published by the Swedish Venture Capital Association show that the number and level of investments in the third quarter were the lowest since 2007.
The SVCA said just 79 investments worth SEK266m categorised "venture" were made in the period.
There were 21 investments worth SEK8.5bn in the SVCA's "buyout" sector. Much of this was driven by investments made by foreign based offices; these accounted for 52% of the total number of investments, and 70% of the total sum invested.
The SVCA said foreign investors were attracted to the country's sovereign balance sheet position, including budget surpluses and low levels of debt. This leaves more room for policies designed to stimulate growth. However, with rising unemployment and falling growth being felt, there is an increasing need to stimulate the development of companies, especially SMEs, the SVCA said.
The low level of activity overall through the latest quarter is said to be the result not of a lack of investment opportunities, but because of the way the venture capital market has been unable to take advantage of opportunities.
Henrik Talborn, chief economist at the SVCA, said that fewer new jobs and companies in future.
"Low levels of activity, low levels of competition for investment opportunities, and a good supply of attractive investment opportunities are clear signs," he said.
"It is therefore highly likely that very profitable companies will never get the chance to grow in the current environment. Venture capital funds deliver competencies and capital, which are the necessary ingredients to maximise the chances of entrepreneurial success."
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