Venture-Capital Record makes Sweden a new Impact Hub in Europe
(Bloomberg) – Venture capitalists looking for sustainable startups are plowing in more money than ever in Sweden, making climate activist Greta Thunberg’s birthplace Europe’s biggest magnet for power investors.
Sweden this year attracted a record $ 4.5 billion in cash-oriented investments that strive to meet at least one of the 17 sustainable development goals, according to data compiled by Dealroom.co. Among the largest financing rounds were those for the battery manufacturer Northvolt AB and the care app Kry International AB.
Tove Larsson, general partner at Stockholm-based Norrsken VC, says that she is preparing for more business. “Given the tremendous traction in this market, we are likely to go out with fundraisers soon,” she said in an interview. Her fund currently has EUR 120 million ($ 135 million) in assets, making it one of the largest of its kind in the Nordic region.
Larsson says that the development shows how effect investments, where money is channeled to investments that focus on change such as decarbonisation, have developed from a niche strategy to something that is closer to the mainstream. That is when environmental, social and governance strategies spread, with ESG assets expected to exceed $ 50 trillion by 2025.
“Just five years ago, the term ‘impact’ was misunderstood and did not resonate with valuations of $ 1 billion at all,” said Larsson. “Everything has changed now.”
Sweden was already a hub for startups and has produced some of the world’s most famous companies, including the music streamer Spotify Technology SA, the Minecraft manufacturer Mojang AB and the payment company Klarna Bank AB.
Larsson says that she now feels a “sense of urgency” among Swedes to channel more economic resources to combat climate change. “The Greta effect is also a factor,” she said.
Eric Archambeau, who founded the Brussels-based VC company Astanor Ventures, has invested in Swedish tech startups for 13 years. He started with Spotify and was recently involved in the financing of Stockeld Dreamery, a vegan cheese producer in Stockholm.
Apart from a framework for public guidelines that encourages entrepreneurship, Archambeau says that Sweden benefits from “a rapidly maturing technical ecosystem”, where billionaire founders from the first wave of success are now reinvesting back into the system.
“Often, this investment is increasingly power-driven,” Archambeau said.
An example of this type of reinvestment is the Northern Lights Foundation, which was started by Klarna’s co-founder Niklas Adalberth. The buy-now-pay-later app that he helped create is now valued at about $ 45.6 billion.
Investors are still more comfortable spending their money on regular tech startups than on those who have committed to doing good, according to the State of European Tech report.
Larsson says that her goal now is to “provide institutional investors with evidence that the impact can create a great financial return.”
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