Top institutions including Credit Swiss and BMW’s pension fund are backing a new impact investing fund raised by one of Europe’s largest venture capital groups, as it hunts for a new generation of tech “unicorns” on the continent.
Norrsken VC said on Tuesday that it had closed a new €320mn fund, securing investment from the family behind fashion chain H&M, as well as leading banks such as Sweden’s SEB and Finland’s Nordea.
Set up by Niklas Adalberth, a founder of Swedish buy now, pay later pioneer Klarna, Norrsken launched its first fund of €100mn in 2019 with an aim of showing that impact investing — choosing companies that have a clear environmental or social objective — could deliver “competitive returns” as well as do good.
To date, Stockholm-based Norrsken has made successful bets on unicorns — start-ups that have gone on to be valued at more than $1bn — including battery manufacturer Northvolt and e-truck group Einride.
“It’s no longer just a hypothesis — we have three unicorns,” Adalberth told the Financial Times, referring to German cleantech group 1Komma5° as well as Northvolt and Einride.
He added: “It gives me so much hope that the capital world has woken up. This is a tremendous business opportunity. That is why we are able to attract the top tier one LPs [limited partners]: they are not doing it because it does good, but because it’s good business.”
The new fund may provide a welcome boost to Europe’s tech scene, with funding for the region’s start-ups having plummeted following a global retreat by venture capital investors since the pandemic.
Sweden has in recent years become one of the main European centres for both green industrialisation and impact investing as asset managers look to profit from decarbonisation.
Norrsken was one of the first venture capital groups to launch an early-stage impact investment fund, backed by Nordic founders of Candy Crush-maker King Digital Entertainment and Minecraft creator Mojang Studios, watch brand Daniel Wellington and Klarna.
But its second fund — which surpassed its original targeted size of €250mn — has attracted large institutional investors such as AP1 and Folksam of Sweden, the European Investment Fund, and the German state-owned investment group KfW.
“More and more LPs are looking at impact,” said Agata Freimane, one of Norrsken’s general partners. “The investors in the latest fund have been following us for a while but before they made the call, they needed to see a record. ‘Show me on paper that you can truly walk the talk’.”
Norrsken declined to reveal the performance of its first fund, but Freimane said it was delivering “market returns, and even beyond”.
The new fund will focus on Norrsken’s main markets of the Nordics, Germany and the UK, and will invest in areas such as climate, biotech and energy. Its investment criteria are strictly linked to the UN Sustainable Development Goals.
The venture capital fund is part of the broader Norrsken ecosystem, which includes social entrepreneur centres in Stockholm, Barcelona and Kigali as well as a foundation that backs several different funds including one focused on African start-ups.
Adalberth underlined that Sweden invested almost 40 times the global average in impact companies, but that such investments still accounted for only about 1 per cent. “You don’t solve climate change out of Sweden,” he added. “You need this movement to go viral and global.”
