6. VC & Growth fundraising: Exceeding expectations
Compared to our estimates at the beginning of the year, Nordic venture and growth funds raised €400m more than expected. We have talked to Eir Ventures, one of the region's latest life science investors, and Verdane, which has its Idun fund that will be aligned with Article 9 of the SFDR.
In 2020, many Nordic fund managers postponed the fund closing due to the pandemic. At the beginning of 2021, we estimated that Nordic venture funds would raise around 1.6 billion euros. The results show that 23 funds raised over 2 billion euros in total.
"Compared to 2020, which was a meagre year than the previous five years for fundraising among Nordic VCs, the tally was much more solid last year. With a growth in the total capital raised of more than 100%. We also find four funds that were €100m or larger in size”, says Joachim Høegh-Krohn, CEO at Argentum.
See the list: Top 10 Nordic venture funds that closed in 2021
Life science debut fund
One of the new managers that had a final close in 2021 was Eir Ventures, a Nordic-based venture capital firm that invests across all stages of life science development, from early-stage seed investments to later-stage financing. According to their founding partner, Stephan Christgau, raising capital for a fund without name recognition and track record was not a walk in the park during a global pandemic.
"To be honest, it is among the hardest jobs I have ever done. Luckily, right before the pandemic, we got our last cornerstone investor onboard", he says.
In Christgau's experience, the capital is available for the health care and life science sector, but LPs primarily focus on other sectors.
"This is a structural issue for the sector. We must show investors that our investments lead to strong returns. In general, the sector has a way to go in communicating its attractiveness. The job is hard for a new fund like ours because the track record is shorter than more experienced funds. In addition, world events have not made it easier. First the pandemic, and then a war in Europe", Christgau says.
"Our edge is that we do the same as other VC investors, at the same time as we have a link to universities. Solid scientific quality is in our DNA; innovative science can lead to successful products and companies."
Top 10 Nordic venture funds that closed in 2021
| Fund manager | Fund | Country | Raised in closing (€m) |
|---|---|---|---|
| Monterro | Monterro IV | Sweden | 700 |
| Heartcore Capital | Heartcore IV | Denmark | 180 |
| Eir Ventures | Eir Ventures I | Sweden | 122 |
| Idekapital | Idekapital Fund II | Norway | 100 |
| Maki.vc | Maki.vc Fund II | Finland | 100 |
| Hadean | Hadean II | Norway | 90 |
| Korona Invest | Korona invest IV | Finland | 80 |
| Norselab | Norselab Fund I | Norway | 70 |
| Icebreaker Ventures | Icebreaker Fund II | Finland | 50 |
| Heartcore Capital | Heartcore Progression Beta | Finland | 45 |
Incredible fundraising expectations for 2022
There is a record amount in the pipeline for 2022. As the graph below shows, funds with an aggregated target amount of 8 billion euros are in fundraising. However, it is still too early to tell how many will succeed in their fundraising efforts in 2022, as the current market conditions have increased the uncertainty.
Among the funds that have already closed is Verdane Idun. The fund will be aligned with article 9 of the EU's Sustainable Finance Disclosure Regulation (SFDR, see facts) and focus on three investment themes: Companies within sustainable consumption, companies that play a part in the energy transition, and companies that help to create resilient communities.
"The fund invests in companies go through an impact analysis in the investment committee. We have created a system to score companies on their intentionality, on whether the impact is likely to grow with the company, if the impact can be measured, and what risks the growth might lead to", says Eline Stokstad Fjell, Director at Verdane. She is on the board of Spond, one of the companies in Verdane Idun's portfolio.
"It has been a rewarding experience to raise capital for a large impact fund, and we see that our investors find it attractive. It is, of course, ambitious to be aligned with article 9 of the SFDR, and now we must deliver on our promise. Together with our data team, I am now setting up KPIs for Spond to measure the company's impact", she adds.
Cyclical fundraising: As the graph shows, the astonishing fundraising level in the pipeline for 2022 exceeds all the capital raised in the last decade.