Sweden turning into Europe hub for impact investors

Stockholm

VENTURE capitalists looking for sustainable startups are plowing more money than ever into Sweden, turning the birth country of climate activist Greta Thunberg into Europe's biggest magnet for impact investors.

Sweden this year attracted a record US$4.5 billion in cash targeting ventures that seek to address at least one of the 17 Sustainable Development Goals, according to data compiled by Dealroom.co. Among the biggest funding rounds were those for battery-maker Northvolt and healthcare app Kry International.

Tove Larsson, general partner at Stockholm-based Norrsken VC, says she's gearing up for more deals. "Given the enormous traction in this market we're likely to go out with fundraising soon," she said in an interview.

Her fund currently has 120 million euros (S$185.2 million) of assets, making it one of the largest of its kind in the Nordic region. Larsson says the development shows how impact investing, whereby money is channelled into ventures targeting change such as decarbonisation, has evolved from a niche strategy into something closer to the mainstream. That's as environmental, social and governance strategies proliferate, with ESG assets expected to exceed US$50 trillion by 2025.

Sweden was already a hub for startups and has produced some of the world's best-known companies including music streamer Spotify Technology, Minecraft maker Mojang and payments firm Klarna Bank.

Larsson says she now feels a "sense of urgency" among Swedes to channel more financial resources into fighting climate change. "The Greta-effect is also a factor," she said.

Eric Archambeau, who founded Brussels-based VC firm Astanor Ventures, has been investing in Swedish tech startups for 13 years. He started with Spotify and more recently was involved in the financing for Stockeld Dreamery, a vegan cheese producer in Stockholm.

Aside from a public policy framework that encourages entrepreneurship, Archambeau says Sweden benefits from "a quickly maturing tech ecosystem", where billionaire founders from the first wave of successes are now reinvesting back into the system. "Oftentimes that investment is increasingly impact-driven," Archambeau said. BLOOMBERG