Norrsken VC is the first impact VC in the Nordics, and among the first in Europe. At the core of the Norrsken mission is to invest in impact-focused startups solving the world’s biggest problems and building scalable, successful businesses in the process. The ultimate vision is to drive more capital to positive impact initiatives by proving that impact leads to superior returns.
The Stockholm-based firm, founded in 2017, aims to invest across all 17 UN Sustainable Development Goals, with a primary focus on Europe. Its portfolio companies include the likes of Swedish lithium-ion battery startup Northvolt, British peer-to-peer food sharing platform Olio, and Gothenburg-based electric airliner startup Heart Aerospace.
We had the pleasure to catch up with Agate Freimane, General Partner at Norrsken VC. Agate is a trailblazing woman in the VC space and is passionate about impact-focused startups. She started her career working in finance in London and New York, before co-founding edtech charity Bright Mentors.
Agate talked to us about how impact and profit can go hand in hand, how tech can be a force for good, shifts in the European VC space, and how founders should approach funding.
What first got you into investing? What is your story?
My background is a mix of investments and start-ups. I started my career in investment banking and private equity investing at Morgan Stanley, working in both their London and New York offices, but after years in finance, I took the leap into startups and joined BrickVest as one of the first employees. It became one of the largest real estate investment platforms in Europe and a few years later.
Impact has always been close to my heart. I regularly volunteer in my free time, and I am the co-founder of Bright Mentors, an EdTech charity based in London. Yet I had never considered a career in impact. I thought it would be closer to working for a non-profit — underfunded and under-resourced, and therefore limiting my ambitions.
I was absolutely thrilled to discover Norrsken VC where I could combine my love for finance and startups, whilst exerting a tangible, positive impact.
Can profit and impact really go hand in hand?
Absolutely, today we are uncompromisingly focused on investing in impact-first companies that also have a focus on providing top-tier financial returns. But we didn’t land on this strategy from day one.
When we began investing five years ago, we were experimenting. Our main idea was that entrepreneurs building scalable solutions was our best bet to solving some of the world’s biggest challenges. At first, we invested for-profit, then in non-profit, then somewhere in the middle. And through that process we realised that the biggest opportunity lies where impact and profit have an equal importance to the company. In other words – for every unit of sales, there’s also a unit of impact.
A key part of any business looking to grow is to have the resources and good financials to be able to scale, which in turn, generates more impact. Therefore, we absolutely think these two should go hand in hand. They are not mutually exclusive, but rather mutually reinforcing.
Could you tell us your impression of the current VC landscape in Europe? How have you seen it change in the last 5 years?
We started investing a little more than five years ago. Back then, every single meeting we entered we had to explain our belief that you can generate great financial returns whilst focusing on impact businesses. Fast forward to today, and no one questions that proposition. It is widely accepted that yes, you can generate impact and profit at the same time, and I would even go as far as saying that impact is now seen as an investment strategy in its own right.
We truly believe that using impact investing as a strategy can even be a source of outperformance in financial returns. For instance, impact companies find it easier to hire top talent because today’s millennials are looking for purposeful careers, which is exactly what impact companies offer. This means they often have first pick on who they can hire. Moreover, impact can often resonate with other investors, or with clients, which means we see both impact and non-impact investors actively going after impact companies.
This shift has occurred in such a short timeframe. We had always hoped that it might happen as fast as it did, and it’s great news for the planet that the momentum around impact investments has grown, but it’s taken place even faster than any of us could have predicted.
What practical actions do you think need to be carried out to shift the funding landscape in the next 5-10 years, and by who?
Today we see the first generation of impact venture capital funds, such as Norrsken VC, proving that you can combine impact and profits. Yet we’re still relatively early in the journey compared to mainstream VCs. It means that impact VCs still need to demonstrate a greater number of successful case stories for the institutional investors to start to re-shift larger amounts of their capital into impact strategies.
Over the next 5-10 years, we hope that a lot of impact companies will become unicorns and decacorns, and that even more impact strategies launched by impact funds or even non-impact funds. Importantly, the big capital holders – pension funds, insurance funds – will all recognise the need to invest in impact companies more actively, if not only because they lead to fantastic returns.
Can technology really be a force for good?
It can 100% be a force for good. If we think that the iPhones in our pocket have more processing power than the computers that facilitated the first mission to the moon, we realise that the power we have available to us through technology is enormous. It can be used to tackle society’s big challenges, offering health or environmental solutions, and we have not yet realised even a small percentage of its possible power.
With this, it means we also don’t know the potential negatives of using new technologies. Therefore, the job for us as an impact VC is to really evaluate each of the technological solutions presented by each company we back. We need to make sure that they are directly addressing at least one of the United Nations Sustainable Development Goals.
Using our Impact Assessment Framework, we evaluate both the positive impact, as well as the potential unintended negative consequences, of any technology we’re considering to back. It is our duty to be very thorough in our due diligence, to make sure the technologies we back represent a net positive for the world.
What are your investment criteria at Norrsken VC? What will make you pursue a startup for investment?
The most important criteria we’re looking for in startups are those that have a dual-focused unicorn potential; companies that could be valued at $1bn, but also positively impact the lives of 1 billion people.
This is important because it asks of the team, will they be able to raise billions of dollars of investment and in doing so, what could they achieve with this significant amount of funding? When your ambition is this high, the significant improvements you can make to a huge population is vast.
First, founders who approach us should have a very crystalised impact thesis – what is the problem they are addressing and what is the solution they provide? We want to make sure they have mapped their solutions relative to UN Sustainable Development Goals. It is the first question we will ask, and the most important. Other than that, there are no real do’s and don’ts, we just want a great conversation!
Norrsken VC has a largely open-door policy — we simply want to hear great solutions from impact companies that have potential to scale. We encourage anyone with a startup they believe fits into the Norrsken VC landscape to drop us an email. We can then evaluate it and respond if we wish to find out more. We want to hear a tight elevator pitch that leads with the impact that the company plans to achieve and take it from there.
Diversity quota in investment firms, yes, or no?
As a woman who started a career in investment banking and now as a woman in VC, where I’m still a minority, I want to say ‘no’ to quotas, because I want to feel like I’ve got to this position through merit. No one can say that I got to where I am because I was simply ‘fulfilling a quota’. However, I’m very aware that’s the idealist in me speaking.
In practice, I recognise that we do need quotas. They force us to dig deeper and spread our networks wider. We have seen first-hand that quotas make you go the extra mile to find that qualified person who can fill the spot.
This is also something that we monitor closely in the companies we invest in. There is a huge amount of research available, and the conclusion is always the same – diverse teams perform better. We want to build the best teams possible, and quotas represent an additional tool we can use to optimise success.
via https://www.AiUpNow.com
January 26, 2022 at 06:12AM by contact@bcurdy.com, Khareem Sudlow
