Magnus is a co-founder and Managing Director of Cleantech Scandinavia. In 1990 he co-founded environmental consultancy Natlikan AB, and developed it into the leading supplier of environmental legal information in Sweden.
Nordic cleantech investments continued to increase in 20092010-03-23 09:59
Nordic cleantech investments continued to increase in 2009
Cleantech Scandinavia, a pan-Nordic investor membership network organisation, released its annual report “Nordic Cleantech Dealflow 2009”, summarising and analysing all the private equity investments and public grants in the clean technology sector in the Nordic countries that took place in 2009. It is the third year in a row that this study is being conducted, and it is exciting to see that despite the general economic slow-down, cleantech investments did not fall, but developed instead.
The total amount of capital attracted by cleantech companies in the Nordics rose to EUR 460,6 million during 2009, compared to EUR 371,9 million in 2008. This 24% growth rate was achieved primarily because of the increase in public funding activity, which doubled compared to 2008, but it also includes a 9% increase in amounts of private equity investments. At the same time, the number of transactions in 2009 was down 22% compared to the previous year. This development is explained by a shifted focus of the financiers. Private equity is now searching for later stage companies to invest in, reverting from high-risk start-up companies, which led to a significant increase in the amounts involved in every deal. Public funders have in turn concentrated most of their funding effort on commercialisation stage companies, helping them to scale up and demonstrate their technologies.
Another positive sign is the internationalisation of the market. Some of the key players of the European cleantech venture capital scene such as RWE Innogy, Capricorn Venture Partners, Wellington Partners to name a few have invested into the Nordics in 2009, and many more are showing high interest. In fact, the five largest venture capital deals of they year all included international actors. “I am very glad to see big international VC names come in the Nordics, it shows international confidence in the entrepreneurial spirit and environmental awareness of the Nordic countries. We consider international participation as a very positive sign for the industry, and look forward to see more of it during 2010” – says Magnus Agerström, the Managing Director of Cleantech Scandinavia.
Among the countries, Norway has been this year’s champion in the amounts of capital attracted, accounting for 40% of the Nordic’s total, while Sweden is the leader in the number of investments, leaving neighbours far behind with 52% of the total number of deals.
The Danish private cleantech investments witnessed a reduced activity level in 2009. Fewer investments were made, though with larger amounts of capital involved in every deal. At the same time, Danish system of public support for cleantech innovation is not slowing down, as almost twice as many grants compared to 2008 were given to research, development and technology demonstration projects, especially in the energy sector, the most active financiers being the Danish Energy Authority and the Danish National Advanced Technology Foundation. Still the combined private and public funding amount tapped into the cleantech sector in 2009 was 22% less than in 2008.
The Finnish cleantech investment market witnessed somewhat reduced activity levels, with a 60% decrease in the number of deals, but the majority of those investments were made in expansion stage companies, keeping the average amount of money involved per deal high. Finland shows good practices in private-public partnerships in the cleantech area, one example being the financing of a new industrial scale production plant of European Batteries, whose Li-Ion batteries have electrical vehicles as one of the customer segments. Three Finnish companies are listed among the 22 largest private equity deals in 2009.
Finland has also created new financing and support structures for the cleantech start-up companies, such as Cleantech Invest, a seed fund and start-up accelerator co-ordinated by TEKES.
Overall, the Norwegian cleantech sector has had the most positive development among the Nordics. The amounts of capital drawn into the sector have risen significantly. The number of investments was somewhat down but investments were, on average, larger in amounts. Norway had the highest amount of money involved per deal due to the fact that half of the companies that attracted money were later stage companies. One technology area that can be particularly mentioned is the solar energy cluster that is in place in Norway. Technologies across the lifecycle of the photovoltaic cell and solar energy generation raised an impressive EUR 90 million in private and public funds combined, including the largest registered private equity investment of 2009.
As a clear indicator, eight Norwegian companies are listed among the 22 largest private equity deals in 2009, with two of them taking first and second positions. This activity on the private equity scene was also supported by a newly created public-backed investment fund, Investinor AS, which co-invested significant amounts in three cleantech companies during 2009.
Sweden’s stronghold is its public support system, with the Swedish Energy Agency in the lead of public financiers. Both the number of public grants and soft loans, as well as the overall amounts grew in 2009 compared to previous years. The largest public investment grant of the year amounting to SEK 500 million (EUR 48,7 million) was awarded by the Swedish Energy Agency to black liquor gasification company Chemrec for the construction of its first industrial scale plant.
The cleantech equity investments in Sweden decreased however, as compared to 2008, both in number of deals (by 29%) and in the amounts invested (by 16%), but a characteristic feature of Sweden is that seed financing kept a larger share compared to the neighbouring countries, particularly thanks to the activity of the investment funds backed by public money (such as Chalmers Innovation or STING Capital). Nevertheless, nine Swedish companies are listed among the 22 largest private equity deals in 2009.
It is fair to say that the investors in the Nordic cleantech industry did not succumb to the financial crisis, but instead adapted, and focused on the lower risk segment of the later stage expansion companies. Nevertheless, for the years to come, growth in all development stages is needed. The coming two years of capital inflow will be very important for the development of the cleantech sector and will show if it is on the right track towards a mature and successful industry. We will keep reporting about it!
- ENDS -
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