December 3, 2023
  • Norrsken VC advocates radical transparency in impact investing.
  • The company said the new sustainability regulations make it difficult for the sector to wash the environment.
  • Check out our 23-slide Impact Report that reveals how Norrsken is evaluating its portfolio.

Norrsken VC has been pushing radical transparency into impact investing since raising funds in 2019.

The Stockholm-based investor, founded by Klarna co-founder Niklas Adalberth, publishes a report on his private portfolio assessing everything from how he has adapted to new sustainability regulations to the overall impact of his startups on the world.

Norrsken writes checks from 1 to 5 million euros for early impact startups that address at least one of the 17 United Nations Sustainable Development Goals (SDGs).

It has supported 37 companies, including eight new and 11 follow-up investments in 2021, across 11 Sustainable Development Goals. Its portfolio includes electric car company Northvolt, food-sharing app Olio, and carbon credit-rating startup BeZero Carbon.

About 72% of the company’s portfolio companies reached their annual impact goals in 2021. “We got some questions about this, like ‘Are you really comfortable showing that number?'” Tove Larsson, general partner at Norrsken, which is investing from a €125 million fund, according to Insider.

“That’s what we’re going for – to be completely transparent. We would of course like to say 100% or higher, but that really reflects our ambitious goals for the portfolio as a whole. It’s also very difficult to anticipate early corporate flights and where they’re going to come out.”

Larson said the investor did not “pick and choose” what it disclosed in the impact reports, but added that she was “very confident” it would reach its long-term goals.

When a portfolio company fails to reach its annual goals, Norrsken works to keep it on track with other long-term goals. These goals are set before Norrsken invests in a company and are approved by its advisory committee, which is made up of major LPs, and is not modified later.

There is no common definition of “impact” within the venture capital and startup ecosystem, which can lead to confusion and a lack of alignment. Larson said there are likely as many definitions of influence as influencer investors. Norrsken shares her definition publicly on her website.

“We’ve seen a lot of impact funds emerge and it’s great to see more capital making an impact, but I think it’s also important to be really transparent about how you think as an impact investor,” she added. “We’ve seen great examples and other less important ones on the market.”

New sustainability regulations in Europe and the United States are also helping to set standards. Funds in Europe are categorized based on their impact and business model, and have different reporting requirements.

“I think it’s definitely a step in the right direction,” Larson said. She added that her company has allowed new regulations to guide its impact framework and hopes others will follow suit, fill any loopholes in it, and help “co-create” the frameworks rather than pointing out their challenges.

Norrsken aligns its operations with Article 9 standards, the most impact-driven type of fund.

Check out the 23-segment impact report below, which shows how and when Norrsken assesses the impact.

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