SEB has extended the mandate of Greentech VC, the bank’s unit that invests in companies with technologies that help reduce the effects of climate change, protect biodiversity and other areas covered by the concept of “planetary boundaries”.
SEB Greentech VC now has an extended mandate to invest 1 billion Swedish kronor (90 million euros) in such companies. When the unit started in 2021, the mandate was to invest up to 300 million kronor. Already a year later, the mandate was increased to 600 million kronor.
“The challenge of staying within the planet’s boundaries continues to grow, and despite market fluctuations, we continue to see great value creation from sustainable, innovative solutions,” says Markus Hökfelt, who heads the unit.
The Stockholm Resilience Centre, a research outfit, developed the concept of planetary boundaries. It covers nine areas (see fact box), and SEB Greentech VC wants to invest in these areas.
Like SEB in general, Greentech VC focuses on a long-term approach, which is essential in a sector that is based on changing industrial processes and structures to more sustainable solutions.
Significant fluctuations in the venture capital industry
In the early 2020s, venture capital companies around the world made a wave of investments in climate-oriented companies, so-called climate tech. However, after the record years of 2021 and 2022, there was a sharp slowdown in the entire venture capital market.
“We have seen a major correction in the general market and in the area of environmental technology. Since 2022, the market has had a strong focus on AI,” says Markus Hökfelt.
Resilience as a key word – and strategy
For SEB Greentech VC, the concept of resilience in a broad sense has long been central. It is about investing in energy efficiency, local job growth, innovation and sustainable supply chains.
“We build resilience in society by investing in new and better technology or innovation that increases our productivity. We see that in many cases it reduces the risks in supply chains while at the same time increasing the possibility of using resources that are available locally,” explains Markus Hökfelt.
Dares to show patience and perseverance
SEB Greentech VC’s investment strategy is based on patience and perseverance, which Markus Hökfelt believes provides better long-term returns.
“We see that companies that work methodically and long-term with the transition to sustainable and strong societies build more value than those that do not change,” he says.
SEB Greentech VC’s structure makes this possible, as it allows investments to be made directly from the bank’s balance sheet rather than through traditional venture capital funds.
“We have the opportunity to be more long-term and have the patience to achieve the return we aim for,” says Markus Hökfelt.
Innovative companies – and AI – in focus
Markus Hökfelt and his team are focusing their interest on Nordic and European companies, and so far, a central theme has been electrification. In the future, they see particular value in investing in companies that in some way address the problem of matching energy production and consumption, i.e. make the energy systems more flexible. Production can vary with the weather or when large power plants need to be shut down suddenly. Consumption varies over the hours of the day and with the seasons.
SEB Greentech VC wants to see companies with significant sales and technology that provides a lasting competitive advantage. The latest investments have been made in companies with a 50 to 150 million kronor turnover and vigorous growth.
AI is a clear trend, not least in combination with energy efficiency.
“Our latest investment in Embedl shows that we are investing in companies that, with the help of AI, reduce energy demand and contribute to the climate transition,” he says.
Continued influx of investment opportunities
Despite market changes, Markus Hökfelt is experiencing a stable inflow of investment opportunities, especially from the Nordic region. He believes that SEB Greentech VC has built up a strong market position.
“We evaluate up to 1,000 companies a year and have an extensive European network through both SEB and the relationships we have built with investors in the market.”
Read more about SEB Greentech VC and their investments
