Nordics choose climate technology over AI as their golden ticket in 2023

2023 was not a great year for fundraising. Nordic countries were no exception. But while it was AI that bucked the trend in other European countries, climate technology kept the Nordic technology wagon on track.

It’s not just a matter of climate technology. Nordic VCs are also establishing funds focused on industrial technology and Web3. However, compared to the $1 billion generalist funds in 2022, only a handful of funds raised more than €100 million in 2023.

Sweden and Norway are leading the way when it comes to green waves, but Finland and Denmark have found other areas to shine.

Here’s a look at what happened in the Nordic tech industry in 2023.

Series B and mega rounds end in 2023

It is no secret that the investment environment has deteriorated since 2021. In 2023, his total investment (to date) has decreased by more than half compared to his two years ago.

However, the $10.3 billion invested in Nordic startups in 2023 still exceeds the amount invested in 2021 and earlier.

H2 Green Steel, Northvolt and Klarna are typically the Nordic scale-ups that raise the most funding, and last year was no exception.

Swedish startups accounted for the bulk of the funding, with $6.5 million compared to $3.7 million for other Nordic countries. Finland had the largest decline in startup investment, from $1.9 billion in 2022 to $680 million in 2023.

In 2023, the number of funding rounds of $100 million or more also decreased in the Nordic countries. According to Dealroom, last year there were 24 rounds over $100 million, but in 2023 there will only be seven rounds at that level.

Who cares about AI when we have climate change technology?

In 2023, six of the 10 companies with the highest funding, ranging from €75 million to €1.5 billion, were climate change technology startups.

And three of the six companies, H2 Greensteel, battery scale-up company Northvolt, and heat pump startup Ayla, have Harald Mix, the Swedish grandfather of climate change technology, as a co-founder. .

Photo of Harald Mix, who helped co-found Northvolt and H2 Green Steel.
harald mix

2023 was the year that Mix (known here at Sifted as Sir Mixalot), who usually stayed behind the scenes, emerged from the shadows.

He is believed to have created a spreadsheet filled with ideas about what climate issues to focus on next. We wait for this with bated breath.

Although Sweden has the largest technology industry in Northern Europe, it is not the only Nordic country focusing on climate change technology. Norwegian battery manufacturer Morrow, founded in 2020, plans to raise €118 million in 2023 and build its first factory in 2024. Morrow isn’t the only company in Norway focusing on energy storage, and the field is buzzing.

Perhaps surprisingly, Iceland also appears in the top 10 after marine technology startup Waterfirst raised a total of €90 million in 2023.

Company Builder of the Year

Danish biotech startups Hemab Therapeutics, NMD Pharma and IO biotech are less likely to appear in news headlines, but they are firmly in the top 10 largest Nordic startup investments in 2023. ing.

Denmark doesn’t have a healthtech Harald Mix yet, but it does have Europe’s most valuable company, Novo Holdings, the parent company of the miracle drug Ozempic. Novo Holdings has an annual budget of €200 million to build and invest in early-stage therapeutics startups, and he has invested in all three biotech startups.

The most surprising new funds of 2023

Industrial technology may not be as sexy as AI, but it will undoubtedly be just as important when it comes to solving the climate crisis. Finnish VC Kvanted certainly thinks so, having closed its first €70 million fund focused on industrial technology in 2023.

But the most surprising move of 2023 is Heartcore’s new Web3 fund.

I’m surprised Web3 wasn’t supposed to be deprecated.

Heartcore partner Yacine Ghalim doesn’t think so.

“It’s very important for venture capital to stay relevant and stay on top of things. If you want to play that game, you have to play that game perfectly. If you’re not going to invest in a protocol, it’s no longer “I don’t think you can call yourself a technology investor,” he said.

The most anticipated startup launch of the year

Swedish media has been following Spotify founder Daniel Ek’s new health tech startup for years, even though they know almost nothing about it. Sifted was able to shed light on this issue in his late 2022, revealing that this serial entrepreneur’s secret startup is his primary care clinic equipped with whole-body diagnostic hardware.

Photo of Feline Health founders Daniel Ek and Hjalmar Nilssonne
Daniel Ek and Hjalmar Nilssonne, founders of Neko Health

Sifted was able to try it out when Neo Health launched earlier this year.

The next step is expansion into Europe. we will watch.

battle of the year

EV charging company Easee is one of Norway’s fastest growing startups.

And in early 2023, the Swedish National Electrical Safety Board banned Easee’s best-selling EV charger. Easee is appealing this decision, and the case is expected to be decided by the court in January 2024.

The ban has increased problems for the company, which has shrunk from 500 employees to about 150 in a year. The company escaped bankruptcy in August by raising NOK 60 (€5.2 million) in convertible bonds from existing investors.

It remains to be seen whether Easee can turn things around.

This year’s breakthrough

Norway has recently produced not only battery and EV companies, but also start-ups looking at different types of energy storage. Photoncycle is working on solutions that make homes energy self-sufficient by storing solar energy more cheaply than batteries from summer to winter. The company is currently working on a demo in Norway ahead of its entry into the Danish market in 2025.

Axel Fuckup of the Year

The Swedish branch of US accelerator Techstars opened in Stockholm in fall 2021 and welcomed a new group of 30 founders to the program in March 2023.

Just a few weeks later, Techstars announced it was ending its program in Stockholm with immediate effect.

“Due to the market’s unique complexity and relatively high costs, we have made the difficult decision to close our Stockholm accelerator,” Techstars told Sifted.

Photo of people standing in the outdoor area of ​​the Techstars building.

Ecosystem members were surprised by Techstars’ sudden decision, with some even calling the situation a “terrible storm.” In a U-turn, Techstars decided to continue with the Swedish group a week later and permanently closed its Stockholm accelerator.

The Techstars are not the first team to try and defeat Sweden and fail. His Accelerator 500 Startups in the US was founded in Stockholm in 2016, but was shut down within a year.

This year’s merger

Grocery delivery startups, especially those that couldn’t compete on price with brick-and-mortar stores, had a rough year.

For example, Sweden’s Macem has seen its valuation fall by more than 50% since 2021.

The biggest problem for Norway’s Oda is not valuation, but rather a change in focus with investors, with international expansion on hold and an exit from Germany and Finland in 2023.

Only the Norwegian market remains, and although the company achieved operational profits in 2023, it required much larger volumes in terms of logistics.

The two companies merged in November.

“This is a dream come true for me,” Oda co-founder and CEO Karl Munthe Kaas told Shifted, adding that the two companies had been discussing a merger since 2019.

a ship that has changed direction

Talking about the Nordic tech scene without talking about Klarna is like Christmas without Santa.

Although fintech has recently taken a back seat compared to climate change technology and GenAI, it remains one of the strongest sectors in Northern Europe. Klarna, the largest of the group, started the year with an annual loss of $1 billion for 2022.

Then, in the summer, it announced it would outsource 250 customer service staff, and added another 500 to the list in October.

Sebastian Siemiatkowski, CEO of Klarna
Sebastian Siemiatkowski, CEO of Klarna

For those reading the news about outsourcing and layoffs in 2022, the threat of a strike by Swedish trade unions that hit Klarna in October may not come as much of a surprise. Labor unions and payment companies will not agree to a collective bargaining agreement. The issue was resolved with Klarna’s eventual withdrawal a few days before the planned strike.

Despite heavy losses and employee problems, Klarna was able to turn the company around. Already in May, Klarna CEO Sebastian Siemiatkowski said the scale-up was “firmly on track” to return to profitability “on a monthly basis” in the second half of this year. In the third quarter of 2023, the company reported a surplus for the first time in four years.

What’s in store for us in 2024?

2023 saw large-scale projects such as the Finnish AI scale-up Silo, the data center project evroc, and a series of new battery and energy storage projects. Next year, even more people will look to scale up for work.

In 2023, Tesla, Spotify, and Klarna all fought with unions over worker rights. The Swedish model, which has worked well so far, is now increasingly threatened by scale-ups that insist on speed.

2024 is likely to see further disagreements between unions and scaleups, with the startup ecosystem taking a deeper look at the Swedish model to see how it fits large startups There is a need to. Perhaps it is possible for workers to make some adjustments to their collective agreements without losing their employee rights. The system cannot bend over backwards for start-ups, but Sweden needs to get new industries to embrace the Swedish model. Otherwise, there is a risk of gradual decline.

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