Market situation

The market in 2023 experienced higher interest rates, elevated inflation, and geopolitical instability. Despite these challenges, investments in climate technology remained relatively robust. We observed a significant decline in capital invested in general tech companies in 2023, whereas climate technology companies were partially shielded, receiving in percentage terms a greater share of the total investment in early-phase companies. According to Climate Tech VC, early-phase and growth investment in climate tech totalled USD 32 billion in 2023, marking a decrease of 30 percent from 2022. Nevertheless, the average growth rate since 2020 remains at 23 percent. Atomico reports indicate that the carbon and energy sector, including climate tech, constituted 27 percent of all capital invested in European tech in 2023, which is more than double its share of investment compared to 2021. In Norway, we are witnessing decreased participation by international investors in fundraising rounds. This observation is corroborated by Atomico, which highlights the increasing significance of local investors. Optimistically, Climate Tech VC estimates that there is over USD 30 billion of investable dry powder ready to deploy in climate ventures. Additionally, early-phase investments have demonstrated greater resilience compared to past economic downturns. Companies are securing capital, albeit a larger share originates from existing investors via bridge financing rounds. 

Early-phase investments have demonstrated greater resilience compared to past economic downturns.

The extent to which our climate is changing became even more apparent in 2023, with a growing number of extreme weather events, increased precipitation, and more frequent flooding. Six of the nine planetary boundaries that sustain human life are being breached. According to the latest report from the IPCC, the impacts of climate change on nature are far greater and wider ranging than previously understood. The Secretary-General of the United Nations, António Guterres, has stated that we have transitioned from the era of global warming to an era of ‘global boiling’. These conditions are heightening awareness of the immediate necessity for enduring, effective solutions. Moreover, there is significant potential for growth in this area, according to the IEA, 35 percent of the emissions reductions required to meet the 1.5-degree scenario could be attributed to technologies not yet commercially available in the current market. This underlines the critical need for sustained investment in emerging climate tech.

35 percent of the emissions reductions needed to achieve a 1.5-degree scenario are expected to come from technology that is not commercially available in today’s market.

In 2023, we completed our first exit from the company NeXtWind, which has been a successful journey that started in 2020. Its new owner, Sandbrook Capital, has invested over USD 700 million in the company, and is helping accelerate NeXtWind’s expansion in wind energy significantly. Additionally, we executed our first secondary investment in Pale Blue Dot Fund I, as well as our first reinvestment with a fund manager, through Ecosystem Integrity Fund V.

We further committed capital to the Pale Blue Dot Fund II and Antler Nordic Fund II and made follow-on investments in Ignite and Nofence. We also co-invested in Kvist Solutions with Arkwright X, and in Metizoft and Ditio with Dovetail. In January 2023, Ferd Capital’s investments in Brim Explorer and Disruptive Technologies (DT) were transferred to Impact Investing, and we completed an additional investment in DT later in the year. Detailed information on all our investments is outlined below.

Moreover, we published an updated and enhanced edition of our impact report in 2023, which can be accessed here. 

Portfolio

Funds and co-investments

2150
2150 invests in technology companies that seek to sustainably reimagine and reshape the urban environment. By the third quarter of 2023, the fund has made 17 investments. 2150 is at the forefront in the field of impact measurement, and its impact report for 2023 can be accessed here. 

Antler
Antler is a global venture investment company that invests in skilled and visionary individuals across the world. Since the launch of its first Nordic fund in 2019, Antler has invested in over 140 companies throughout Norway, Sweden and Denmark. More than 50 percent of these companies are actively addressing global challenges related to climate change and sustainability. In 2023, we invested in Antler Nordic Fund II.

ArcTern Ventures Fund III
ArcTern Ventures Fund III is a Canadian venture fund with offices in Toronto, San Francisco and Oslo. The fund invests broadly in the areas of major climate and sustainability challenges. As of the third quarter, the fund has made six investments, four of these in 2023.

Arkwright X
Arkwright X Investment Family (AXIF) is a club deal structure that gives Ferd, as a program investor, the opportunity to invest alongside Arkwright X and other program investors. Through AXIF, we have invested in Ignite, a company that offers a software-based procurement system that translates procurement data into actionable insights. This system notably uses Artificial Intelligence (AI) to trace and quantify CO2 emissions. In 2023, Ignite completed a significant funding round in which Ferd Impact Investing also participated. Additionally, within the same year, we partnered with AXIF to invest in Kvist Solutions. This company aids real estate companies, contractors, and consulting companies with environmental certification of buildings.

Dovetail
Since 2022, we have collaborated with Dovetail, which focuses on products and services that integrate technology at the core of their business model. Through our partnership with Dovetail, we have invested in 360 Logistics, a full-range supplier of third-party logistics (3PL) that contributes to making cities more sustainable. In 2023, we expanded our investments with Dovetail to include Metizoft, a company that provides software and services aimed at promoting sustainable and responsible shipping. Additionally, we invested in Ditio, a company that develops software to enhance the sustainability and profitability of construction sites.

Ecosystem Integrity Fund
Ecosystem Integrity Fund, headquartered in San Francisco, focuses on sustainability and invests in companies at the early growth stage. Since 2022, we have been invested in Ecosystem Integrity Fund IV, and we also committed capital to Fund V in 2023. As of the third quarter of 2023, Fund IV has made investments in 14 companies, and the fund conducted its first company divestiture. Meanwhile, Fund V has already completed one investment. We are co-invested with EIF fund IV in Shoreline, a company providing simulation and optimisation solutions for the design, construction, and operation of wind energy projects.

Momentum
Momentum II is a venture fund located in Bergen that invests in sustainable and innovative companies in their early growth phase. The fund focuses on the green transition, decarbonisation and challenges associated with biodiversity and scarce natural resources. To date, the fund has invested in eight companies, including one investment made in 2023. We have co-invested with Momentum in Nofence, which provides the world’s first virtual fence system for grazing animals. In 2023, we also participated in an additional fundraising round to fund the company’s continued expansion.

Pale Blue Dot
Pale Blue Dot is an early-stage fund based in Malmö, Sweden, which invests in the most exciting climate tech start-ups across Europe and the US. In 2023, we made our first secondary transaction and invested in Pale Blue Dot’s Fund I. By the close of the fourth quarter of 2023, the fund had invested in 35 companies. Additionally, in 2023 we committed capital for Fund II, set to commence investment activities in 2024.

Startuplab
Startuplab is an incubator and seed investor that offers office space, capital, network and industry expertise to Norwegian startups. With a presence in both Oslo and Bergen, Startuplab manages a vibrant hub of more than 300 companies, many of which have grown to become some of Norway’s most renowned tech companies. Ferd has invested in Founders Fund II, III and IV.

Blue Ocean
SWEN Capital Partners is a leading European asset manager. We are invested in their Blue Ocean fund, which is SWEN’s venture capital fund dedicated to investing in innovations that strengthen and preserve marine life. By the end of the third quarter of 2023, the Blue Ocean fund had invested in twelve companies, with three of those investments made in 2023.  

Other company investments

Antler
Antler has continued to escalate its growth, opening new locations throughout 2023. Over the course of the year, Antler played a key role in launching more than 300 new companies across 27 locations and six continents. By the end of 2023, Antler’s diverse portfolio comprised over 1,000 companies, with a history of delivering strong returns. Additionally, Antler has strengthened its focus on impact, with 17 percent of active Antler companies operating within the climate sector. For more detail on sustainability and social responsibility efforts, the Antler’s 2023 ESG and Impact Report is available here. 

Brim Explorer
Brim Explorer is a maritime company with a focus on sustainability that operates in northern Norway and Oslo with a fleet of four ships, a number which is soon set to increase to five. The company is committed to preserving natural habitats, and its ships use hybrid-electric engines that create minimal noise and vibration, thus preserving the tranquillity of the surroundings. The company was transferred from Ferd Capital in January 2023.

Disruptive Technologies
Disruptive Technologies (DT) is a Norwegian tech company developing some of the world’s smallest wireless sensors and IoT infrastructure. These robust, low-cost, and flexible sensors make buildings intelligent and sustainable. We took the company on from Ferd Capital in January 2023 and invested additional capital later that year.

NeXtWind
NeXtWind has built up a portfolio of older land-based wind farms in Germany with the ambition of replacing the old turbines with new and more efficient ones (repowering) or extending the lives of the existing turbines (life extension). This enables the company to increase the renewable energy production capacity of its wind farms while reducing the LCOE (Levelized Cost of Energy). In August 2023, the investment company Sandbrook acquired NeXtWind and contributed further capital to help it scale its strategy. NeXtWind is the first investment that Ferd Impact Investing has sold.

Seagust
Seagust is a Norwegian offshore wind company that was established by Ferd and Arendals Fossekompani in 2021. Seagust’s first objective is to develop offshore wind power projects in Norway. In 2022, it was announced that the Swedish company Vattenfall had entered into a collaboration with Seagust in relation to the development of offshore wind on the Norwegian continental shelf. Seagust has become an important participant in the Norwegian offshore wind industry and is involved in a number of exciting projects.   

Wind Catching Systems
Wind Catching Systems (WCS) is developing groundbreaking floating wind turbines, with the potential to produce electricity at a significantly lower LCOE and on a significantly smaller area of the sea than other technologies known today. Ferd Capital’s portfolio company Aibel AS has been an important collaboration partner for WCS. In addition to Ferd and North Energy ASA, General Motors (GM) Ventures and Havfonn have also invested in WCS. 

Future prospects

We are not expecting 2024 to be significantly easier than 2023, we believe that it will continue to be a challenging environment for companies and funds to raise capital. Therefore, companies’ existing investors will likely need to provide financing for multiple rounds. In 2023, we noted that climate tech appears to be more robust than other sectors, and we hope and believe that this trend will continue through 2024. We believe that funds investing in 2024 have the potential to deliver strong financial returns. We will continue our strategy of investing regularly in each vintage of funds managed by established, high-quality fund managers in both Europe and the US, which share our focus on solving the climate crisis.