Swedish Startup Space

Northzones Record Breaking Fund Is Live And Looking For The Next Klarna

Written by on September 8, 2016
Editors Note: This post is part of a series called Featured posts, presented by Breakit.

Northzone has closed its new $300 million fund. The VC firm is looking to invest heavily in Fintech.

Founded in 1996, North Zone has become one of Sweden’s most prominent venture capital firms, with offices in London, New York, Stockholm and Oslo. Like most VC firms, Northzone are constantly panning for gold in the steady stream of new tech startups.

Their previous success includes investments in Swedish companies Klarna, Avito and Tobii. Northzone was also one of the earliest investors in Spotify, which according Breakit’s sources should go public within the next year.

Last spring, Northzone created a new investment fund for Swedish and European tech companies. DI Digital (article in Swedish) reported in May that this fund would amount to $300 million.

Now it is clear that goal was surpassed and the fund, which will be presented at the Stockholm Tech Fest, will set new records.

“We went over $300 million,” said Hans Otterling, partner at Northzone, but he did not want to specify the exact amount.

“It is our largest fund ever, and we raised it at record speed.”

Northzone seeks to invests more than $300 million in 25-30 companies over the next three to five years. Like Northzone’s funds from the previous 10 year (Skandia and the Third and Sixth AP Fund), the new fund will focus on Swedish, Nordic and European tech companies.

Looking for investments in a number of sectors, the new fund has already made two. First Cornerjob, a Spain-based mobile job site, and secondly in Zervant, a Finnish invoicing platform designed for smaller companies.

Meanwhile Northzone is searching their mobiles for a big, new success like Klarna.

“We have come to an interesting point where not just young people, but all demographics, are spending the majority of time on their phone, as opposed to a computer. E-commerce has exploded, and the mobile phone is the fuel,” said Mr. Otterling.

Northzone will continue to focus on e-commerce, while e-tech (education focused startups) will also take priority. The hot Fintech sector is also on their radar.

“Brexit will be a big boost for Fintech. Historically, all banks have been based in England, and now there is a big political change.” said Otterling.

While technology has forced banks to examine their business models and structure, Brexit has accelerated a change which strongly favors Fintech.

“It is important for us is that we can stay with our investments over the long term long. In many companies, we have even been involved in the later rounds [of investment].”

Breakit’s research shows that $1.3 billion was invested in the Swedish tech industry during the first six months of 2016. That includes EQT’s giant tech fund, filled with over $600 million, which was launched in the spring.

But Otterling sees no risk of the wheels falling off the Nordic tech bandwagon, even as more and more players jump on.

“Of course there may be be incorrect valuations, but a crash is highly unlikely. There are still more investment opportunities than there are funds.”

Breakit recently reported that Tim He left Northzone for a job at Kinnevik (article in Swedish). But Mr. Otterling says it is natural for people like He to follow their own career path.

The defection of one employee is not so crucial. In Otterling’s opinion, “the European venture capital industry has developed so strongly, it now attracts a lot of talented people.”

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