If the Nordic Innovation Fund becomes a reality, the Nordic region will be a frontrunner when it comes to establishing a multinational fund of funds.
- Nordic Innovation and Nordic Council of Ministers have worked for many years to strengthen the Nordic market for early stage risk capital financing and to improve access to capital for Nordic start up and growth companies. The Nordic countries by themselves represent small open economies and we are dependent on trade internationally. Therefore, it is important to facilitate a well functioning risk capital market, which enable promising young Nordic companies to grow and compete internationally.
- Poor track records and difficulty of fund-raising have led many private investors and fund managers to withdraw from the early stages of the risk financing market (i.e. seed and venture). As a result it has become more difficult for Nordic companies to get access to risk taking capital and strategic owners.
- To counter this negative trend, Nordic Innovation together with European Investment Fund (EIF) has submitted a proposal for a Nordic Innovation Fund (NIF) – a commercial fund of funds which will invest across the Nordic region into established and new fund management teams with a clear focus on the early stages. NIF will also have some investment activities targeting business angels, family offices and Tech Transfer Offices (TTOs).
- The proposed fund size of NIF is 250 million Euro. The five Nordic countries combined are asked to invest 125 million Euros into the fund and EIF and private investors will invest the other half into the fund. The fund will be managed by EIF with an agreed governance structure representing the owners.
- The fund draws EIF expertise to the Nordic countries but also provides access to private capital because it is more interesting for this type of capital to see the Nordic region as a region than five single countries.
Statement from Nordic Innovation:
Nordic Innovation Fund will be developed and carefully planned alongside with each country's budget processes and involve the national authorities so that the new Nordic fund will play well together with the national and regional solutions that already exist.
Together with the EIF, Nordic Innovation has had close and good dialogues and consultations with the Ministries and all key players in the area, since the EIF and Nordic Innovation handed over the proposal for a Nordic Innovation Fund to the five Ministries of Economics in June last year.
Nordic Innovation is pleased that the Nordic Ministers of Trade and Regional Affairs addressed the issue at their meeting in Helsinki in October. There are ongoing national decision processes in the resonsible Ministry of each country expected to reach a decision by the end of March 2012.
The Nordic Innovation Fund would increase the early stage risk capital access in the Nordic region and provide added value to SMEs across the five Nordic countries, which together constitute the world's 10th largest economy.