The VC Challenge (Venture Capital Challenge) is a training program that provides emerging managers with professional guidance, learning and network on how to raise and manage a fund. The 25 selected emerging fund teams will participate in 10 sessions where investor experts from the venture capital ecosystem will lecture about venture capital topics such as sourcing and dealflow, portfolio construction, fundraising strategy and fund operations.
The teams are planning to develop funds within l BioTech, HealthTech, Gaming, FinTech, women-led startups, Circular Economy, Energy, Climate, Impact, and other sectors that are key for the Nordic region.
In this VC Challenge 12 of the GPs are women, which amounts to about 20% of the aspiring managers in the program. This is above the industry benchmarks of 15% female GPs.
All the Nordic countries are represented. There are 6 Danish teams, 5 from Norway, 5 Iceland, 4 teams from Sweden and 4 from Finland.
VC Funds “are in itself of limited interest”
The program was officially opened with a welcome speech by Svein Berg, Director of Nordic Innovation. He began somewhat provocatively by saying: VC Funds are in itself of limited interest. It is the role they play in the ecosystem which make them interesting and make them an asset for the societies.
His key message was the bigger role venture funds should have to the Nordic economy and how we should properly measure its contribution. Svein Berg also pointed out the lack of All-women funding teams in the Nordics and how they just attracted 1,1% of the total VC-investments between 2017-2022.
The kick off continued with the keynote speaker Bjorn Tremmerie, Head of Venture Capital and Impact Investing at European Investment Fund. It was followed with a panel debate and a Q&A session.
VC Challenge Aims to Raise More First-Time Funds in the Nordics
To get a better grasp on the VC Challenge we had a chat with partner and organizer, Managing Director Virginia Vegas from Startup Norway.
So why is the VC challenge important?
We think, that in order for a startup and innovation ecosystem to succeed, we need what we call the innovation stakeholders. On one side of the table, we need the entrepreneurs that are the ones that turn ideas into businesses, but on the other side we need the financiers. - The investors that are not providing just capital but also knowledge, skills and Knowhow. The Nordics is an emerging ecosystem, meaning that we have a lot of new investors, so we think is key to work together to professionalize the investor ecosystem in the Nordic region and support its development. We do it by working with the private investors, educating them on how to invest in early stage companies, and we also work with aspiring and emerging fund managers in the process of developing and setting up their first funds. We help these investors by providing them with expertise, tools and network. And most important, we provide them with context: how to do this as a Nordic investor or fund. Because it is not the same to raise a fund in Silicon Valley than it is to do it in North of Iceland, for example.
What do you hope to achieve with the with the VC Challange?
We work towards the end goal, which is to see more first-time funds being raised in the Nordic region. This is, we want to help the Nordic players that are seriously pursuing a Venture fund, to succeed with their efforts, which would translate to more capital and more investments into Nordic companies. But we also want to help this team understand what Venture Capital really means and what does it take to be a fund manager, because maybe not all of them should pursue that path. And to help them realise that is also a success for the VC Challenge. From previous programs, we can count now 6 teams that have succeeded in raising their first fund and they are now actively investing, and we have other 10 teams that are in the validation and pre-marketing phase of their fund. From the 25 teams we are working with in this edition, we hope to see 20% or 30% of them manage to raise a fund. And hopefully more!
1/3 of the applicants are female. What are your thoughts on that?
I think 30% of applicants being women, it's twice the average you see in the Nordic ecosystem, where 15% of all General Partners in VC funds are women. We should always aim for more, but I think the outcome is very good. Where we need to improve is to convert those applications into participants, because the problem has been to select them from a pool of incredible talent. So, when you're putting some standard selection criteria and you don’t take into account gender balance in the cohort, you might end up making a list full of men. And that is because one general selection criteria for us, that we think it is also important for anyone that wants to be a fund manager, is if the applicant had prior investment experience. And unfortunately, as of today, women are less likely to have prior investment experience compared to men. And that is just one main barrier we see that is stopping many women to enter Venture and that is something that we hope we can address together in the Nordic ecosystem.
How is the VC challenge contributing to the transition to circular economy in the Nordics?
I did a presentation for the Nordic Circular Economy Summit which showed that there is a direct correlation between first time Fund Managers and ESG funds or sustainable funds. This is, funds that promote ESG with their investments or that invest directly in sustainability and ESG. First-time fund managers in the Nordic region are more likely to be ESG focused funds. And there are two main reasons.
1) Limited Partners are choosing more and more green and sustainable financial products over conventional financial products, meaning that there is a growing demand for ESG and these type of funds and 2) Because emerging fund managers tend to focus on the sectors and areas with the biggest funding gaps (and therefore the biggest opportunities), and now those industries are Energy, Climate, Circular Economy, Health or women-led startups, to name a few.
So if we support more first-time fund managers succeed in raising their first fund, we will see more capital being invested into ESG and sustainable companies in the Nordic region, and ultimately more capital to accelerate the Circular Economy transition in the Nordics.