Via Financial Times

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The founders of Minecraft, Candy Crush Saga and Klarna as well as the family behind Hennes & Mauritz are raising Europe’s largest early-stage impact investment fund. 

The €100m Swedish fund will invest in companies seeking to solve what it says are the world’s greatest challenges including poverty, food waste and climate change.

It is seeking to show that impact investing – which has traditionally meant accepting sub-par returns – can deliver results comparable with normal investments.

“There’s a mantra among investors that you can’t do impact investing and get competitive returns,” Niklas Adalberth, co-founder of Swedish payment unicorn Klarna and a general partner in the fund, told the Financial Times. “We really want to prove this wrong. If we can show that it’s possible to do impact with competitive returns, maybe we can inspire the big capital to follow.”

Mr Adalberth founded Norrsken Foundation, which houses the fund, three years ago after becoming disillusioned with what he has called “the constant chasing of the next goal or achievement” at Klarna.

The foundation runs two buildings – one in Stockholm and one in Kigali – offering office space for social entrepreneurs. It also invests directly and through its funds into companies that tackle problems in line with the UN’s sustainable development goals. 

Its first SKr300m ($32m) fund has invested in start-ups such as Karma, which reduces food waste by allowing restaurants and shops to sell surplus produce, and Welcome, an app that helps integrate refugees. 

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The new fund is backed by Mr Adalberth; Carl Manneh, co-founder of Minecraft-creator Mojang; Filip Tysander, founder of watch brand Daniel Wellington; Sebastian Knutsson, co-founder of Candy Crush Saga maker King Digital; and Ramsbury, the family office of the Persson family, which founded and controls H&M.

The fund had its first close of €61m last week and is aiming to raise the full €100m by spring next year. 

Agata Freimane, a former Morgan Stanley banker who is a general partner in the fund, said it was Europe’s — and possibly the world’s — largest early-stage impact investment fund.

“We feel there’s a strong momentum building around impact. When you look today, many of the top graduates from university are thinking about launching impact start-ups,” she added. 

Mr Adalberth said one of the main goals of the fund was to demonstrate to larger financial institutions it was possible to make impact investments without sacrificing returns. 

“The larger institutions are very conservative,” he added. “It’s hard to get past the switchboard if you talk about impact. A traditional pension fund is required to make a high return and is not able to take the risk. That is why we need to go first and show what is possible.”