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Impact Investing

Main features

The market for early-phase climate tech companies was better than the market for general technology investments in 2022

The transition to climate-resilient development is more urgent than previously thought

Ferd Impact Investing made two new investments in funds, as well as three new co-investments and three follow-up investments

In 2022 Ferd Impact Investing launched its first impact report, which provides insight into its approach to impact and how the portfolio is helping to solve challenges in the areas of climate and the environment

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The market

General technology investments experienced a very weak year, both in terms of their valuations and the amount of capital being invested, and the pace of investment at the end of the year was at a level not seen since 2018. For early phase companies active in the area of climate, however, the situation was entirely different. According to Climate Tech VC, seed funding and series A funding increased by 51% and 64% in 2022 relative to 2021.  On the global level, more than 130 climate-focused funds raised USD 37 billion in capital in 2022 – there has never been a better time to be an entrepreneur in the climate sector!

On the global level, more than 130 climate-focused funds raised USD 37 billion of capital in 2022 – there has never been a better time to be an entrepreneur in the climate sector!

The impact of this was further strengthened in 2022 by Joe Biden’s signing of the Inflation Reduction Act (IRA), a comprehensive and historic legislative package that will contribute to the green transition and emissions reductions in the USA over a ten-year period. On the negative side, however, we saw a 24% reduction in capital invested in growth phase companies in 2022 compared with 2021. This will probably have an impact on the opportunities available to our funds and companies in terms of raising capital at later phases.

The continuing impacts of climate change, hurricane Ian, heat waves in Europe and China, and catastrophic floods in Pakistan are some of the events that shaped the news in 2022. The IPCC’s latest report announced that climate change has had a bigger and more comprehensive impact on nature than previously thought.

Russia’s invasion of Ukraine and the subsequent reduction in exports of Russian gas led to an energy crisis and record-high electricity prices across Europe. This in turn resulted in a greater focus on ensuring clean and predictable energy services across the continent. According to the IEA’s World Energy Outlook, we have now reached the peak for fossil energy. This is having an accelerating and positive impact on the energy transition we are facing.

With a team of three people, Ferd Impact Investment was able to increase the pace at which it makes investments in 2022 compared with 2021. As a result of the market turmoil, we have increased our focus on valuations, the capital markets in later phases, and the maturity of companies’ teams.

With a team of three people, Ferd Impact Investment was able to increase the pace at which it makes investments in 2022 compared with 2021.

In 2022 Ferd Impact Investing made two new fund investments (ArcTern Ventures and SWEN Blue Ocean), as well as three new co-investments (Nofence in partnership with Momentum II, Shoreline in partnership with EIF, and 360 Logistics together with our new partner Dovetail) and three follow-up investments (Seagust, Wind Catching Systems and Ignite Procurement).

In 2022 Ferd Impact Investing launched its first impact report, which offers insight into our approach to impact and how the portfolio helps solve challenges within climate and the environment. The report is available here.

Portfolio companies

Funds and co-investments

  • 2150 invests in technology companies that develop sustainable solutions that help to reimagine the urban environment and enable a scalable future for mass urbanisation. As of the third quarter of 2022, the fund had made 12 investments, six of which were made in 2022. 2150’s new portfolio companies include BioMason, which is developing a new type of cement and NatureMetrics, which monitors biodiversity. 2150 is very advanced in terms of its measurement of impact, and its 2022 impact report is available here.
  • ArcTern Ventures Fund III – At the end of 2022, we announced that Ferd Impact Investing had invested in ArcTern Ventures Fund III together with Nysnø Klimainvesteringer and Lærdal Invest. ArcTern is a Canadian fund with offices in Toronto, San Francisco and Oslo. The fund invests broadly in the areas of major climate and sustainability challenges. The fund’s first investment is Prague-based WoltAir, which has built a digital platform for installing sustainable energy solutions such as solar energy and heat pumps.
  • Arkwright X Investment Family (AXIF) is an Oslo based club deal structure that gives Ferd, as a program investor, access to invest alongside Arkwright X and the other program investors. Through AXIF, we have invested in Ignite Procurement, which provides a software-based procurement system that translates procurement data into actionable insights and uses AI to track and quantify CO2 emissions. Ignite raised more capital in 2022, and Ferd Impact Investing increased its ownership interest. We have also invested through AXIF in Yellowsack, which provides solutions within the waste management area in California.
  • Dovetail – In 2022 we set up an investment collaboration with Dovetail that focuses on products and services that have tech at the core of their business model. Through Dovetail we invested in 360 Logistics, a company that is a turn-key provider of third-party logistics (3PL). Moving goods to a 3PL provider that is closer to the end-customer significantly reduces the need for long-distance transport. 360 Logistics’ solutions are a significant way of developing more sustainable cities.
  • Ecosystem Integrity Fund IV (EIF IV), based in San Francisco, is a sustainability-focused fund that primarily invests in early growth-phase companies. EIF invested in five new portfolio companies in 2022. One of these companies is the Norwegian company, Shoreline, in which we made a co-investment with EIF. Shoreline provides simulation and optimisation solutions for the design, construction and operation of wind projects.
  • Momentum II is a Bergen-based venture fund that invests in sustainable and innovative companies that are in an early growth phase. The fund focuses on the green transition, decarbonisation and challenges associated with biodiversity and scarce natural resources. The fund invested in four new portfolio companies in 2022; SES-X Marine Technologies (boat electrification), Glint Solar (software for optimally locating solar parks), Amina Charging (electric car chargers) and 7Analytics (flood analysis software). In 2022 we co-invested with Momentum in Nofence, which provides the world’s first virtual fence system for grazing animals. The technology helps make better use of grazing land, which contributes to biodiversity regeneration in the soil. Ferd-owned Broodstock Capital has also co-invested in Momentum through the portfolio company Blue Ocean Technology.
  • Startuplab is an incubator and seed investor that offers office space, networking, capital and industry expertise to Norwegian start-ups. With a presence in both Oslo and Bergen, Startuplab has a total hub of over 300 companies, many of which have grown to become some of Norway’s most well-known tech companies. Ferd has invested in Founders Fund II, III and IV.
  • SWEN Capital Partners is a leading European asset manager. In 2022 we invested in its Blue Ocean fund, which is SWEN’s venture capital fund that invests in innovations that strengthen and preserve marine life, meaning it contributes to SDG 14. By the end of the third quarter of 2022, the Blue Ocean fund had invested in eight companies, with seven of these investments made in 2022. The portfolio includes two Norwegian companies, namely Optoscale (biomass measurement for aquaculture) and Ecosubsea (hull cleaning technology).

Direct investments

  • Antler has continued to accelerate its growth, and in 2022 opened a number of new locations and rebranded the company. Antler was involved in the establishment of about 150 new companies in 2022 across 25 locations in six global regions. In 2023 Antler expects to launch in both the Middle East and China. Antler’s broadly-based portfolio included over 700 companies at the end of 2022 and has historically delivered a good return. Antler has further emphasised its impact focus, and its ESG and impact report is available here.
  • NeXtWind delivered strong results as a result of factors including higher electricity prices across Europe, and has built up a portfolio of older land-based wind farms in Germany. Its ambition is either to replace the old wind turbines with new and more efficient turbines (repowering) or to extend 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).
  • Seagust is a Norwegian offshore wind company that was established by Ferd and Arendals Fossekompani in 2021, and it intends to seek licences in Norwegian offshore wind areas. Seagust’s objective is to use the wind power resources of the North Sea to develop renewable energy capacity and build a stronger Norwegian offshore wind industry. 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. 2023 will be an exciting year for Seagust as the Norwegian government is aiming to launch the first phases of the Sørlige Nordsjø II and Utsira Nord wind farm areas.
  • Wind Catching Systems (WCS) is developing a ground-breaking concept for floating offshore wind, with the potential to produce electricity at a significantly lower LCOE on a significantly smaller area 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, GM Ventures and Havfonn invested in WCS in 2022.

Future prospects

We expect the challenges of 2022 to continue in 2023 as a result of the economic situation facing the world. We anticipate that companies will find that it takes longer and is more difficult to raise capital than has been the case in recent years. At the same time, we believe that climate tech will continue to be a favoured sector as a result of the progress we saw throughout 2022, but also because of the large amount of capital earmarked for climate investments that is available. Ferd Impact Investing will continue to make investments in 2023, but with even greater focus on the impact of the times we are in. At the same time, we recognize that many of the funds that have delivered the best returns historically have raised capital during recessions, and we will therefore continue to look for good funds and teams that share our focus on impact.