Norwegian government launches EUR2.2bn venture fund

Investinor, the government-backed venture fund launched earlier this year, will invest in early-stage companies in Norway as well as provide expansion capital for later stages. The fund has NOK 2.2bn under management, of which NOK 500m is earmarked for the maritime, fisheries and aquaculture industries. Additionally, the fund will focus on companies operating within the areas of environment and cleantech, energy and tourism. The investment process is expected to start by the end of this year with the first investments to be made in early 2009.

At the time of going to press, the Trondheim-based fund was hiring investment directors, analysts and communication specialists to form the investment team. Geir Ove Kjesbu has been appointed managing director. Kjesbu holds an MSc in engineering from NTNU in Norway, and has experience from early-stage and growth companies as well as participated in IPOs. He has acted as CTO, CEO and board member of Q-Free and holds an MBA from INSEAD. Additionally, Bjorn Lovlie, former head of SND Invest AS, will assist Investinor in the start-up as project coordinator.

Nordic unquote" asked Kjesbu about the timing of the fund launch, as in harder economic times the government could wish to secure capital to promote innovation and enterprise activity or alternatively, wants to benefit from good investment opportunities at a discount. Kjesbu rejects the notion that timing was a consideration, and expounds: "Like everyone else, we depend on functioning money markets. But we are a fund with capital resources to invest and we are ready to make those investments now, regardless of the state of financial markets."

The fund will make direct investments in early-stage ventures for equity stakes of up to 49%. Although no agreements have been made to date, Investinor will exclusively invest together with other venture firms. The fund will perform its own origination and diligence work, and Kjesbu reports that the fund has already been contacted by many start-ups looking for financing. He also expects a significant number of prospects from Innovation Norway. "No system has been put in place yet, but as a subsidiary of an incubator like Innovation Norway it is a natural consequence."

The fund has not specified a target holding period for the companies. "As an evergreen fund, we are prepared to invest and work with the companies longer term," Kjesbu explains.

Similarily, Investinor has not set specific performance targets either, but its mandate states that performance requirements should be equal to that of a privately backed fund. However, Investinor's sister fund Argentum, the government-backed fund-of-funds which invests into both buyout and venture vehicles, has set an impressive precedent with an average annual return of 35% since its inception in 2001.

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