NewNet Investor Profile: Arve Johan Andresen, Northzone Ventures

24 April 2009

Arve Johan Andresen

Northzone Ventures is a Nordic venture capital partnership spread across Oslo, Stockholm and Copenhagen which concentrates on early and later stage companies within the technology sector.

Arve Johan Andresen joined Northzone in 2001 to establish the firm’s Copenhagen office. Previously, he held the position of managing director of Laerdal Medical, prior to which Andresen spent some years working for Nestlé SA and five years working as a management consultant at McKinsey & Co.

What is Northzone’s focus?

‘We are trying to stay within areas where we can see commercial potential in a minimal time frame. We believe cleantech to be a trend that will last for a very long time, although some of the segments and different areas are rather immature. Of course there are also some areas such as wind and solar which have matured slightly and are on a promising track. What we attempt to do is to apply classical venture capital skills in an industry where there are a very broad selection of opportunities.’

Which sectors are of particular interest?

‘It is more a question of finding opportunities that make commercial sense and do not rely too heavily on regulation or governmental subsidies in order to have a meaningful financial model. To be honest, it is a question of digging through opportunities. If it makes economic sense for everybody involved, including tax-payers money, then it is probably a promising area to invest in. We chose cleantech because, from our point of view, it makes environmental sense as well as offering us attractive returns. It is out job as venture capitalists to try and spot new markets, so it was a very natural move for us to become involved with cleantech.’

Are you primarily focused on the Nordic region?

‘Although we are primarily a Nordic company we do also stray into Europe occasionally. We consider ourselves one of the leading players in the Nordics and that is a very strong base for us. We will continue to look outside into Europe but we will not attempt to venture further afield to places such as Asia at present. Nothing is ruled out but up until now, we have been more than happy with the opportunities in our surrounding areas.’

What cleantech opportunities do the Nordics have to offer?

‘We tend to believe that the Nordic region is a particularly attractive sector because the environment has been a big issue here for many years. If you look at true innovation in the major areas of cleantech and renewables, such as district heating, wind and solar, we have world leaders such as wind power Vestas and REC in solar. In district heating especially, Denmark and Sweden are clear leaders and way ahead of many other countries. Denmark is also a fantastic hub of activity for those in the wind sector.’

What are the challenges you face in this space?

‘The challenges we face are that many projects, especially within the energy generation and fuel generation sectors are potentially extremely capital-intensive and take a very long time to develop. Those projects must also compete to find their place within an industry previously dominated by big, existing industries. The risk is that it becomes increasingly difficult to really establish something because of the size and the magnitude of the hurdles in your way. It takes big muscles, as it were, to see your investment through and ensure it is a success.’

Are there enough experienced individuals in the space?

‘It depends again very much on the opportunity at hand. If you look at wind and solar, you can see there are a growing number of experienced individuals. Likewise, when you talk about various efficiency measures, it is not that it is something new. Traditional semiconductor businesses tend to lean towards cleantech because they are easy to incorporate; sometimes it is merely a matter of combining the two rather than starting afresh. Innovation continues to spring up in what is essentially a classical industry and today’s happens to be cleantech.’

How is the financial downturn impacting clean energy?

‘It is fair to say that everything is affected by the economic crisis. However, markets that look set to grow and are at the very beginning of their peak will tend to survive. Climate change and the need for clean technology is an issue that will not go away so we must concentrate on building a future for it. I firmly believe a lot of the technologies are set to become mainstream so it will weather the financial storm.’

What excites you about this space?

‘If you are an investor you are fundamentally looking for major trends where there will be market growth, because that is where opportunities are. Now it happens to be cleantech which is also valuable for society. As venture capitalists we always believe we are doing good things, as we aim to fund innovation. The only crossroad we ever experience is the battle of how to balance growth against the impact to environment. Luckily with cleantech, we do not have to face this problem, so it is a particularly rewarding and exciting space to be in.

In terms of an investment, it has to be potentially economically attractive in order to excite us. It must contain technology which pushes the boundaries because that is what it required to move trends forward. Unless there is innovation in an investment, it is hard to receive any firm returns. Finally, we has to slot into a market that is big and have a capable team that is able to execute.’

How will cleantech evolve over the next ten years?

‘I think this industry is most certainly here to stay. I think the areas where application makes economic sense will fare a lot better than areas where you rely on governmental intervention or subsidies. I grant you, both are an important part of kick-starting things and attracting attention but if you are looking at this space from a ten years’ time perspective, they will only serve to do that rather than commercialise businesses and technologies.’

Copyright © 2009 newnet

Tags: cleantech, private equity, solar, venture capital, wind

This story was published on Friday, April 24th, 2009 at 5:32 pm and is filed under profiles. You can follow any responses to article entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Leave a Reply