At Arendalsuka 2024, our session on regional funds discussed the important role these funds play in fostering local value creation across Norway. The event, hosted by Sparebanken Sør, brought together key figures in the industry to discuss how regional investment strategies can be optimized to support economic growth in less urbanized areas.
Terje Berg-Utby, Managing Partner at Skagerak Capital, began the discussion by focusing on the distinct opportunities that regional funds present. He highlighted that due to the smaller investment universes in these regions, it's essential to broaden the scope beyond just early-stage companies to include growth-phase enterprises.
- When managing regional funds, Terje noted, it's vital to adapt by investing in a mix of early-stage and growth companies, ensuring that the capital can effectively nurture local businesses. He also emphasized the importance of maintaining sufficient fund size and continuity, suggesting that smaller but more frequent fundraisings could better sustain regional investment efforts.
The discussion also explored the current venture capital landscape in Norway, presented by Ellen Amalie Vold, CEO of the Norwegian Venture Capital Association. In recent years, there has been significant growth in active ownership through seed and venture funds. Despite this progress, the concentration of investment activity remains in major urban centers like Oslo, Bergen, and Stavanger. Ellen emphasized the crucial role venture capital plays in driving value creation across a wide range of industries.
- Venture capital is a significant driver of value creation in Norway, fueling early-stage growth and contributing to job creation and economic resilience. The companies we support employ nearly 90,000 people, demonstrating the profound impact that strategic venture investments can have on our society.
Leo A. Grünfeld, Founding Partner and Chairman of MENON Economics, discussed the pros and cons of regional investment mandates. He highlighted the advantages of local knowledge but warned against the limitations that come with restrictive geographic and sector mandates.
- For regional funds to succeed, it's crucial to minimize sector restrictions and build larger, more robust management environments. This flexibility allows funds to navigate the limited investment universe more effectively and capitalize on a broader range of opportunities.
Insights from an investor with a "double bottomline" mandate were provided by Eskil Stenhaug, CEO of Sparebankstiftelsen Sparebanken Sør. He stressed the dual objectives of financial returns and social impact, particularly in improving living conditions in the Agder and Telemark regions.
- We are committed to supporting our region by partnering with capable local providers like Skagerak Capital. As a foundation, our goal is to generate returns while simultaneously fostering local development and ensuring that our investments contribute positively to the community, Eskil remarked.
He also addressed concerns around taxation for foundations involved in local investments, stating;
- We view these investments purely as financial ventures, aiming to generate a return that we can reinvest into the community without triggering tax liabilities that could compromise our foundation's non-profit status.
The discussions at Arendalsuka 2024 highlighted the significant potential of regional funds to drive economic growth and innovation throughout Norway. By combining local expertise with broader financial resources, minimizing sector restrictions, and building larger management environments, these funds can ensure that all regions, not just urban centers, benefit from the country's entrepreneurial momentum.