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Norselab launches fund dedicated to venture debt

Norselab is setting out to establish a world-class capital- and competence hub for meaningful growth companies, and look for new ways to empower founders. Now they aim to fill another gap in the market by offering growth loans to companies in the Nordic region.

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Photo by Tim Stief, via Unsplash.

Venture debt is a new concept in the Nordic region, although it’s an integral part of the capital structure for growth companies in the US, especially ones with as-a-service business models.

In Norway and the Nordic region, ordinary banks don’t offer loans to these types of companies, even if they have established profitable business models with substantial recurring revenue streams. Companies that are headed into the growth phase are often in great need of capital, but when they are still operating with negative earnings before income and taxes, loans from traditional banks are out of reach.

Norselab is now aiming to expand the toolbox of founders and investors, while filling the gap in the Nordic market. This spring, Norselab will launch a credit fund that will offer 15-20 companies in the Nordic region growth loans of NOK 30 to 100 M.

Lower risk and greater flexibility

With its new credit fund, Meaningful Credit I, Norselab will ensure that founders retain a larger share upon exit, whilst providing venture capital funds greater flexibility in terms of deal design - allowing the combination of venture capital and venture debt. For investors, the fund offers a chance to partner with renowned venture capital funds with limited downside risk which provides attractive risk adjusted returns with a shorter lock-in period, dividends and equity upside.

The credit fund will invest in fast-growing companies in the growth phase, that are supported by industry expertise and investors with a strong capital base. Typically, the credit fund will look to co-invest with established venture capital funds or larger family offices where product, international market- and go-to market strategies as well as unit economics have been validated.

Like other Norselab funds, the credit fund seeks out companies with the potential to create net positive impact through their core products or services.

Closing the gap

As one of the venture debt fund’s Investment Partners, Norselab has hired Carsten Werner, who is described by Norselab’s Chief Investment Officer Yngve Tvedt as «one of the rare people in the Norwegian credit world who really understand growth».

The new Investment Partner first became acquainted with Yngve and the team when Norselab portfolio companies Svenn and Carrot (formerly WasteIQ) were in the process of financing.

With experience from Pareto Securities during the global financial crisis, and from building Nordea Startup & Growth in Norway, Werner will be instrumental in building the credit fund. He is certain that the time for launching a credit fund is right, and that Norway is only at its infancy when it comes to professionalizing startups:

- Meeting with entrepreneurs in Norway and the Nordics during my time in Nordea Startup & Growth, I witnessed an incredible development; In Norway we saw companies like Tibber, Kahoot, Oda and Spacemaker achieve great successes internationally. Only 5 years ago we would not have had enough companies at a high enough level for a credit fund, but these companies’ successes shows that the situation has radically changed in Norway.

Werner is strongly driven by the desire to contribute to help build companies with a net positive impact on people and the planet. Norselab is also recruiting a second Investment Partner for the credit fund.