Northzone VII, the technology investment fund, has successfully reached its first close, securing €150m from just under 20 pension funds and family office institutions.
Among them are the sixth Swedish national buffer fund (AP6), which has joined existing backers in making its first investment, €15m, with technology investment partnership Northzone.
Another first-time investor is SEB Pension Fund, also Swedish.
The latest vehicle is a continuation of Northzone’s series of funds backing start-up and early-stage companies, primarily in the Nordic region.
It will invest in 20-25 companies developing technology that “unexpectedly” displaces established technology.
Previous Northzone investments include Spotify, Avito and eProspects.
Northzone VII will make investments in individual companies in tranches of between €1m and €5m, either in partnership with other funds, or as the sole external investor.
Typically, investing in companies will be over three or four years.
A limit of 10% of the fund total will apply to individual companies.
Tellef Thorleifsson, general partner in the Oslo office at Northzone, said: “This fund will enable pension fund investors to capture a part of value creation pre-IPO. The fund offers investors the chance of a superior return, as well as diversification. Technology companies are not reliant on GDP growth, as they are based more on the rapid deployment of new technology.”
The fund’s target size is €200m, with a target return of 20%.
Ulf Lindqvist, head of communications at AP6, said: “We have chosen to invest in Northzone VII because it fits in with our strategy. This investment will add diversity to our portfolio, although venture capital is rather a small part of it. We have evaluated the team at Northzone for quite some time, and it is our assessment they will be able to deliver a good return over time.”
AP6 is a long-term investor in unlisted companies and invests in venture capital indirectly through funds.
It focuses on more mature companies with growth potential, on which it has historically enjoyed a return of 16.3% per year since AP6 was set up in 1996.