Stockholm (HedgeNordic) – Oslo-based asset manager NOMA Capital has launched a closed-end actively managed alternative investment fund that invests in early-stage private companies. Launched in the third quarter, NOMA Vekst I is the first of a series of planned fund launches by NOMA Capital that focus on early-stage companies, according to the asset manager’s latest quarterly investor letter.
NOMA Capital, co-founded by CEO Thomas Raaschou (pictured) and CIO Geir Stave, raised capital during the third quarter for the launch of NOMA Vekst I, which predominantly seeks to invest in private Norwegian technology companies or companies that can use technology for competitive advantage. “During the third quarter, NOMA Capital carried out a share issue aimed at professional investors in connection with the establishment of NOMA Vekst I,” says the letter to investors.
NOMA Vekst I has already invested in four Norwegian companies – Marketer, Wheel.me, 3D Radar and ODI Medical – following the closing of the capital raise. The fund primarily invests in Norwegian companies, but can invest in companies with domicile or headquarters in other OECD countries. The rationale behind the recent launch and the planned launches is “multifaceted,” according to CEO Thomas Raaschou.
“Overall, many of the world’s challenges can be solved in completely different ways in the future thanks to an accelerating technological development,” writes Thomas Raaschou in the letter. “The use of artificial intelligence and machine learning, which are processing large amounts of data, the Internet of Things (IoT), blockchain, data storage in the cloud and intelligent robots are just some of the innovations that create many opportunities,” continues Raaschou. “From an investment point of view, the supply of early-stage technology-focused companies, often with scalable and capital-light business models, is increasing. Paradoxically, the Covid-19 pandemic has been a catalyst for the development of Norwegian expertise in areas that have lived in the shadow of traditional Norwegian industries, such as oil and gas, energy-intensive processing industry and salmon farming.”
“From an investment point of view, the supply of early-stage technology-focused companies, often with scalable and capital-light business models, is increasing.”
“The biggest challenge is not that we lack competent entrepreneurs who are willing to invest everything they own to succeed,” points out Raaschou. “On the contrary, a great number of Norwegian “inventions” are leaders in their respective global markets today. But historically, we did not have a culture and framework conditions to remain owners all the way,” emphasizes Raaschou. “The foreigners have all too often taken over the ownership and run away with the majority of the value creation.”
“Historically, we did not have a culture and framework conditions to remain owners all the way. The foreigners have all too often taken over the ownership and run away with the majority of the value creation.”
“But we are experiencing a change in investor behavior. The positive value development in the capital markets in recent years has meant that many Norwegian investors have become very wealthy,” writes Raaschou. “Both the ability and patience to remain owners are increasing, even with a special Norwegian wealth tax as a handicap. The competence among investors for early-stage companies is also clearly rising,” he continues. “The establishment of Euronext Growth, as part of the Oslo Stock Exchange, has also made a positive contribution. This intermediate station has meant that many early-stage companies have been able to raise capital to further develop the companies here in Norway. They are no longer sold out of the country at the first opportunity, as we have experienced before.”
NOMA Vekst I is now the second fund under the umbrella of NOMA Capital, which has been managing long/short equity fund NOMA Fokus since late 2016. Up 17.6 percent in the first three quarters of 2021, NOMA Fokus is enjoying its best year since its launch exactly five years ago.
Also structured as an alternative investment fund, the recently-launched NOMA Vekst I seeks to invest in tech-focused private companies with scalable business models with potential for global expansion. “Our experience is that it is better to have a good idea with exceptional entrepreneurs and management, than good entrepreneurs and management with an exceptional idea,” argues Raaschou. “We see ourselves as long-term investors who, through active ownership, want to contribute expertise to entrepreneurs and the companies in which they invest.”
“We see ourselves as long-term investors who, through active ownership, want to contribute expertise to entrepreneurs and the companies in which they invest.”
“Investing in the early stages, whether it is at the establishment of the company, or after the commercialization potential has been confirmed, usually entails a significantly higher risk than investing in mature listed companies,” argues Raaschou. “Therefore, it is important to create a diversified portfolio across products, technology and customers. When we consider an investment in an early-stage company, we must be able to envisage a five- to ten-fold increase in value within the fund’s investment horizon. Not every venture will succeed, and the successes must contribute to the entire portfolio returning 15 to 25 percent annually during the fund’s lifetime.”