IDEA Consult’s blueprint for an “Investment Platform for the Arctic regions of Finland, Sweden and Norway”
In cooperation with N-Able Company, IDEA Consult has now released its blueprint for an Artic Investment Platform in the so-called ‘Northern Sparsely Populated Areas’ (NSPA, Northern parts of Norway, Sweden and Finland). The blueprint contains three key messages defining further implementation:
- NSPA SMEs have clear investment needs. Evidence from a wide range of sources shows that SMEs located in the NSPA are facing clear investment needs related to close-to-market and scaling-up phases of their business lifecycle. While they call upon balanced mixes of capital and operational expenditures, they often require investments for collaborative projects and initiatives that often correspond to amounts that are realistic to address at regional level (€500.000,00 to €3.000.000,00 for instance) or justify a larger investment pot (beyond € 7,000,000.00). With a recurring notion of pre-commercial risk (linking to needs below TRL9) companies tend to mostly seek corporate and venture capital investors that are currently absent from the NSPA due to a lack of visibility of the deal flow which is deemed insufficient. When looking at individual regions, investors thus often conclude on a lack of business opportunities while SMEs are craving for capital.
- Setting up a Vehicle to Tackle Information Asymmetries: An immediate Priority for the NSPA. Multiple forms of information asymmetries apply to NSPA regions and stand in the way of SMEs who have difficulties to reach out to financial intermediaries active in the Urban hubs of the Southern parts of the 3 countries under the scope. Information asymmetries also relate to the need for capacity building at different levels – from SMEs who should have the ability to present a solid business plan to the right investor, to investors who would benefit from a form of pre-screening of a potential deal flow. Such challenge also applies to the difficulty to find reliable co-investors. A consolidated and visible deal flow allowing for a structured matching of demand and supply is therefore needed. By building a common platform, NSPA Regions could consolidate a unique pipeline of SME investment projects and match-make these projects with financial providers. A Vehicle could indeed support SMEs build strong business plans and bridge them with relevant financial products offered by investors who address both the sectors and lifecycles considered as problematic in the NSPA. The vehicle could constitute the ground of a future, fully-fledged Fund.
- Establishing a Fund will First require a Strategic Alignment and Engagement across Policy Levels in the 3 Countries. The study highlights the need to see an active convergence of regional and national priorities and objectives in this regard. Ensuring such convergence requires an engagement of regional and national policy makers, but also representatives from the financial and industrial spheres. The on-boarding process would allow for a validation of the AIP and provide relevant information to define its features as well as possible commitments from given contributors. More specific steps are proposed in the current report.
Vincent Duchêne (Ph.D.)
Senior Expert Innovation & Competitiveness
- Foreign Government