How the first Nordic industrial tech VC is expanding: 'Old-school industries are waking up'

"It was just a really good match, both in the skill set and expertise, but really also, personality wise," says Wasastjerna about Lappi’s hire as Kvanted’s first investment manager in January. "It has to be a person that the energy feels right with."

Lappi was working at NGP Capital, where she focused on Series A-C stage investments in industrial data, analytics and automation, when she was headhunted by Kvanted.

She previously worked for VC firm Wave Ventures and at management consultancy firm Oliver Wyman. The investment manager says she jumped at the chance to collaborate with Wasastjerna, an "inspirational" leader who has carved a long career in male-dominated sectors. Plus, Lappi was attracted to Kvanted’s gathering momentum, and the chance to work for a VC firm that had innovation at its core.

This new recruitment is just one example of Kvanted’s growth since launching at the end of 2023 with a €70m first fund. The company’s goal is disrupting investments in the industrial tech sector, which, says Wasastjerna has traditionally been both under-digitalised and under-invested.

Indeed, Dealroom data analysed by the VC firm suggests industrial tech companies had just a 5 percent share of European VC funding between 2015 and 2022.

Fast-forward to 2024 and it is one of the fastest-growing sectors, attracting $3.3b in European funding in Q1-3, on a par with Generative AI.

Eight investments across six markets

Last year Kvanted made eight investments in industrial tech companies in six European countries, including France, Germany and the Netherlands, as well as in the Nordics and Baltics.

Their impact investments include SynergyXR (based in Aarhus, Denmark) which provides an extended reality (XR) platform that facilitates remote collaboration and training. This reduces the need for employee travel and associated emissions, thereby contributing to sustainability efforts.

Another is Berlin-based Cozero, which offers a carbon management platform that enables companies to measure, reduce, and report their carbon emissions, supporting effective decarbonisation strategies.

"I think the highlights have been: seeing how our investment strategy and focus is resonating with founders – also with co-investors and, most recently, with the talent in the market," says Wasastjerna, reflecting on the company’s first full year in action.

Wasastjerna believes the VC firm’s success is down to a range of factors. One is a Europe-wide momentum to modernise sectors that have lagged behind in sustainability and digitalisation, both to help cut carbon emissions and promote the region’s competitiveness.

"I think it's sort of a compulsory movement that we're now seeing happening," argues Wasastjerna. "Some of the old school industries missed the digitalisation wave, and now they are waking up to AI," she says.

Meanwhile, startups are, in parallel, increasingly spotting the potential in the industrial sector.

"If you have a good offering that resonates with the big, more established players, I think there's a lot of opportunity," she argues.

Prioritising networks and diversity

Alongside this, Wasastjerna credits Kvanted’s diverse and experienced team as a major factor in the VC firm’s growth. Her co-partners Eerik Paasikivi and Axel Ahlström earned their stripes sitting in the boardrooms of major Nordic industrial companies and at established venture capital firms, giving them access to broad networks within both finance and industry.

Wasastjerna herself was a business lawyer for 15 years and has a long-running passion for digital transformation in industry, having written her PhD on the data economy.

She says she doesn’t reflect much on being amongst a tiny minority of female VCs in Europe, having spent her entire career in other male-dominated sectors.

"I was a partner in a leading Nordic law firm. And [there were] a minority of the partners who were female and who had small kids. So I think that sort of context is not really new to me," she says.

But the former lawyer says she has noticed a growing trend for women breaking into finance in the Nordics, and is hopeful there will be a better gender balance in the VC world in future.

"I think it's really positive that you see a lot of young women, approaching and coming to the field – that's maybe not visible yet at the partner level."

Retaining talent in "unsticky" industries

In a world where companies and VCs are increasingly – and importantly – focussed on developing carbon-cutting solutions, Kvanted also stands out for its focus on another UN sustainable development goal: decent work and economic growth.

In the industrial sector Lappi says this equates to improving workplace safety: making the industrial jobs of the future more attractive for employees, while also figuring out which roles can be automated to help improve efficiency, safety standards and tackle labour shortages. Data from the International Labour Organisation suggests that global workplace accidents and illnesses currently cost the global economy around $1.25 trillion (€1.13 trillion) a year.

Stockholm-based Buddywise, which Kvanted invested in alongside J12 Ventures last spring is one example of this. Its technology enhances workplace safety by using AI and computer vision to detect risks in real-time, aiming to prevent accidents and promote a zero-injury environment.

Lappi points out that there is often a high turnover in the industrial sector, describing it as an "unsticky" environment where it can be hard to retain skilled talent. This, she argues, is at least in part due to fears about workplace safety. According to 2022 EU data, the highest incidence of non-fatal accidents at work take place in the construction industry, while the highest proportion of deaths happen in mining and quarrying environments.

"Buddywise enables us to take action by enabling safer workplaces through a computer vision solution," says Lappi.

The investment manager is also passionate about robotics and hopes that Kvanted will invest in technologies that replace humans in some industries.

"We are facing this massive labour shortage in the industrial environment – soon there will not be enough skilled workers, in Europe, to keep the factories up and running. So there's also a need to automate some of these tasks."

We are facing this massive labor shortage in the industrial environment

Central European expansion plans

Kvanted’s near-future expansion plans include cementing their presence in the central European DACH region, with plans for an additional office in Zurich or Munich by the end of the year.

The company is also devoting plenty of time to scouting for new startups, and Lappi says it’s a core part of their strategy to get to know founders before committing to investments.

"Understanding that they have the motivation and ambition to build the company, but also having the resilience to get through tougher times," explains Lappi.

She reflects that the last couple of years have been testing for startups due to potential customers and clients having less money to spare, and says that founders need to be prepared for similar challenges in future, even if the European economy is picking up now.

It has to be a person that the energy feels right with

Wasastjerna agrees that "the likeability factor” is essential when it comes to deciding who to do business with.

"It has to be a person that the energy feels right with and that you actually get along with and that's coachable, receptive to constructive feedback," she says. "You have to feel that you want to actually hang out with this person a lot because you will be doing so over the years to come!"Maria Wasastjerna and Lyydia Lappi may be sitting in separate rooms for their video interview with Impact Loop, but you can sense the rapport and respect between them through the screen.