New €65 million fund Turbine Capital aims to bridge lab-to-market gap: 'It simply takes more funding'

In Sweden – a country known for its strong engineering tradition and technical universities – many promising startups still struggle to make the leap from lab to market.

That's what newly launched venture capital fund Turbine Capital wants to change.

The fund has been launched by the incubator Sting, alongside founders Karin Edström and Anders Ösund, both of whom bring long-standing experience from the investment world, with backgrounds at Almi Invest, Investor Growth Capital and Combient.

Will invest in early-stage deeptech

Turbine Capital has secured 40 per cent of the capital for its new venture capital fund, which aims to invest in early-stage deeptech companies. The fund is ultimately targeting a total of €65 million, and over the next 15 years, the ambition is to back 30 to 40 early-stage deeptech startups.

Government-backed Saminvest, Sweden's largest investor in early-stage venture funds, is anchoring the fund together with six leading university-affiliated deeptech incubators, Sting, and Saab's investment arm, Saab Ventures.

The idea for the fund had been in the works for a while, Karin Edström tells Impact Loop, and says that it addresses a clear market gap.

"University-affiliated incubators spin out many great companies, but within deeptech they often struggle to access sufficient capital. It simply takes more funding to reach a viable validation stage compared to, say, SaaS companies," she says.

"This creates a financing gap – these startups need more than angel investors can offer but are too early for the bigger VC funds."

"Need access to industrial companies"

Turbine Capital's model is designed to benefit both startups and established industrial players, says Edström.

"Startups need access to industrial companies. These are the types of firms – large enterprises – that will ultimately be the users and buyers of the technology, the customers and, in some cases, potential acquirers. We want to offer startups a formalised pathway into the corporate world."

At the same time, the fund will help industrial investors keep tabs on the deeptech startup scene.

"From the perspective of the large companies – and there are more involved than we can currently disclose – they want a broad mix of startups working with different types of deeptech. That could include everything from advanced materials and general energy solutions to novel manufacturing methods," Edström says.

"Many large firms have their own investment arms and R&D departments, but there are limits to how much they can scout for new innovations and tap into the best Sweden has to offer – including our universities and research hubs. In that way, we become a 'feeder fund' for our investors," she adds.

In that way, we become a 'feeder fund' for our investors

Pipeline of 50 companies

Whilst the industrial partners will not have a direct say in investment decisions, they will have the opportunity to follow developments and potentially make follow-on investments via a digital platform. Turbine Capital will use the platform to share insights about its portfolio companies and consolidated data on the entire deal flow.

And work is already well underway:

"Thanks to our partners, we already have a pipeline of 50 companies, and we've advanced with about 15 into deeper due diligence. We hope to make our first investment in Q2," says Edström.

The fund is casting a wide net across the deeptech space and is not ruling out dual-use technologies – innovations with both civilian and military applications – even if that's not the primary focus.

"We're taking a broad view on deeptech and don't want to narrow our focus too early. That said, a natural filter is the source – we expect more than half of the companies we look at will come out of the university system," Edström notes.

She sees particular promise in certain sectors.

"Energy is a big one for us. We won't be investing in large, capex-heavy energy infrastructure, but if you look further back in the value chain, there are really interesting opportunities in energy storage, smart materials for electrochemical applications, and other enabling components."

Backed by Saab and industrial family offices

A typical initial investment from Turbine Capital will be around €435.000, with the potential for follow-on investments of €2.6–3.5 million or more in certain cases.

In addition to backing from industrial partners and incubators, the fund has also attracted several private investors – mainly industrial family offices who see value in the deal flow the fund will generate, Edström explains.

They hope to close the full fund before the end of the year, with another interim closing planned before the summer.

Jonas Lundeberg, head of Saab Ventures, sees the fund as a complement to Saab's own innovation efforts:

"Innovation is a core component of Saab's future development. The investment in Turbine Capital will complement Saab's existing innovation work by offering a broader view of early-stage deeptech companies in Sweden," he says in a press statement.