Sweden’s top forest VC reveals what it takes to win his backing: "It's super basic"

Few places on earth are as obviously aligned with impact goals as forests. A walk through a woodland, with its green canopy in spring, and red-gold palate in autumn, offers a simple reminder of how important trees are for a healthy planet. According to the Swedish Environmental Protection Agency, Swedish forests absorb about 35–40 million tons of CO₂ annually, roughly 80% of Sweden’s fossil fuel emissions. 

But without trees, we’re in trouble. When forests are cut down or burned, CO₂ is released back into the atmosphere. When fires, insect infestations, and storms take place in forests this also unleashes vast amounts of CO₂. And when large swathes of forest are logged, biodiversity takes a hit, robbing animals of their habitats.

Why forestry’s in the spotlight

This is where Erik Bengtsson and his team come in. As head of Södra Ädla, the investment branch of Sweden’s largest forestry cooperative, Södra, Bengtsson is on a mission: to bring innovation into forestry while creating value for the cooperative’s 50,000 forest-owning members. Södra Ädla backs startups pushing the frontier in ‘forest tech’ – the latest tech innovations designed to keep forests both profitable and sustainable. Bengtsson is a key player in this fast-growing sector, where drones, AI, and smart systems are transforming the way forests are managed and preserved.

“Forestry’s really in the spotlight right now,” says Bengtsson.  “But it’s also under scrutiny since it’s a natural resource we have to be cautious with. We launched Södra Ädla because we want to lead the development of responsible forestry and help Södra members stay relevant.”

By members, he means the tens of thousands of forest owners in the Södra cooperative. Södra Ädla, a subsidiary of Södra, operates independently. “We understand forestry very well. And we’re looking at solutions dedicated specifically to forests.”

So, what’s coming next?

The forestry industry is capital-heavy, with existing solutions that often come with million-dollar price tags. So, what’s next on the horizon?

“We’re looking at smart forestry tech, like better solutions for thinning, harvesting, and replanting. With cameras, drones, satellites, and airships, you can document the forest. There are also companies working with algorithms and AI to provide smarter interpretations and management recommendations, although that last part is still a tricky area,” says Bengtsson.

"You’re probably making a really good investment"

Customer benefits and value creation are the two terms Erik Bengtsson keeps coming back to during the interview. Companies that don’t get forest owners’ needs or show how their innovation adds value for Södra’s members have close to zero chance of securing an investment from Södra Ädla.

“It’s a mature industry with stable players, but it’s also one that changes slowly, which makes it challenging. At the same time, it’s a big, stable market. So, if you can disrupt it, you’re probably making a really good investment.”

So far, Erik has considered investing in about a hundred companies across Sweden, Finland, and northern Europe, but only three have secured funding. His advice to those seeking capital?

“You have to understand that forestry is already part of a functioning industrial system. It’s a capital-intensive one, with billions already invested, so it’s not easy to change. Understanding the industry’s structure is crucial.”

Customer match is key

More importantly, though, says Bengtsson, you have to understand the customer. And in forestry, that can look very different. Among Sweden’s roughly 300,000 forest owners, you’ll find everyone from small private owners to large corporations.

Bengtsson says these include both “frugal farmers” from rural Småland (a part of southern Sweden where people are known for being thrifty) and professors at one of Sweden’s most prestigious universities, KTH Royal Institute of Technology in Stockholm.

“They’re driven by a range of motivations, but those with larger forests tend to see the economic impact of innovations more clearly. They’re often more professional and sometimes have formal forestry education too.”

Is there heavy competition for access to forest owners’ wallets?

“There’s not much competition, but on the other hand, it’s challenging to find that truly value-adding offer.”

What he’s looking for

At Södra Ädla, Bengtsson has SEK 200 million (around €17 million or $18 million) to invest, typically starting with an initial round of SEK 2–5 million (€170,000–425,000 or $180,000–450,000), with the possibility of follow-up rounds. Unlike traditional venture capitalists, his team can afford to be more patient, Bengtsson says.

“We prefer making solid investments that take time. We’re not investing to buy these companies out later but to see them grow, develop independently, and offer new business opportunities for forest owners. Ideally, we’d like to make an exit in our role as a minority investor.”

You have to understand that forestry is already part of a functioning industrial system

Södra Ädla’s first investment was in Happie Nation, the ecotourism company behind the Happie Camp network, which sets up its signature triangular tents in secluded forest clearings. “It might sound like a quirky investment, but that’s where we started. We thought it sounded intriguing; could there be value in the forest experience?” However, Södra Ädla recently sold its stake in the business.

“It ended up too far from our core as a member cooperative,” Bengtsson explains.

The firm’s next investment landed with Nordic Forestry Automation (NFA), which Bengtsson calls one of the 'rock stars' in forest tech. NFA specialises in using autonomous vehicles and AI algorithms to pinpoint the ideal timing for forest thinning. Södra Ädla’s third investment went to drone company Nordluft, which has developed a method to help forestry firms more efficiently spread fertilisers and bio ash

“Now I’m looking for more companies,” says Bengtsson.

Is it hard to find the right businesses to work with?

“Yes, it’s challenging. Partly because it’s a narrow niche. And since Södra is an industrial group, there are many ways for companies to work with us. Some companies are perfect for an investment, while others might be better suited for direct collaboration or consulting.”

What makes you turn down an investment?

"When the value creation isn’t clear. The entrepreneur doesn’t understand their ‘user case.’ Sometimes, they’ve confused the needs of small private forest owners with those of larger forestry corporations. Or they simply haven’t validated their concept yet. You need at least a credible hypothesis – not just something that sounds good to a layperson. It also needs to hold up when you’re sitting down with our experienced specialists."

Is there ever a risk of being restricted by members of the collective or other colleagues? Say you want to invest, but the company you’re keen on doesn’t resonate with others in the network?

"Yes, but that’s both the strength and the challenge of working with a large forestry company. We know the forest inside out, but we’re also maybe locked into a certain view of how to manage it. So, along with our expertise, you get a bit of conservatism too."

Bengtsson already has his eye on several promising forest-tech companies and names a few that stand out:

• Kelluu, based in Joensuu, Finland, has developed an 11-meter hydrogen-powered airship equipped with heavy cameras for detailed ground imaging. The company specializes in using these airships for environmental monitoring and infrastructure inspection, offering real-time data services across Finland and Central Europe​.
• EcoType, located in Umeå, Sweden, is creating technology to help forest owners better manage and interpret their forestry data, aiming to streamline data handling within sustainable forestry practices.
• Taigatech, headquartered in Gothenburg, Sweden, focuses on raw material traceability across the value chain. Currently, they’re more geared towards sawmill processes but hold potential for forestry applications as well.

Finally, if an entrepreneur wanted to pitch to you, could they reach out?

"Any day of the week."