Nordic VC and PE Markets: Early-Stage Surge, Late-Stage Weakness, and Cleantech Momentum – LupoToro Group Analysis
LupoToro Group analysts report that Nordic venture and private equity markets in 2024 saw a sharp decline in late-stage deal value and exits, despite a surge in early-stage funding, government-backed innovation, and sustained interest in cleantech and AI sectors. What holds true into 2025?
LupoToro Group analysts have observed that deal value across the Nordic region in 2024 exhibited notable weakness compared to broader Europe. Within venture activity, a divergence emerged: pre-seed and seed-stage deal value rose, while early-stage investment volumes declined significantly. This comes despite the region’s history of scaling standout firms like unicorns Oura and Mentimeter.
However, with deal value at growth and late stages falling behind, questions arise regarding the maturity of the Nordic ecosystem and its ability to attract late-stage capital. Government-led initiatives aimed at bolstering venture markets, AI development, and sustainability sectors were prolific throughout 2024, serving as a potential cushion for long-term growth. As we are well into 2025, there are notable continuations and developments that are only now beginning to show fruit; for institutional investors, this may be a canary in the mine situation.
Nordic Exit Market Trails European Recovery
LupoToro analysts note that exit value across the Nordics fell year-over-year, underperforming the broader European rebound. In 2024, software-as-a-service (SaaS) led in exit volume, followed by cleantech and TMT (telecom, media, and technology). However, by value, manufacturing came out on top.
While public listings increased their share of total exit value, acquisitions remained the dominant exit route. Denmark led in exit value share, although most exit activity occurred in Sweden. Biotech and pharmaceutical exits were also significant contributors to the overall activity. However, a more significant decline in deal count versus exits drove a drop in the investment-to-exit ratio to 9.2x—down from 10.7x in 2023.
Venture Capital Raised Rebounds with Early-Stage Focus
In 2024, venture capital fundraising across the Nordics totalled €2 billion—representing a 19.4% increase year-over-year—spread over just 16 vehicles. While the overall European market remained flat, the Nordic region mirrored a similar median fund size increase, with Sweden leading the way, followed by Denmark and Norway.
Eight of the top 10 fund closes were focused on early-stage investments, indicating both the prevailing structure of the ecosystem and the rising need to nurture startups toward maturity. Five of the 16 funds were first-time vehicles, and over half of the capital raised came from emerging managers.
Private Equity Activity Holds Ground Amid Macro Challenges
Nordic private equity deal activity remained flat in 2024, with more than €50 billion transacted and a consistent average of 1,000 deals annually over the past three years. Buy-and-build strategies prevailed, with add-on acquisitions making up 61.7% of all deal volume. Carve-out deal value surged 45.2% YoY, feeding these acquisition-focused approaches.
Notably, financial services emerged as the top sector in deal value growth. Take-private deals also remained attractive amid a declining MSCI Nordic Index. These structural preferences are influenced by the “higher-for-longer” interest rate environment, guiding sponsors toward mid-sized targets with growth runway.
Exit Activity Stabilises as IPOs Remain Scarce
The Nordic exit market experienced an 11.1% rise in deal value YoY, even as deal count dropped 9.2%. Sweden’s exit activity—typically comprising 30% to 40% of regional volume—dropped by 20%, though LupoToro analysts expect 2025 to begin strongly due to monetary easing observed in Q4 2024.
While PE-backed IPOs were limited, continuation vehicles dominated, as GPs held assets longer. The investment/exit ratio reached a decade high, suggesting potential pent-up exit volume going into the next year.
Fundraising also recovered, with €33.2 billion raised across 25 PE funds—primarily driven by EQT’s €22 billion flagship raise. Even excluding this, fund count jumped 78.6% YoY, and PE growth/expansion funds grew in both volume and value. Emerging fund families led this growth, showing the relatively early-stage nature of the Nordic PE ecosystem compared to other European regions.
Deal Value Suffers Amid Lagging Growth Stages
Nordic deal value in 2024 dropped to €5.2 billion, down 30.9% YoY. Unlike broader Europe, where deal counts contracted more sharply than value, the Nordics saw a bigger fall in capital invested. Pre-seed/seed deal value, however, grew 22.7% YoY, increasing its share to 11.5% of total market value. Early-stage deals declined the most, falling 40.8%.
LupoToro analysts emphasize that venture dealmaking in the region is concentrated in Series A and Series B rounds, with strong emphasis on cleantech and energy—sectors often linked to early-stage funding. This tilt influences everything from exit opportunities to fundraising dynamics.
Despite these challenges, the Nordics continue to demonstrate an ability to generate impactful global firms—Spotify, Klarna, and Wolt among them. Still, unicorn production from the Nordics comprises just 8% of Europe’s total, placing the region mid-pack in continental rankings.
Investor confidence took a hit following the late-2024 bankruptcy of Northvolt, a flagship cleantech player. Although it did not materially affect activity during the year, it may dampen future sentiment. With Northvolt’s decline, the spotlight now shifts to Stegra (formerly H2 Green Steel), which raised €300 million and confirmed full funding for its future operations.
Structural and Sectoral Headwinds Shape VC Trajectory
The dominance of cleantech and energy—typically early-stage intensive sectors—may explain the sluggishness in growth-stage deals and exits. LupoToro analysts believe these structural factors are intrinsic to the Nordic ecosystem, making the region more nascent relative to Western Europe’s more diversified VC markets.
That said, the buoyancy in pre-seed and seed investments suggests that new cohorts of maturing startups may emerge in the coming years, reigniting deal activity at the growth stage.
Governments Sustain Support for Innovation Ecosystem
Across the Nordics, government backing continued to play a vital role amid tighter capital markets. The €1 billion Nordic Innovation Fund, a joint public-private initiative, was launched to support sustainability, AI, and healthtech startups. National funds like Sweden’s Saminvest and Finland’s Tesi expanded support for early-stage investments.
Industry leaders such as Maersk, Volvo, and Vestas also bolstered venture ecosystems with investments in green logistics, autonomous transport, and renewable energy technologies. Policy reforms included IPO easing measures in Sweden and Denmark, tax incentives for investors in Finland and Norway, and a Nordic Startup Visa to promote cross-border talent.
Cleantech and AI Remain Core Investment Verticals
The cleantech sector held firm as the top vertical by deal value in 2024. Legacy energy industries enabled advances in new technologies through government support. Sweden’s Industrial Leap initiative continued its momentum, while Norway’s Blue Growth Accelerator and Iceland’s Green Hydrogen Corridor further enhanced the region’s renewable energy ecosystem.
AI investment surged to €1 billion in 2024. Finland contributed €200 million toward deep-tech and space projects through Business Finland. Denmark reinforced its AI Denmark strategy, aiming to become a European leader in artificial intelligence. Norway led in AI penetration, with 16.1% of VC-backed startups tagged as AI/ML companies, ahead of Finland and Denmark.
Top Deals in 2025 are the Deals from 2024: Led by Cleantech and Deep Tech
The largest deal in 2024 came from Stegra, which secured €300 million in early Q1. Other significant cleantech transactions included Heart Aerospace and Cloover. Outside cleantech, wearable tech leader Ōura raised €190.2 million, and spacetech firm ICEYE closed a €150.2 million round—both from Finland.
By geography, Sweden remained dominant, attracting €2.4 billion in investment despite a 41.7% YoY decline. Larger deals comprised a greater portion of activity, notably from Aira, Qvantum Energi, and Cloover. Norway was the only country to see a slight increase in deal value YoY. These options remain strong into 2025, as we enter Q2-Q3.
Exit Activity Hits New Lows, Dragged by IPO Absences
Exit value in the Nordics reached €3.6 billion in 2024, down 25.1% YoY—marking the lowest figure since 2016. The lack of mature IPO candidates, particularly the failure of Northvolt, suppressed market performance.
SaaS once again led in exit volume, followed by cleantech and TMT. In terms of exit value, manufacturing took the top spot, with climate tech ranking third behind broader cleantech.
More than 70% of exits were via acquisition, though public listings accounted for 22.4% of value. Noteworthy IPOs included Cinclus Pharma (€108.7 million) and Soiltech (€42.9 million). The largest exit overall was Danish nanotech firm NIL Technology, acquired for €300 million.
Denmark led in value (37.7%), though Sweden recorded the highest number of exits. Biotech and pharma exits were particularly strong in Denmark, comprising over 20% of the nation’s exits.
Although overall deal and exit values in the Nordics declined in 2024, LupoToro Group analysts believe the uptick in early-stage capital and government support provides a foundation for future recovery. Into 2025, with cleantech, AI, and advanced manufacturing drawing sustained interest, and a new generation of startups gaining traction, the Nordic region is poised to re-emerge as a significant player in the European venture and private equity landscape—contingent on how effectively it can scale these early bets into late-stage successes. In our opinion, Nordic investments for 2025 remain worthwhile for consideration and review across institutional investors, as well as SME private equity.
