A new government-backed venture fund, Sunstone Capital A/S, has launched in Denmark with a total commitment of €390 million to invest in early-stage technology and life sciences companies with global potential.
In its first closing, Sunstone raised €160 million from seven institutional investors: Industriens Pension, Nordea Life & Pensions, Tryg i Danmark, MP Pension, Lønmodtagerns Dyrtidsfond and the Danish government-backed fund Vaekstfonden, and private investors through a feeder fund managed by Carnegie Private Banking.
Sunstone Capital consists of four funds:
Fund 1 consists of a portfolio of 14 companies from Vaekstfonden’s Technology Ventures. It has a capital base of DKK 241 million and pledged investments from Vaekstfonden of DKK 288 million. This fund is owned by Vaekstfonden.
Fund 2 consists of a portfolio of 19 companies from Vaekstfonden’s Life Science Ventures with a capital base of DKK 676 million and pledged investments from Vaekstfonden of DKK 486 million. This fund is owned by Vaekstfonden.
Fund 3 (Technology) consists after the first closing of DKK 600 million, of which a little more than half comes from private investors. An additional DKK 200 million is expected to be added in the second closing.
Fund 4 (Life Science) has DKK 580 million at the first closing, of which a little over half comes from private investors. An additional DKK 200 million will be added by the second closing
The four funds are constituted as partnership companies. All assets in the four funds will be administrated by Sunstone Capital A/S, a privately owned management company. The transferral of the portfolio companies to Fund 1 and Fund 2 will begin shortly.
“We expect to invest in 30 to 40 early-stage companies from the new funds, and to follow them all the way to the global market,” said Jimmy Fussing Nielsen, managing partner. “Our substantial capital base gives us the critical mass to deploy the resources necessary to truly drive the growth of our portfolio companies.”
In addition to funding start-ups, Sunstone will take responsibility for business development. “The true value we provide our portfolio companies comes from the breadth of our combined experience base, our network and the personal involvement of our team. You could say that, in addition to capital, we show up with a pair of running shoes,” said Peter Benson, managing partner.
He added, “Our management teams have spent years developing an international network of potential investors, corporate contacts and industry experts. This international network is at least as important to our portfolio companies as our financial strength.”
Bendt Bendtsen, Minister of Economic and Business Affairs, said the formation of Sunstone Capital was the fulfilment of one of the objectives in the government’s “New goals” platform.
The value of the 33 companies Sunstone is inheriting from Vaekstfonden is more than DKK 900 million.
The new investors are expected to join in the year to come. For the second closing Sunstone Capital is expected to reach a capital base of more than DKK 3 billion, with commitments from private investors of over the DKK 1 billion mark.
“It is encouraging that private investors have found the new fund so attractive that they have joined in its formation. Strong and well-capitalised, the new fund will provide solid support to growth-oriented Danish companies,” said Bendtsen.
“With Sunstone Capital we will take an important step towards realising our vision of creating the best-functioning market for innovation finance in Europe initially, but later on, globally as well,” said Christian Motzfeldt, director at Vaekstfonden and the architect of Sunstone.
“It also means that we can now expand our investment activities to include new areas, like design and cleantech, and to new companies with promising growth potential.”
Sunstone will operate on the same terms as other players in the Danish market. “There is definitely room for a new large player on the Danish venture market to lift the companies that are in need of very large capital contributions,” says Jan-Ole Hansen, finance director at Industriens Pension.
“Sunstone Capital will operate on entirely commercial terms, even if the state to begin with formally acts as a major investor through Vaekstfonden, until Vaekstfonden’s investments are either sold or has been publicly quoted,” said Peter Schmiegelow, investment director in Nordea Liv & Pension.
“This is exactly what is needed here in Denmark,” said Soren Nielsen, Director of the biotech company Action Pharma A/S, which has had backing from Vaekstfonden. “We need a substantial combined force of capital and knowledge to carry new biotech companies forward in the fast phase that is needed to achieve success. We are really happy to have Sunstone Capital on board as investor.”