Why was Dansk Vækstkapital III established?
Dansk Vækstkapital III was established to increase the amount of risk capital in the market and, in so doing, create more growth companies, turnover and jobs. To ensure investors a competitive, double-digit return, the capital is invested on 100 percent commercial terms.
How many funds and eventually companies will benefit from this new capital?
We expect to invest in 10-15 new funds. We expect the funds to invest in approx. 100 Danish companies within the next five years.
How much capital would normally be invested by Dansk Vækstkapital III?
We expect commitments of DKK 100-250 million to each fund and seek to be a significant and active investor with a place in advisory boards.
How large a share will Dansk Vækstkapital III typically hold?
When Dansk Vækstkapital II invests, it is always a requirement that private capital is invested as well. The aim for Dansk Vækstkapital III is to hold a maximum of 50 percent of the shares so that, in addition to the capital from Dansk Vækstkapital II, further private capital is drawn into the market. Exceptions to this 50 percent limit may be made on rare occasions if the case is very strong. Dansk Vækstkapital II’s capital commitment to an individual fund may not exceed 10 percent of Dansk Vækstkapital II’s capital base.
How large a turnover and how many jobs will Dansk Vækstkapital III help create?
It is difficult to provide a precise figure, but the increase in turnover will be noticeable. Realistically speaking, the companies receiving capital from funds invested in by Dansk Vækstkapital II over the next 10 years could end up with as many as 15-20,000 employees.
What is the timeframe for Dansk Vækstkapital III’s investments?
Dansk Vækstkapital III can make new investments until the mid or end 2025, depending on the timing of last closing. The funds which are invested in will typically have a lifespan of around 10-12 years.
When will Dansk Vækstkapital III be considered a success?
Dansk Vækstkapital II will be considered a success when the capital is put to work, first in the funds and then in the companies. Ultimately, the goal is that all the investments result in growth, turnover and the creation of jobs, together with a competitive double-digit return for the investors.
DVK III – POLICY ON GENDER EQUALITY AND DIVERSITY
1. BACKGROUND
At DVK III we want to create growth and returns in an ethically and socially responsible manner. This includes prioritising and promoting equal opportunities, gender equality and diversity.
We believe that gender equality and diversity are important principles to adhere to and we believe that improved gender balance and diversity across portfolio funds and underlying portfolio companies will benefit the financial performance and the ecosystem impact of DVK III investments.
Our points of reference for a policy on gender equality and diversity takes point of departure in the codes and guidelines established by Invest Europe (the European Private Equity and Venture Capital Association, EVCA) and the Danish Venture Capital and Private Equity Association (DVCA). Further, our focus on gender equality will mirror the principles set out in the Companies Act Article 139a and the ambition manifested in the guidelines of UN’s Sustainable Development Goals, more specifically referring to Goal 5: ‘Achieve gender equality and empower all women and girls’ with more specific reference to target 5.5: “Ensure women’s full and effective participation and equal opportunities for leadership at all levels of decision-making in political, economic and public life’, with specific focus on:
‘5.5.1 Proportion of seats held by women in national parliaments and local governments and 5.5.2 Proportion of women in managerial positions’.
On an operational level we will incorporate the due diligence guidelines developed by the International Limited Partners Association (“ILPA”) when relevant and applicable.
DVK III is a fund of funds, meaning that DVK III as fund manager invests in funds that invest in companies. DVK III has a direct contact to and contractual relationship with its portfolio of funds but as fund manager, DVK III has no direct influence on or contact to the investments made by its portfolio of funds. Nonetheless, we will strive to promote equal opportunities, better gender balance and diversity across both portfolio funds and their underlying investee companies.
2. SCOPE
This policy on gender equality and diversity shall apply to all operations of DVK III and shall be applicable to all investments made by DVK III (DVK III’s portfolio of funds).
This policy aims to:
(i) promoting awareness of structural/cultural challenges related to gender diversity within our organization and within our portfolio of funds with specific focus on equal opportunities and gender diversity in management positions;
(ii) establishing specific targets and ways to measure the promotion and progress of equality between women and men in management positions;
(iii) identifying due diligence steps and monitoring mechanisms to be applied in the business of DVK III.
3. RESPONSIBILTY AND SUPERVISION
This policy is applicable to the board of directors of DVK III and to Vækstfonden as the appointed secretariat and investment manager to DVK III.
Questions regarding this policy should be addressed to CSR and Communication Advisor, Marie Lerche Ratzer by e-mail: mlr@vf.dk
DVK III’s investment professionals are primarily responsible for ensuring that the consideration of gender equality and diversity will be integrated into the evaluation of investments and into the monitoring of DVK III’s portfolio of funds.
The management of DVK III is responsible for maintaining and updating this policy to ensure its continued relevance. The implementation of measurable targets, controlling procedures and continuity hereof is anchored in the Fund of Funds department.
4. FOCUS AND PRINCIPLES
At DVK III we aim to promote equal opportunities, gender balance and diversity. We consider this a relevant and important part of optimizing the financial performance of DVK III – as well as to optimizing the long-term ecosystem impact of the DVK III investments. Therefore, we include such considerations in our decision-making, in our daily procedures and in our due diligence procedures.
We consider diversity and a diverse staff composition as vital to achieve an efficient organization and a qualified workforce and to deliver growth and investment returns. This applies to our own organization and to our portfolio of funds and their underlying investee companies. Thus, we strive to obtain/secure equal opportunities when hiring, promoting and dismissing regardless of gender, ethnic origin, religion, nationality, sexual orientation and age – however with an initial primary and actionable focus on gender.
As set out above under “Scope” we will structure our approach under three headlines:
(i) Awareness
DVK III recognizes that awareness and recognition of structural/cultural challenges in relation to gender diversity and (subconscious) bias is necessary to advance equal opportunity, gender balance and diversity. DVK III is dedicated to promote gender balance and women’s opportunities in its own organization and in the venture and private equity industry as such, including by articulating the current inequality in this business area/industry as well as by identifying and sharing best practices in its portfolio of funds and by collecting data and measuring change over time. Further, DVK III will expressly encourage portfolio funds to develop a policy on gender equality and diversity and actionable steps/tools to provide equal opportunities and increased employment and promotion of women – with the objective to strengthen performance and promote greater diversity in the management teams.
(ii) Measure
DVK III believes it is important to establish a number of measurable targets and to collect data across the DVK III portfolio of funds to measure progress over time. Establishing target figures for the share of women at different management levels will make it possible to quantify and monitor the progress in relation to the percentage of women at different management levels both with the fund managers and with the underlying portfolio companies. DVK III will on an annual basis discuss and set targets for the share of women at different management levels with both the fund managers and the underlying portfolio companies. The initial target is to double the share of women at different management levels by 31 December 2020 with both the fund managers and the underlying portfolio companies.
(iii) Due diligence
DVK III commits to consider gender equality and diversity in the course of its due diligence and analysis processes and in the monitoring of its portfolio investments to the extent reasonably practical, always in compliance with its obligations pursuant to applicable Partnership Agreements. Enhancing the dialogue with fund managers on the importance of gender equality and diversity, all things being equal, will generate attention and, hopefully, commitment to the subject.
Based on ILPA’s ‘Due Diligence Questionnaire, Version 1.2, Most-Recently Revised in September 2018’, the following questions will become an integrated part of the due diligence-processes of DVK III:
The above ILPA questions do not represent an exhaustive list of questions or topics to be discussed with fund managers, as further questions that are more open-ended will form part of the dialogue to understand the relevant fund manager’s policies and approach – and to promote the agenda.
Dansk Vækstkapital’s investment commitee determines its investment policy and criteria and decides which funds to invest in. Dansk Vækstkapital only invests in funds and not directly in companies, and the companies must therefore approach the funds and not Dansk Vækstkapital.
A number of criteria must be met if a fund is interested in an investment from Dansk Vækstkapital. In order to be an eligible candidate, funds must submit a detailed Private Placement Memorandum and necessary documentation specifying how the criteria will be met, to Vækstfonden’s secretariat. You need to submit a presentation of the fund that describes in detail how it intends to meet Dansk Vækstkapital’s investment criteria.
Based on the material submitted, the secretariat will prepare a recommendation for the board, which will then decide what funds to invest in. If you have any queries concerning the selection process or the criteria, please direct them to the secretariat.
Team
The team in question has to have relevant experience, and together the team members should possess the necessary strategic and operational knowledge to manage the fund successfully. The team members must be able to demonstrate that they work well together and that they have access to a strong network, which can support their investment strategy.
Investment strategy
There is a clearly defined investment strategy, that describes in detail the value creation in the companies until their exit. The investments must comply with fundamental social and ethical principles.
Track record
The team should be among the best investors in its field and have demonstrated its ability to create returns on invested capital from previous or current investments. Results must be documented in relation to the selection of investments, the structuring of investments, the development of a portfolio companies and exit.
Processes
Structured work procedures has to have been implemented, ensuring a consistent and efficient execution of the investment strategy. The fund’s work is systematic in relation to value creation and risk management, demonstrating clear structures for the division of responsibilities. The processes cover documentation and communication – including reporting.
Structure and key terms
The fund has to have a clear legal and fiscal structure with transparent terms that conform to market practices and balance returns and risks for all parties involved.
Notice
To be considered for a possible investment from Dansk Vækstkapital, it is a prerequisite that the criteria above be described in detail. You need to submit a presentation of the fund that describes in detail how the fund intends to meet Dansk Vækstkapital’s investment criteria.
Dansk Vækstkapital III is a private investment fund investing in venture funds and small and mid-cap funds with a Danish anchor. The funds invests with the ambition to deliver a competitive return and it expects an annual return on 10-15 pct.
The new fund, which is part of the Danish Government’s Growth Package, is a continuation of the cooperation on risk capital, which Government and the pension funds agreed to continue in 2015 with the establishment of DVKII. Focus for Dansk Vækstkapital III is to contribute to innovation, growth and new jobs through responsible investments and UNs global goals for sustainability. Dansk Vækstkapital III seek to become an active investor participating in advisory boards – typical investments of DKK 100-250 million. Vækstfonden functions as a secretariat for Dansk Vækstkapital II.
History
In 2020, the Danish Government reached an agreement with a number of the largest pension funds in the country to establish Dansk Vækstkapital III which, among other things, gives new and smaller companies access to new risk capital:
What we invest in
Dansk Vækstkapital II is a private investment fund that invests in a wide range of funds under private management, including venture funds and small and mid-cap funds. Up to 1/3 of the capital can be allocated to venture funds investing in young companies and 2/3 will be allocated to funds focusing on established small and medium-sized companies.
How much capital is available
The agreement on Dansk Vækstkapital II increases the risk capital available to entrepreneurs and small and medium-sized companies by up to DKK 10 billion.
Who is in our board
The Board of Directors consists of Ulrik Spork (chairman), Birgit Wøidemann Nørgaard, Peter Carøe, Jens Peter Toft and Kent Stevens Larsen.
Dansk Vækstkapital III invests in unlisted funds with a view to achieving a competitive and double-digit return for the combined portfolio of funds.
The funds need to be of a size – and have critical mass – that makes them commercially viable, building upon the existing skills of established fund managers who possess specialist knowledge. Therefore, the required minimum fund size is usually DKK 400-500 million (EUR 54-70 million).
This minimum requirement may on the grounds of return, in certain situations be waived, for instance regarding sector specific investments.
Requirements of fund managers
Dansk Vækstkapital II invests in funds that focus on growth companies to which the fund managers actively contribute with value creation.
The fund managers must have extensive field-specific experience corresponding to the scope stipulated in the fund’s investment strategy. Furthermore, the managers must have a proven track record regarding value creation and generating return. Dansk Vækstkapital II always conducts its own independent due diligence.
Responsible investments
The funds must adhere to fundamental social and ethical principles in relation to their investments and focus on UNs global goals for sustainability.
At Dansk Vækstkapital we want to create growth and return in an ethically and socially responsible manner. Therefore, we include environmental, social and governance considerations in our decision-making and in our daily procedures. We require the funds we invest in to act responsibly, and we follow a number of established principles for responsible investment ourselves.
Our points of reference for the CSR policy are the UN Principles for Responsible Investments (UNPRI) and the principles outlined in the UN Global Compact initiative. Furthermore, we follow the codes and guidelines established by Invest Europe (the European Private Equity and Venture Capital Association, EVCA) and the Danish Venture Capital and Private Equity Association (DVCA).
+ Read the entire ethical policy of Dansk Vækstkapital III here.
What we invest in
Dansk Vækstkapital II is a private investment fund that invests in a wide range of funds under private management, including venture-, small and mid-cap- and mezzanine funds. Up to 1/3 of the capital can be allocated to venture funds investing in young companies and approximately 2/3 will be allocated to funds focusing on established small and medium-sized companies.
How much capital is available?
The agreement on Dansk Vækstkapital II increases the risk capital available to entrepreneurs and small and medium-sized companies by up to DKK 2,63 billion.
Who is in our board?
The Board of Directors consists of Ulrik Spork (chairman), Birgit Wøidemann Nørgaard, Peter Carøe, Jens Peter Toft and Kent Stevens Larsen.
Robust funds with competitive returns – Read more about our investment policy
Companies must approach funds directly – see a complete list of possible funds in Dansk Vækstkapital’s portfolio.
