E582 | Alex Bakir, Norrsken Evolve: Resilience, Climate, and Building Europe’s Future

0:00What if building the world's largest constellation of space cameras was the easy part? Creating the world's largest constellation at the time of space cameras, we could just call it what it is, was way easier, actually, than getting this done. For 18 months, Alex Bakir fought to close Norskin Evolve's$57 million fund. There were moments when even he wasn't sure. It took us 18 months to get to that moment, where even earlier this year, I was like, I don't know if we'll get this done. But behind the struggle was a deliberate choice to abandon climate buzzwords for something more real. So you need to talk about things in more meaningful ways than that.

0:33So we very quickly developed like a dual narrative of talking about what's going on in Europe, where all our resources come from, the fact industry needs to change. The result? A fund structure that breaks every traditional VC rule. So 80 companies is a lot of that, right? 250k, cool. So we're not a material owner on the cap table. No board seats, no gut decisions, just one automated rule for follow-ons. So that becomes our follow-on strategy, right? We're not really thinking about it. It's very automated. Because in a world where Europe needs rebuilding, relationships still matter most. Emotional bonds get forged in reality, and we have found that we give the most value if we're with you for some weeks.

1:10Discover the contrarian playbook that turned 18 months of uncertainty into Europe's most oversubscribed emerging manager story, and why 80 small bets might beat traditional venture wisdom. Join us for the full conversation on the EUVC podcast.

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3:12tear down this wall it's more than just an ally this this is a union of values of values Let's start acting, acting, acting. This show is not investment advice, and the hosts of this episode may be invested in the funds and companies featured. Today, I am talking with Alex Bakir, general partner at Nuchen Evolve, the brand new 57 million euro pre-seed fund spot out of the legendary Norskin family of funds, I was about to say. Together with Johan Adby and Rebecca Lötmann-Röder, Alex is doubling down on impact-driven founders, building Europe's resilient and sustainable future. They have some backing from friends we all know, EIF, Sam & Mass, SmartCab, and operators like Tavit Henrikus and Sten Tamk Ivi, who we of course also know from Plural.

4:03The fund is already supporting startups tackling everything from climate resilience to bio and health tech. And this is very much an exciting episode for me. Tell me, Alex, how did you come to be? Oh, my God. Where do you want to start? I mean, we were just talking, where's my name come from? So start with day zero. I'm half Iraqi, half English, but was brought up in England. So when people want to talk about impact, which I really care about, for me, that meant, okay, so my dad's side of my family is trying to get out of Iraq right now. when I was a kid in the 1990s. And he's not here and he's dealing with that.

4:42So like this whole like the world is safe, the world is secure, like the post-World War II European construct is one that's like enduring. Major questions on all of that, you know? Like I think the world has a tendency of like surprising everybody. So that's sort of how I was like brought into the world. With all immigrant families, like education, right? How do you improve your lots in the universe? It's education. So my dad was really, really, really smart. I turned out being like somewhat smart and managed to eventually find my way to Cambridge University, where I studied like a lot of like climate science, actually.

5:18And I was like, wow, we are. That's not science, though, because it has science in it. Yeah, yeah, yeah, yeah. I've read lots of papers that were hard to read. Let me put it that way. Beyond my mental capacity, for sure. And then this was like 2001. Right. and it was very very very very very clear that we were sort of screwed and we'd known this for a long time and this is 2001 and so i was like why are we not doing anything about this you know like young idealist like activist oriented i was like we got to work together we got to like hold hands and like fix this problem it's got to be an international level like i need to work on that and so i ended up finding my way into like the world bank as my first job right doing like big energy projects on a national scale.

6:03And I lasted less than a year in that job. It's super important. I think this stuff should happen. It was just a very bad fit for me, personally. And I was a little bit downhearted at what was happening. So I quit. I had one of those fancy two-year whatever-it-is things. And then there was this fund in London that got raised called Climate Change Capital in the mid-2000s. Billion dollars into climate stuff, 2005. So I was like that thing that looks like a thing that I should really get involved in right it's kind of what we're doing over here but maybe a little bit more like fast cutting edge commercially driven so I just bugged them for ages until they gave me a job so I wound up in London at this billion dollar fund I was very junior with some awesome people literally doing in my lifetime the first like wave of sort of like clean technology investment right so that was kind of how I arrived at yeah into my mid-20s let me put it that way tell me then navigating through that time because everyone like cleantech clearly took a took a hit and i'm sure that that has given you a bunch of learnings both like and maybe you can also contrast that or liken that to what some would say that we're going through right now yeah i mean cleantech died in 2008 right officially 2009 but it died in 2008 um that word anyway or however you describe stuff that would you know address problems in the energy system all that kind of stuff um the billion dollar fund ended up dying right eventually and that that can happen it turns out um but the the optimism in like the 2005 to 2008 period was insane like the stuff going on was insane the money being made was actually insane like the first kind of carbon credits are out there that kind of stuff So I had like the education of the up and the down of that.

7:56The learnings were that even the best investment thesis is probably going to get messed up by macro. The key learning actually from that period was no one had modeled what would happen in a recession to all this climate stuff. And you have things like energy prices, commodities prices, carbon credit prices. No one had modeled it. And when it hit, obviously, it was bad. And all these assets went to like nominal value, kind of on the pound because we were dominating GBP. And that was a real lesson. Like macro can and will turn against you. And I had this expensive apartment in like central London.

8:31I said, what am I doing here? Like, how do I? No jobs, right? All the finance jobs. Everyone's walking out their buildings with little boxes. So I kind of talked to a few people and I said, I need to hide for a couple of years because this economy is not good. So I applied a business school and actually went out to Stanford. That took me to California for about a decade, which, yeah, lots of learnings in that decade, too. But then, like, to answer your question, yeah, we're finally back in a world where everyone recognizes that there's loads of problems, right? Those problems are getting worse, by the way.

9:04And now everyone's talking about it's got to make economic sense, right? It's got to stand on its own two feet. Yeah, like, we've sort of known that since 2008. That's not like a new revelation in any way. It's like a very logical thing to think about. no one actually cares unless it's very real and material for them and solves like real problems at prices of that so like we're there and like that that said we did have a green premium and that said we did have maybe some investments that were more founded on regulation and yeah good good tailwinds and so on rather than buyers no matter what is going on in the world and whatever regulation requires like where yeah like very few of the people that lived through the 2008 2009 were around you know like it's almost like our our like in our collective memory is so short it's like what's happening now cool this looks good but anyone that was around at that time saw all that happen already right and so it's already very clear for me that anything reliant on like a green premium a carbon price that's just not a sensible thing to do right yes you need to make some stuff that hopefully is reducing emissions but like this just needs to make sense so like the whole like re-revelation of that like i really hope we remember it next time around you know because it's like yeah what makes you comfortable to double down on climate in the current market like why is it you're saying this is not 2008 again it is actually it is actually different and tell me this is why it's different yeah i mean the world is like super scary you know Right.

10:41If I look, so I have a like I have a master's degree in international relations and economics as well. And like the world is really scary. You haven't seen like this kind of isolationism, nationalism, tariffs, non-trade barriers, supply chain stuff. None of like the fear of like globalized conflict is as high as it's been. Right. Since 1920. Everyone can see that. That has like super real effects on how companies are making decisions. Right. What supply chains make sense. Right. Where should your materials come from? How do we think about our cost basis? All that stuff. And the fact is, Europe has been sort of dependent on Russian gas and imported hydrocarbons since World War II and the discovery of the Gawa oil field in Saudi Arabia.

11:24That's like when I was doing international relations, we were building the pipelines across Europe being like, oh, yeah, this is good. No problem. Let's just ship all this gas over here. So our raw material supply stuff is not really within anyone's control, right? Or not within our control. Your business, if it's based here, has like zero ability to substitute out of that in a real way. And I think people, because of the general really scary nature of the economy and the relationship between all the nations around us, people are just taking that seriously. Like, cool, if we want to have a business that thrives in this environment, guess what?

11:59Europe doesn't have these like fossil based resources outside of like a few remaining North Sea gas fields. So if we want everything to work and the power to be on and the materials to flow and the industry to flourish, it makes sense that we shouldn't be using stuff that's based on that. Right. And so that automatically brings like this like next wave of development into a logical place where it's like, cool. So we need other ways to do that. And guess what? Most of those ways are going to be like low greenhouse gas emissions. So we're in like a realist world. I kind of love that. Right. We're not in this utopian place.

12:31things are very real it's about numbers about supply chains about materials it's about you know quote-unquote rebuilding europe so that for me we haven't been in this environment before this is super super different from 2050 and super super different from 2008 that being said you know we already talked about like our lessons learned tend to not stick around so let's see tell me alex because now you've been on the fundraising trail you've raised 57 million you actually got significantly above what you first planned. Congratulations on that, obviously. It's not what everyone is experiencing in climate right now.

13:08Traction is not the word that I hear from people most often. Tell me, what do you think kind of allowed you to get the catch-up effect or get the ball moving for the fundraise? Yeah, yeah, yeah. So let me start with, I've never done this before, right? It's not like I have anything to compare it to. So for me, that was just a normal thing. When I compare it to other people, other people's experiences, everyone's having a really hard time. And ours, I thought like, this is quite hard. Just as background, I worked at a space technology company called Planet Labs for like five years, where we built the world's largest constellation of Earth imaging spacecraft about this big with cameras in them, took pictures of everything.

13:45So putting, creating the world's largest constellation at the time of space cameras, we could just call it what it is, was way easier, actually, than getting this done. Just to put it into perspective, I was like, this feels hard, right? I feel like I've done hard things. This feels really hard. So I think we were really lucky in that we had no knowledge of what it should look like, number one. Number two, we had some really kind people that told us that we had like mud on our face. You know, like feedback is so important to everything we do. So just knowing how we're coming across when we talk to investors or LPs was really, really important.

14:22And we got some super solid feedback, like very, very early on. Like, this is not going to work, guys. Like, we like you, but here are a bunch of problems. So we had to go and reflect on, okay, what is going to work? What do we believe in? And like, what is going to work and what's going to fly? Just double click on that. What were the problems that you were going to market with, or at least preparing to go to market with that you were told, this is probably not the right narrative or the right strategy? What was it that you had wrong in the beginning, so to say? Yeah, yeah. Really good question.

14:53So number one, we naively thought we could run a global strategy with first-time people. Clearly not a thing. And you can be told that very early on. And so awesome. Let's not do that. And I understand why that's a very bad thing to try to do. Second thing was, I mean, it was already very clear to me when we started. And this was a long, difficult process, right? It's been like two years in the making. The headlines always feel nice. but like the reality of everything that's meaningful is like quite horrible and messy underneath right so it was really clear to us about 24 months ago that climate tech is a buzzy thing that people are going to put money to doesn't work right so you need to talk about things in more meaningful ways than that so we very quickly developed like a dual narrative of talking about what's going on in europe where all our resources come from the fact industry needs to change and the fact that probably has to be quote unquote climate tech, green tech to get you there for materials, energy, et cetera.

15:49So we started using this word resilience really early on, right? So I want to be super clear, we don't do weapons, we're impact oriented. That word became like suddenly more and more exciting for people and has ended up in very weird places, if I'm honest with you. But we were kind of in that world 24 months ago when we kind of reoriented how we were talking about ourselves, just based on some stuff I was reading from the European Commission on, like, you know, critical raw materials and what that means for everything we do. Right. So we were quite a long way ahead of that curve behind the scenes, even if this fund gets launched into like its moment.

16:22Right. So we were lucky on that for sure. And then if I'm like totally honest with you, we were very blunt about things we'd gotten wrong in the past, things that didn't really work very well and how we would do things differently. And then people believed us eventually. Right. And it took a long time for people to start believing us. And we were super lucky to be able to do stuff in the meantime, right? We were in motion all the time. And that eventually came together. But it was super, super hard. And you need some early backers. We were talking offline about like this moment where momentum shifts.

16:54It took us 18 months to get to that moment where even earlier this year, I was like, I don't know if we'll get this done, Johan and Rebecca. Like, I think we will, but I don't know. And then the momentum shifts. And then suddenly you go into like, everyone wants to be in. And so there's a very fine line, I think, having an N of one to talk about. Yeah. Tell me now, but everyone's just the same. All of a sudden it's like it pops and it works. Tell me at the same time as everyone also says, oh, man, it's a struggle. Would you just keep going, going, going? And in the end, you end up crossing the finish line.

17:29Tell me a bit about LP profiling, because I'd be very curious on this. I imagine that you very quickly know who is a match and who is not. But I'd be curious if there's any pre-filtering before you actually have a call that allows you to gauge this or any questions that you felt or any signs in the first calls or even the first responses to emails that told you this is going to be worthwhile or let me go to the next one. But yeah, yeah. I mean, there's no reason for NLP to pick up the phone and talk to us in the beginning, right? At all. So I always kind of describe it as you got to remember that you're the pizza guy bringing a pizza no one has ordered to the door of a wealthy person that has just sat down to have his steak with his family.

18:16And you're trying to sell your pizza. Yeah, it's just irrelevant. You know, it's just noise. There's no signal. It's just noise. So how do you become Signal? For us, actually getting some brand names on board early was super, super, super important. We felt like, well, we need the local people to care about this. And if we can't get the local people to care about this, why should anybody else care? Because at least the local people in our orbit know us a little bit. And that's hard because everyone's over allocated. There's no money in the market. So we were lucky to start getting some million dollar commitments that made sense.

18:51The big turning point was actually meeting Tabernacle and Stand Plural. and what they're doing in Estonia, right? We are going to be part of what they're doing in Estonia as well. And there was just a very good connection there early on because Johan has built a couple of companies, raised 100 million. I've been an operator in some interesting companies. There's just like a vibe there that works very well, right? You can tell you're talking to, what's the right word, a similar species that has similar points of view about what's going on with the early stage companies, what founders need, et cetera.

19:20And we really do have a lot of focus on what founders need, which we should talk about, right? We do in-person stuff with founders in our fund, a lot of it. So that worked. And then suddenly you are like, you know, 10 % there, right? Then we were like... Talk about, before we go on, talk a bit about what's happening in Estonia and what the guys are doing there. Just because it's not everyone that's tuned into it, of course. Oh my God, this is super awesome, basically. So Tavit and Sten and Scala, which is sort of their background family office, are building the world's largest kind of entrepreneurial technology center, right?

19:57It's kind of like a quadrant of a city type scale. It's called the greenhouse in English. I'm not going to say it in Estonian, but it has a nice name in Estonian. I'm not going to butcher it. They really want to have world-class support for early stage companies in and around that ecosystem. So they came to visit us. they spent time with us while we're working with companies. And they were like, this is interesting. Like, how do we get you there? And we're like, well, invest in the fund. And they're like, cool, are you going to come there? And we're like, actually, at like a very small fund size, we can't really support it.

20:28And then they sort of leaned in and they're like, okay, how do we work together to make sure you guys have presence here? And I'm super, super excited about that whole project and whole ecosystem. But it's a huge project, a huge multi-year project, massive commitment to really building kind of Estonian, the Estonian tech universe ultimately. Okay. So then tell me, then that helped you, you got the first 10 % of the fund close, so to say. And then we went into like the trough of despair, right? Where, you know, it's very, very hard to get over allocated high net worth individuals into emerging managers, building a funky fund.

21:03And we should talk about our fund construction. It looks not normal, which was a huge problem for a long time and then it became a huge asset because it doesn't look normal um this trough of despair is like you're talking to everyone and everyone has a reason for no right yeah not this not that not x not y it's like very similar to if you raise from vcs and you just get the response back like traction or whatever right like it's not the full story you know it's not the full story it's just a way to filter and move on so we're like okay we probably need to get an institution here given this landscape how do we get an institution and the closest one to us was the Swedish institution, Saminvest.

21:39So we really, really worked hard to get them excited about what we're doing. And good news is they were local so they could come down to like the Norskan house in Stockholm and actually see us live and like be in and around what we're doing with founders. We run this year, like a six week sprint that is like not a school, but it's working with our portfolio because we believe the best way to work with portfolio is other founders and operators are likely going to be your best guides, actually. We have a very, very healthy skepticism for any kind of school classroom based style thing. So we managed to turn them, right?

22:12And we managed to turn them really with the help of like Rebecca, the third partner who is a career VC. Like she is incredible at venture capital, like great track record, worked at like top firms kind of in this ecosystem. So we actually expanded our team and we brought Rebecca. And we spent a long time before we made that decision to add a third person to the team. And then with her rounding out our skill set, I'm like an operator. Johan is a serial founder. We have a career VC here that has done loads of early stage in these sectors. That allowed us, along with lots and lots of hard work and lots of invites and lots of come hang out with us, come and look at this, come to here, listen to this.

22:51That allowed Sam Invest to gain confidence in us. And so once we had that, suddenly you go from 10-ish to 20, right? And now we're talking. Now people are starting to take you seriously because there is someone doing like real DD on kind of what you're up to. You know, there's like this institutional stamp, which we did not think we would be able to get, if I'm totally honest with you, because we're so early and like classified as emerging managers, how do you get an institution on board? The advice we give to our founders is sort of, they need to kind of fall in love with you a little bit. And so you need to make the opportunities for that to happen while really listening to the things that they don't like.

23:28So that was really, really important. Then let's go to another thing you've mentioned a couple of times. You said it's a pretty funky structure or it's a pretty funky strategy and we definitely did some things differently. Let's talk about that and the importance of what I often say to emerging managers is being different where it matters, but really not like being as vanilla as you can on the things that don't matter. Mm hmm. Yeah, I'm interested in your point of view on how this plays out. I'm not sure we've talked about it. So of the fund, we want to invest in 80 companies, 8-0 is the target in three years.

24:04A lot of companies, that's fast. Our initial ticket size is 250 ,000 euros, standardized ticket size. We do flex on terms because every company is different, by the way. You know, there isn't like a single thing that should be working. And you really don't want to mess up the cap table journey and dilution journey of companies sort of on a roll in the early days. So 80 companies is a lot of them, right? 250K, cool. So we're not a material owner on the cap table. What does that mean? We're not taking board seats, right? Actually, we can't take board seats because the portfolio is too busy. So no board seats.

24:38Follow-ons. So in our experiences, I've been in sort of VC twice. I also had a stint at a place called the Omidyar Network, which is the family office of Pierre Omidyar, which is my first job out of business school in California. It's where I met the space technology company, Planet Labs, which I joined and it goes on to IPO ultimately. So like following decisions, we have some experience of collectively. And we were like, cool, how do you even do that effectively with a large portfolio? And our conclusion was like, you can't. Right. And we'd been operating for a little while. So we had an existing portfolio.

25:10So we just sort of looked at it and said, what rule would have maximized return on follow-on allocation? And it turns out 50 % increase in last post money to new pre with a real VC leading it would have maximized return. So that becomes our follow-on strategy, right? We're not really thinking about it. It's very automated. We're very transparent. So loads of companies, no governance role, automated follow-on, right? That just raised so many questions. Was that superior to you having just done a bigger ticket in the first round? Great point. So no. And in the kind of experimental things we've been doing before that, our ticket size was 100 or 125.

25:52So we doubled it to increase return. But then you hit this point is like, well, do we want to be a big owner with that? Like we actually shouldn't be. so we're kind of balancing between how much do we own what brawl do we want to have and what makes sense for this company the nice thing about 250k is you actually join you're very collaborative actually it turns out like there's a lot of people in that world that want to work together before and you can you can get into much more interesting things actually with that with that level so it's been an advantage for sure but i wouldn't have necessarily known that right without actually actively trying and seeing what's going on with like one million raises three million raises what ticket sizes make sense.