This analysis was first published in SvD Näringsliv, in Swedish, on February 13th, 2023. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.
SvD’s podcast Dynastin reveals that Cristina Stenbeck has left the country and no one else in the family is stepping in. Björn Jeffery sees an investment company that looks to be having an identity crisis.
Few expressions bear the unmistakable stamp of tech companies quite like “transformation” and “disruption.”
It sounded familiar, then, when listening to Georgi Ganev, CEO of Kinnevik, present the company’s latest quarterly results in early February.
“We have completed the fifth year of our transformation,” he said.
It has certainly been a transformation. The part Kinnevik calls its “growth portfolio” now accounts for over 70 percent of its holdings — compared to around 10 percent in 2017.
Calling something a “growth portfolio” is symptomatic in itself.
Around 2017, growth was exactly what the tech market demanded. Kinnevik made a series of investments in unprofitable but fast-growing and successful private companies. Familiar names like Pleo, Mathem, and Vivino entered the portfolio.
That changed quickly in 2022. Being unprofitable and fast-growing is no longer as acceptable as it once was.
Now profitability is what’s valued. And when fewer investments are being made, you have to value your companies by comparison with listed peers — which has become difficult, as many of them have crashed. The holdings that formed the foundation of Kinnevik’s transformation have become something of a burden.
“Applying more mature, publicly listed valuation levels to our young, fast-growing private portfolio requires a lot of thought and deliberation,” explained Kinnevik’s CFO Samuel Sjöström.
That deliberation could extend further than how to value the companies. It could also include the question of why those companies are in the portfolio at all. That’s arguably the more important question Kinnevik needs to answer — to both existing and prospective shareholders.
What kind of company do they actually want to be? What is it they’re supposed to be transforming into?
Historically, Kinnevik was strongly owner-driven by the Stenbeck family. The late Jan Stenbeck was a provocateur and entrepreneur who launched telecom and media companies at the edge of what was both legal and possible. That’s how both commercial television and commercial mobile telephony were introduced in Sweden. Taking big risks grounded in technological development has long been part of Kinnevik’s DNA.
The foundation of the business at that time was Korsnäs — the forestry company that merged with Billerud in 2012. It delivered stable, reliable cash flows that Kinnevik could deploy into new investments.
In one sense, Kinnevik’s transformation began the year after, in 2013, when the Billerud Korsnäs shares were sold by then-CEO Mia Brunell Livfors and chairwoman Cristina Stenbeck — one of Jan’s daughters. It looked like the start of something new: a rejuvenation of the investment company. The collaboration with Rocket Internet had begun four years earlier, alongside the enormously successful investments in e-commerce giant Zalando.
It was a reinvention of the company — swapping out large legacy holdings, with a third generation appearing to launch a third era for the family business.
But since then, the Stenbeck family has increasingly stepped away from operational involvement. SvD’s acclaimed podcast series Dynastin revealed that Cristina Stenbeck no longer sits on either the board or the nomination committee of Kinnevik. She has also left the country, now living in London with numerous personal investments outside of Kinnevik.
It’s an unusual model for a major owner — especially in this context. It’s almost unthinkable that the Wallenberg family would not be actively involved in Investor. That the Stenbeck family would not hold positions of trust in Kinnevik would, historically, have been equally inconceivable. But here we are.
A strong brand, but without a clear steer from the ownership level. The associations still exist, though — and they’re used in the marketing. The founding families are often referenced approvingly, for example.
Looking back one year, the share price has fallen over 36 percent. Before that, Kinnevik had distributed the successful Zalando to shareholders with near-perfect timing. That was both elegant and profitable. But the question now is where the growth to replace Zalando is supposed to come from.
Looking at the listed holdings, there’s no obvious successor to the throne.
Healthcare company Babylon Health has lost over 90 percent in the past year. Telemedicine provider Teladoc is down 60 percent. Global Fashion Group — one of the few remaining companies with a connection to former partner Rocket Internet — has also shed over 66 percent. Tele2 stands stable, but it’s alone in that regard. And that investment was made in 1993.
Former Kinnevik companies included Metro, MTG, Billerud Korsnäs, and Millicom. Who can name the equivalent companies in the portfolio today?
The center of gravity has shifted away from listed companies toward unlisted investments, with fewer connections to companies that originated within their own orbit. With the exception of Tele2, which steadily generates dividends, Kinnevik today looks more like a venture capital firm than a traditional investment company.
It’s management-driven and focused on four very different investment areas: software, health, climate, and platforms and marketplaces. These are all areas that are on trend, but they have very little to do with each other. Becoming a good investor in one of those areas is a challenge. Succeeding in all four simultaneously will be difficult.
The venture capital model is about financing companies that, through speed, innovation, and decisive action, manage to challenge the establishment. Traditional players have experience and brand recognition but are often seen as struggling to adapt to new times. It can be hard to let go of the past, and the old culture can cling to the walls.
After talking around with various players in the Swedish investment ecosystem, the question arises whether Kinnevik itself has become stuck in the traditional. A picture emerges of a top-down company that negotiates hard and is still run like a traditional corporate entity where the CEO and CFO call the shots.
That stands in contrast to the venture capital world, with its partner structures and its increasingly vocal positioning on the entrepreneur’s side. Whether that positioning reflects reality varies of course, but founders’ experience is that there’s a big difference between talking to investors and talking to large companies. Kinnevik seems to fall somewhere in between.
Investing in high-risk, technology-based companies is a proven method — for Kinnevik as much as for anyone. The tech boom of the past decade has generated billions in returns for both entrepreneurs and investors with this thesis. But with the air now out of the tech market, the heavy exposure to this sector is becoming increasingly awkward.
And unlike the many competing venture capital firms, Kinnevik must continuously explain and justify to the stock market how it’s thinking and why returns may be delayed. There are reasons why you rarely find this type of operation in a listed environment. Perhaps the stock market has itself become a burden for Kinnevik?
Answering that question requires going back to the fundamental one — what kind of company do they want to be? From the outside, the mix of investments spanning everything from fossil-free steel to e-commerce, digital healthcare, fintech, and food delivery looks scattered and a little unfocused. There may be a strategy that isn’t visible to an outsider. But it resembles a company going through an identity crisis.
Historically, the answer would have been found on the inside. Jan Stenbeck was an unusual, polarizing, and highly successful businessman. But no one seems to describe him as unclear. The vacuum after him was filled by Cristina Stenbeck and a transformation of the investment company began.
With the Stenbeck family now having stepped back from positions of power, something seems to be missing: a crystal-clear direction and identity. And without the presence of the major owners, that will be hard for anyone else to supply.
Kinnevik’s board
James Anderson, chairman — British, formerly a partner at fund manager Baillie Gifford, which is Kinnevik’s largest shareholder by capital at 11 percent. Susanna Campbell, board member — board professional and former CEO of investment company Ratos, which also co-owns companies with Cristina Stenbeck. Harald Mix, board member — founder and CEO of private equity firm Altor, and chairman of H2GS where Cristina Stenbeck has invested. Charlotte Strömberg, board member — board professional and former CEO of real estate advisor Jones Lang LaSalle. Cecilia Qvist, board member — head of Lego Ventures, the venture capital firm controlled by the owning family behind the Lego group. All board members are described as “independent in relation to the company’s major shareholders.” CEO: Georgi Ganev — previously CEO of Dustin and Bredbandsbolaget.
Kinnevik’s largest shareholders by votes
1. Verdere (Cristina Stenbeck): 19.1% — 2. Alces Maximus (Sophie and Hugo Stenbeck): 11.6% — 3. CMS Sapere Aude Trust (Cristina Stenbeck): 6.6% — 4. Baillie Gifford & Co (British fund company): 5.5%
