Originally published in Svenska Dagbladet by Björn Jeffery, July 5, 2025

With projects like Northvolt and Stegra, Harald Mix and his company Vargas have come under fire. The reason is a new kind of venture capital model — where the public’s contribution is high, but Vargas’s own is low.

With companies like EQT and Nordic Capital, venture capital has almost become a signature strength for Sweden.

In theory, the model is deceptively simple. Buy a company cheaply, improve all the numbers — then sell, or list it on the stock market, at a high price. In practice it is somewhat more complicated.

SvD’s investigation of Harald Mix shows how many companies, pension funds and communities around his investment in Northvolt have been affected.

But Mix himself has escaped the worst of the blow. The reason is a new kind of venture capital model that his investment company Vargas has created.

Vargas calls itself an “impact company builder” — a creator of companies. That is unusual in these circles. Normally this category of company deals with financing businesses that already exist but are facing major expansion or change. Vargas starts earlier than that.

The list of company names where they are involved is well known: Northvolt, Stegra, Aira, Syre and Polarium. They have much in common. All involve green industry in various ways — a sector that has had strong tailwinds in recent years.

That factor is central. Because while Vargas is involved in starting companies, they are not alone in financing them. On the contrary. A long list of pension funds, banks and export credit agencies participate in various forms of financing. The Swedish National Debt Office issued a so-called “green credit guarantee” to Stegra in December 2023. This covers 80 percent of a loan of around 13 billion kronor that Stegra has taken. For Northvolt, the AP funds joined together and created a new company just to be able to invest.

Proximity to abundant renewable and comparatively cheap electricity is a recurring theme. When Harald Mix appeared on Ekot’s Saturday interview in November 2023, he pressed hard on the fact that Stegra — then known as H2 Green Steel — would enjoy major competitive advantages over similar projects in Europe, largely because of lower electricity prices.

Scale is another similarity. When the textile recycler Syre was launched, the plan was to build twelve factories within eight years — several of them simultaneously. This resembles the same method that Northvolt used, and which has been heavily criticised. Before the factory Northvolt Ett in Skellefteå was working properly, massive projects had been launched in, among other places, Heide in northern Germany and in Quebec, Canada.

The purpose of scaling up quickly is straightforward. If it works, you increase the company’s value substantially. A company with twelve factories is worth more than one with a single one — even if all twelve factories have not been built, or even started. If it does not work, however, the crash is all the more spectacular, as in the case of Northvolt.

Overall, these are large, green and ambitious ideas, which are readily co-financed with a broad palette of public stakeholders. Loans can be secured with credit guarantees of various kinds, and customer agreements for products are used as the basis for new investments — even if the products in question do not necessarily exist yet.

In these kinds of contexts one usually talks about “risk/reward” — that is, what risk an investor is willing to take in relation to the return a bet can yield. The theory says they should balance each other reasonably well: high risk can yield high return, and vice versa.

When it comes to Vargas’s companies, one can clearly see what the “reward” could be, but the risk seems more modest. The reason is the structure Vargas works with. It gives a great deal in return for the money invested. You rarely get more shares than when you are involved in founding a company.

In the case of Northvolt, Harald Mix had invested around 175 million kronor via Vargas and his personal holding company Kallskär. That may sound like a lot of money. But it is only around 0.18 percent of the roughly 100 billion kronor that Northvolt secured in financing in various ways. For that, Vargas became the company’s third-largest shareholder.

Compare that with the eighth-largest shareholder on the list — the four joint AP funds. They owned only half as many shares as Vargas, but had invested a full 5.8 billion kronor — fully 33 times more.

That it becomes more expensive to invest at later stages in companies is standard. The premium you pay should be balanced by the fact that the risk to the overall project is lower. Vargas’s model of quickly scaling up, however, reduces that gap — and in the case of Northvolt, the risk was hardly lower.

Vargas lost a great deal of money in Northvolt’s bankruptcy. The AP funds, and ultimately Sweden’s pensioners, lost enormously more.

It is beginning to resemble a new type of venture capital model — one where Vargas can win big, but its potential loss stays relatively small.

But as the bankruptcy of Northvolt shows, that equation does not hold for all participants. And when the co-financiers are our shared pension money, Vargas’s model tastes particularly bitter.