The Reverse VC: How Carl-Erik Lagercrantz and Vargas Holding Built a $12 Billion Climate Tech Startup

Reverse VC

New climate tech startups are notoriously risky and capital-intensive. So, early-stage VCs usually invest a little seed capital in a lot of startups. But what if someone were to reverse the Silicon Valley model of climate tech investing? What if they de-risked climate tech by investing a ton of money upfront into one startup with proven technology, large-scale production plans, and a ready customer? 

Carl-Erik Lagercrantz, CEO of Vargas Holding, joined the SOSV Climate Tech Summit (Oct. 25-26) to discuss why he reversed the conventional VC model. He was interviewed by Sophie Purdom, angel investor and co-founder of Climate Tech VC , a newsletter with 35,000+ subscribers on climate and innovation. Tune into their discussion below.

At first glance, Carl-Erik doesn’t sound like a climate tech investor. He spent more than 20 years in the IT and telecom segments with executive roles at Utfors, Telenor, and British Telecom Nordics. Then in 2014, he and Harald Mix co-founded Vargas Holding “To push boundaries for a sustainable future.”  

Now, Vargas Holding has perhaps the most unusual portfolio of any climate tech fund. It is composed of two unicorns, Northvolt and Polarium, along with H2 Green Steel, which is closing in on a $1+ billion valuation. All three were born and raised at Vargas, all three are based in Sweden, all three are making big commercial deals, and all three count Carl-Erik as chairman or vice chairman. 

Northvolt, founded in 2016 by a pair of former Tesla executives, is the juggernaut of Vargas. It has brought battery manufacturing to Europe, where there’s high demand from automakers. The company has raised $8 billion in equity and debt financing at a valuation of $12 billion, the highest of any climate tech unicorn, with investors including Volkswagen, BMW, Goldman Sachs Group, and Spotify co-founder Daniel Ek. Having secured orders worth $55 billion, Northvolt could become a battery giant on the scale of China’s CATL, Japan’s Panasonic, and LG Chem from South Korea.

Polarium, also a unicorn, provides Li-ion energy-storage solutions for telecoms, industrial companies, and commercial users like hotels and hospitals. Founded in 2015, the company has made over 350,000 installations in more than 70 countries and has raised approximately $140 million. 

Lastly, H2 Green Steel has raised $295 million to decarbonize the steel industry, which accounts for 9% of annual CO2 emissions. At its plant under development in Boden, Sweden, H2 will produce green hydrogen with a renewable-powered electrolyzer and then use that hydrogen to smelt steel. The company says that 60% of its initial production volumes are pre-sold to buyers including BMW and Mercedes-Benz. 

So far, Vargas Holding is three for three creating startups that use proven technology to reduce emissions. What other climate tech categories are ripe for this approach to commercialization? And have we been underestimating the potential of existing technologies to mitigate climate change? 

Learn more about the Summit.

The Speakers


Carl-Erik Lagercrantz photo

Carl-Erik Lagercrantz

Carl-Erik Lagercrantz is the CEO of Vargas, a Swedish impact company builder enabling the transition to a green economy, one industry at a time. By pushing boundaries, they target hard-to-abate industries to accelerate decarbonisation. Carl-Erik has over 20 years’ experience in the IT and telco segments with leading roles at, among others, Utfors, Telenor, and British Telecom Nordics. He is the chairman of Northvolt and Polarium and vice-chairman of H2 Green Steel.


Sophie Purdom photo

Sophie Purdom

Sophie Purdom invests in and supports early-stage climate technology founders and their companies. She also writes Climate Tech VC, a newsletter with 35,000+ subscribers on climate and innovation. Prior, Sophie practiced sustainable business; first launching an ESG fund at a major endowment, followed by a few years making decks at Bain & Co., published a book on Sustainable Investing along the way, and helped found an agricultural technology venture which has raised +$65m.