Economic Sustainability refers to the principle that an investment, a business or the economy overall supports long-term growth and stability without depleting the natural, social, or financial resources that created it in the first place. It involves creating value in a way that is resilient to economic shocks, changing political environments and scarce resources. It denotes business models and practices that are mindful of future generations.

By emphasising efficient use of capital and materials economically sustainable businesses generate lasting prosperity. In practice, this means that some businesses, or technologies, will not be investible, as they may be based on government subsidies, scarce materials, unsustainable capital expenditures or other factors that makes them unalignable with economic sustainability principles. While there are no green premiums, impact on emissions is a key driver for our funds, as long as there is potential for capital efficiency.

Successfully managing years of hypergrowth is incredibly complex. But when you add in the capital intensity required to introduce a first of its kind solution into a market that can disrupt conventional industries and establish new value chains - then you are faced with an exponential complexity called Hypertransformation. This is what most pioneering deeptech and green industrial technology companies have to consistently navigate to survive as they go from having their first stabile product offering to becoming global leaders.

The four complexities of Hypertransformation:

• Value Chain Disruption - The traditional idea of disruption is a process where a smaller company with fewer resources successfully challenges incumbent businesses. Disruption also often means the arrival of new technologies that bring new business models, pressuring established corporates. From a Nordic Alpha perspective, value chain disruption occurs when one can jump several links in the chain. When a new technology takes a new position in the chain, its business model often has to become a more results-based offering, which adds complexity.
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• Technology Transformation - When working with a completely new kind of technology, new barriers of entry have to be dealt with. There is also much more emphasis on specific capabilities within a team, technological expertise as well as technology innovation cycles, technology readiness level. The fact that hardtech businesses will have to go through numerous iterations as they scale from first generation technology platforms to large utility grade tech with industrial scale is complex in itself.
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• Managing Hypergrowth - Hypergrowth is defined by the World Economic Forum as a compound annual growth rate of over 40%. In the world of hardtech, managing this level of growth comes with a number of complexities including the fact that companies have to grow staff to match the increased order rate and fulfilment requirements. Managers have to front-load investments to not get caught in an underfunded growth scenario.

• Intense Capital Expenditure - With hardware offerings, the amount of capital required to sustain growth, fulfil orders and grow staff is exponentially higher than with software offerings for example. The front-loading of growth investments and the level of capital tie-downs mean that the capex levels are much higher in hardtech. 

These four factors each carry their own complexities. However, it becomes an entirely new dynamic when they are present simultaneously. The combination of hypergrowth, value chain disruption, technology transformation and the fact that the solution is hardware-based works to create an immense level of complexity. We have identified this as Hypertransformation. The advantage is that knowing how to navigate it creates several advantages that can be used to accelerate growth, challenge key players, and reach a unique and dominant market position.

It represents the greatest investment opportunity in history, with BloombergNEF estimating that USD 215 trillion will be fuelled into new green technologies, energy, logistics and optimised production infrastructures.

Nordic Alpha is at the forefront of reindustrialisation, ready to support the advanced technologies that can support manufacturing, energy production, agriculture and many other industries. We see the push for reindustrialisation not as a challenge but as a massive opportunity that can be harnessed with the right toolkit.