Classification society DNV GL is breaking into the venture capital arena with the launch of a fund to provide seed capital for maritime and energy start-ups.

Over the next four years, DNV GL Ventures plans to take stakes of up to 20% in 15 to 20 outfits that are tackling digitalisation and decarbonisation.

In its own version of the reality TV show Dragons’ Den — familiar to US viewers as Shark Tank — in which entrepreneurs pitch business ideas to a panel of venture capitalists to try to secure investment, DNV GL Ventures is inviting start-ups to send in 90-second video clips outlining their ideas.

Kaare Helle, who has worked on digitalisation and innovation at DNV GL for five years, is heading the outfit as venture director.

He and two colleagues plan to review the video pitches and respond to applicants within 15 working days.

DNV GL Ventures

Launch date: 2 March, 2020

Venture director: Kaare Helle

Seeking: 15 to 20 start-ups

Investment range: NOK 5m to NOK 20m, or up to 20% of a company

Target: Investment in two to three companies in 2020

Helle has made a conscious decision not to put a figure on the funds at his disposal, as he believes this can be a distraction.

But he said that a typical investment might be between NOK 5m and NOK 20m ($535,000 to $2.14m).

Market fit

This reflects the valuations of the start-ups that DNV GL Ventures is looking for; companies that have “traction” and are “getting mature”.

“It is not a two-man band in a garage somewhere in downtown London," Helle said. “We are looking for companies that have found market fit.

"They have found a real problem, have a good solution for that problem and managed to acquire customers that can validate that they are on to the right thing.”

DNV GL Ventures, which will be bolstered by the group’s finance and legal teams, has a mission to invest in two to three start-ups in 2020.

We are looking for companies that have found market fit. .. It is not a two-man band in a garage somewhere in downtown London.

Kaare Helle

But he is open-minded about the speed of bringing these in, explaining that a typical venture capitalist screens and evaluates 100 cases for every investment, and "I’m going to say no 99 times out of 100.”

Helle, a mechanical engineer who has previously worked on decarbonisation in power and renewables, said the challenge for start-ups is that half of them fail as they cannot get key customers who are willing to pay for their ideas.

By coming when companies are at a more advanced stage in their development or — continuing the Dragons' Den analogy — the stage at which all the dragons want to invest, DNV GL Ventures hopes to reduce the risk of start-up failure.

Deep expertise

But, critically, Helle said: “It is what we bring, in the addition to just capital”, flagging up the company’s ability to plug the ventures into its "deep expertise" in the maritime and energy sectors.

Klas Bendrik Photo: Volvo

"People get creative when there is a need for change," he said. "We predict change for maritime and the energy supply of the world. It is going to create a tremendous shift."

Klas Bendrik, who chairs DNV GL Ventures' investment board and is chief digital transformation officer for the wider group, said the creation of the new business arm is a response to the challenges of the energy transition and the so-called fourth industrial revolution.

Bendrik said "business as usual" is not an option for companies.

“The launch of DNV GL Ventures is an acknowledgment that even a company of experts like ours must look beyond its own four walls to stay relevant,” he said.

Helle has no fixed idea as to how its funds will be allocated, but said it would not be unnatural if maritime were to take a large share, as it accounts for 40% of DNV GL's revenue.

The class society has already dipped its toe in the venture pool, buying a 3% stake in blockchain technology firm VeChain, a holding that will go under the new outfit’s umbrella.

Helle has heard plenty of grand proposals about expected profits in his former role as innovation manager, but at this stage of the new venture, he and his team want to hear about a problem that is being solved. "We can look at making the business case further down the line."

DNV GL Ventures has opened a landing page for proposals on its website, and Helle has blocked off this week to be available to respond.

He conceded DNV GL is casting the net wide with its invitation to pitch ideas. “If I get 2,000 videos on Tuesday, I have done something horribly wrong,” he said. “But I need to get a deal flow running, and this is one way of doing it.”

The Shark Tank team Photo: CNBC