When Peter Carlsson, the ex-CEO of Northvolt, described the company’s collapse as “like pouring diesel on a fire,” it wasn’t just a dramatic analogy, it was an urgent wake-up call for entrepreneurs and startup founders across Europe. As someone who has spent over 20 years building businesses, mentoring startups, and navigating the complexities of climate tech and deeptech sectors, I find Carlsson’s words reflective of a hard truth: rapid growth can easily lead to uncontrolled chaos without sustainable strategies.
Northvolt’s rise and fall, marked by a staggering $9 billion raised and eventual bankruptcy, is a cautionary tale of ambition clashing with reality. As Europe grapples with its role in the global climate transition, it’s crucial for entrepreneurs to take stock of these lessons to avoid lighting similar fires.
Here’s an in-depth analysis, interwoven with actionable steps, essential lessons, and potential pitfalls to help founders build sustainable ventures in today’s fast-evolving landscape.
What Went Wrong with Northvolt? The Key Lessons for Entrepreneurs
1. Overambition: The Double-Edged Sword
Northvolt aimed to corner 15-20% of the global battery market, a bold vision for any startup aiming to compete with titans like CATL or Panasonic. But growth, especially at this scale, requires not just optimism but an intimate understanding of operational risks and financial stamina.
Lesson: While ambition is a cornerstone of entrepreneurship, overshooting your realistic capabilities can be catastrophic. Set short-term achievable goals that align with a sustainable long-term vision. Ambition should fuel, not burn, your enterprise.
2. The Importance of a Resilient Capital Structure
Carlsson pointed to the company’s capital structure as a “fatal problem.” Raising funds is crucial, but relying on inconsistent or short-term investors can destabilize operations.
Action Plan: Cultivate relationships with patient investors who share your long-term goals rather than those eyeing quick exits. Explore diverse means of financing, such as grants, venture debt, or even via government-backed programs like Horizon Europe’s Green Deal Calls.
Avoid This: Rushing into funding rounds to address cash flow issues without a clear, resilient financial roadmap will only postpone your challenges.
3. Scaling Too Fast Without Foundations
Much of Northvolt's downfall stemmed from the aggressive expansion, launching too many projects, including gigafactories, without the resources or expertise to sustain them.
Advice: Think modular. Scale in manageable increments that align with tested market demand and operational ability. Build smaller, iterate, and perfect before going big.
Example Strategy: If you’re in the cleantech sector, start with a pilot program supported by subsidies, test profitability models, and develop partnerships incrementally. Just look at what companies like Climeworks have done in carbon capture: scaling cautiously while earning market trust.
How to Build Resilient Startups: A Guide
1. Define Your Core Capabilities
For startups, focus is everything. Northvolt’s switch from a single gigafactory to a multi-nation strategy diluted their operations and overburdened teams.
Pro Tip: Use tools like a Business Model Canvas. Spend considerable time clarifying your value proposition and how it aligns with your resources. A powerful option to explore is the F/MS Business Model Canvas Tool, which guides you step by step in prioritizing actionable and achievable goals.
2. Balance Innovation with Execution
As a startup founder, it’s tempting to chase the next big innovation. While it’s critical to innovate, even the most brilliant idea will fail if not executed properly.
What Helps: Leverage platforms like Strategyzer AI Business Model Essentials to evaluate whether your operations and market positioning are strong enough to support further innovations.
3. De-risk Through Collaboration
One of the most effective approaches for scaling in any high-capital sector is partnerships. Northvolt’s reliance solely on financial backers left it vulnerable when partners pulled funding.
Actionable Steps:
- Seek collaboration with legacy companies who have the industrial expertise.
- Embrace corporate partnerships and government-backed programs emphasizing innovation and sustainability.
- Platforms like the EU’s Horizon Europe offer grants and networks for startups looking to collaborate with researchers or corporations to build validated, risk-mitigated infrastructure.
Common Mistakes to Avoid
-
Ignoring Honest Feedback
Overconfidence or echo chambers suppress honest feedback from advisors, investors, and stakeholders. Test every hypothesis with data and focus groups. -
Failing to Address Gaps in Talent
Like Northvolt, startups are doomed without the right expertise in scaling operations. Acknowledge gaps in knowledge and hire strategically. -
Overlooking Market Ecosystems
Northvolt’s aggressive expansion took them into markets with unresolved regulatory issues and competitive barriers. Thoroughly map out and evaluate each market in detail.
Opportunities Post-Northvolt: The Digital Pivot
Carlsson’s newest venture, Aris Machina, provides a tangible example of learning from past mistakes. By shifting from heavy industrial operations to a software focus, Aris Machina reduces risk and moves into emerging domains like AI-powered factory management.
For budding entrepreneurs:
- AI is the Future: Master AI tools to optimize your startup processes. Cost-effective adoption can help you deliver better solutions at scale.
- Focus Beyond Hardtech: Consider integrating SaaS or AI solutions even in hardware-centric verticals like cleantech or energy.
Statistics for Thought: Are You Prepared?
- 72% of startups fail due to premature scaling (Startup Genome Report).
- 90% of venture-backed startups fail, with 29% citing running out of cash as the primary cause (CBInsights).
- A survey by McKinsey shows successful climate tech companies spend 50% more time on regulatory preparation than unsuccessful ones.
- 36% of European startups pivot to software or SaaS mid-journey, aligning with Aris Machina’s move to a scalable strategy (European Startup Monitor study, 2023).
Violetta’s Take: Learning from Global Collaboration
As an entrepreneur who’s collaborated with the OECD and led EU-funded initiatives, I believe Northvolt’s story should serve as an inspiration rather than a deterrent. Building green, sustainable projects is critical, but doing so requires more than bold ideas. Robust planning, smart scaling, and honest evaluation are essential.
At Fe/male Switch, we aim to empower women in entrepreneurship, especially in STEM. Practical tools, like our startup simulator, prepare leaders for the challenges Carlsson faced. Learning through “gamepreneurship” can simulate these lessons before you encounter them in real life.
Conclusion
Building a resilient startup in today’s competitive and complex ecosystem is both an art and a science. Northvolt teaches us valuable lessons about navigating ambition, funding, and scale, but it also leaves behind a spark of innovation, showing how even collapsed ventures can give birth to new beginnings. By leveraging data-driven tools, cultivating collaboration, and keeping growth manageable, founders can scale their startups without burning out.
Let’s treat Northvolt’s story not as a failure but as a guide, a compass pointing us toward smarter, sustainable innovation in European startups. If our continent is truly to lead the next wave of climate tech, we must tread boldly, yet cautiously. After all, no one needs another raging fire.
FAQ
1. What caused Northvolt's collapse?
Northvolt's downfall was primarily due to its overambitious goals, such as aiming to capture 15-20% of the global battery market, combined with a fragile capital structure and rapid scaling without sufficient resources. Read more about what went wrong with Northvolt
2. What lessons can entrepreneurs learn from Northvolt?
Founders should focus on manageable scaling, secure resilient financing from patient investors, and align short-term goals with a sustainable long-term vision to avoid similar pitfalls. Check out insights for building resilient startups
3. What was Peter Carlsson's role at Northvolt?
Peter Carlsson co-founded and led Northvolt as CEO from its inception in 2016 until stepping down after the company filed for bankruptcy. Learn about Carlsson’s journey with Northvolt
4. What is Aris Machina, Peter Carlsson's new venture?
Aris Machina, co-founded by Carlsson, focuses on building an operating system for factories using AI-powered solutions, shifting from large industrial operations to digital innovation. Discover Aris Machina’s mission
5. How much funding did Northvolt manage to raise before its collapse?
Northvolt raised an impressive $9 billion in funding but faced severe challenges in managing cash flow and scaling operations, leading to bankruptcy.
6. What key funding mistake did Northvolt make?
The company relied heavily on short-term investors, creating an unstable capital structure and compounding operational risks. Explore lessons on resilient funding structures
7. What strategies can startups adopt to avoid premature scaling?
Startups should focus on modular growth, pilot projects, and aligning scaling decisions with realistic market demand and operational capabilities.
8. How has Peter Carlsson applied his Northvolt lessons to Aris Machina?
Carlsson now emphasizes software solutions and AI-driven efficiency, avoiding the capital-intensive models that contributed to Northvolt's financial difficulties. Learn about Aris Machina’s strategy
9. What role does collaboration play in startup resilience?
Partnerships with established companies, governments, and research institutions can help startups mitigate risks and build sustainable business models.
10. How significant was Northvolt to Europe's climate tech future?
Northvolt represented a pivotal project for Europe’s green transition, aiming to compete with global battery manufacturers. Its collapse highlights challenges for deeptech and climate tech ventures in Europe. Understand Northvolt’s impact on European green energy
About the Author
Violetta Bonenkamp, also known as MeanCEO, is an experienced startup founder with an impressive educational background including an MBA and four other higher education degrees. She has over 20 years of work experience across multiple countries, including 5 years as a solopreneur and serial entrepreneur. Throughout her startup experience she has applied for multiple startup grants at the EU level, in the Netherlands and Malta, and her startups received quite a few of those. She’s been living, studying and working in many countries around the globe and her extensive multicultural experience has influenced her immensely.
Violetta Bonenkamp's expertise in CAD sector, IP protection and blockchain
Violetta Bonenkamp is recognized as a multidisciplinary expert with significant achievements in the CAD sector, intellectual property (IP) protection, and blockchain technology.
CAD Sector:
- Violetta is the CEO and co-founder of CADChain, a deep tech startup focused on developing IP management software specifically for CAD (Computer-Aided Design) data. CADChain addresses the lack of industry standards for CAD data protection and sharing, using innovative technology to secure and manage design data.
- She has led the company since its inception in 2018, overseeing R&D, PR, and business development, and driving the creation of products for platforms such as Autodesk Inventor, Blender, and SolidWorks.
- Her leadership has been instrumental in scaling CADChain from a small team to a significant player in the deeptech space, with a diverse, international team.
IP Protection:
- Violetta has built deep expertise in intellectual property, combining academic training with practical startup experience. She has taken specialized courses in IP from institutions like WIPO and the EU IPO.
- She is known for sharing actionable strategies for startup IP protection, leveraging both legal and technological approaches, and has published guides and content on this topic for the entrepreneurial community.
- Her work at CADChain directly addresses the need for robust IP protection in the engineering and design industries, integrating cybersecurity and compliance measures to safeguard digital assets.
Blockchain:
- Violetta’s entry into the blockchain sector began with the founding of CADChain, which uses blockchain as a core technology for securing and managing CAD data.
- She holds several certifications in blockchain and has participated in major hackathons and policy forums, such as the OECD Global Blockchain Policy Forum.
- Her expertise extends to applying blockchain for IP management, ensuring data integrity, traceability, and secure sharing in the CAD industry.
Violetta is a true multiple specialist who has built expertise in Linguistics, Education, Business Management, Blockchain, Entrepreneurship, Intellectual Property, Game Design, AI, SEO, Digital Marketing, cyber security and zero code automations. Her extensive educational journey includes a Master of Arts in Linguistics and Education, an Advanced Master in Linguistics from Belgium (2006-2007), an MBA from Blekinge Institute of Technology in Sweden (2006-2008), and an Erasmus Mundus joint program European Master of Higher Education from universities in Norway, Finland, and Portugal (2009).
She is the founder of Fe/male Switch, a startup game that encourages women to enter STEM fields, and also leads CADChain, and multiple other projects like the Directory of 1,000 Startup Cities with a proprietary MeanCEO Index that ranks cities for female entrepreneurs. Violetta created the "gamepreneurship" methodology, which forms the scientific basis of her startup game. She also builds a lot of SEO tools for startups. Her achievements include being named one of the top 100 women in Europe by EU Startups in 2022 and being nominated for Impact Person of the year at the Dutch Blockchain Week. She is an author with Sifted and a speaker at different Universities. Recently she published a book on Startup Idea Validation the right way: from zero to first customers and beyond, launched a Directory of 1,500+ websites for startups to list themselves in order to gain traction and build backlinks and is building MELA AI to help local restaurants in Malta get more visibility online.
For the past several years Violetta has been living between the Netherlands and Malta, while also regularly traveling to different destinations around the globe, usually due to her entrepreneurial activities. This has led her to start writing about different locations and amenities from the POV of an entrepreneur. Here’s her recent article about the best hotels in Italy to work from.
About the Publication
Fe/male Switch is an innovative startup platform designed to empower women entrepreneurs through an immersive, game-like experience. Founded in 2020 during the pandemic "without any funding and without any code," this non-profit initiative has evolved into a comprehensive educational tool for aspiring female entrepreneurs.The platform was co-founded by Violetta Shishkina-Bonenkamp, who serves as CEO and one of the lead authors of the Startup News branch.
Mission and Purpose
Fe/male Switch Foundation was created to address the gender gap in the tech and entrepreneurship space. The platform aims to skill-up future female tech leaders and empower them to create resilient and innovative tech startups through what they call "gamepreneurship". By putting players in a virtual startup village where they must survive and thrive, the startup game allows women to test their entrepreneurial abilities without financial risk.
Key Features
The platform offers a unique blend of news, resources,learning, networking, and practical application within a supportive, female-focused environment:
- Skill Lab: Micro-modules covering essential startup skills
- Virtual Startup Building: Create or join startups and tackle real-world challenges
- AI Co-founder (PlayPal): Guides users through the startup process
- SANDBOX: A testing environment for idea validation before launch
- Wellness Integration: Virtual activities to balance work and self-care
- Marketplace: Buy or sell expert sessions and tutorials
Impact and Growth
Since its inception, Fe/male Switch has shown impressive growth:
- 5,000+ female entrepreneurs in the community
- 100+ startup tools built
- 5,000+ pieces of articles and news written
- 1,000 unique business ideas for women created
Partnerships
Fe/male Switch has formed strategic partnerships to enhance its offerings. In January 2022, it teamed up with global website builder Tilda to provide free access to website building tools and mentorship services for Fe/male Switch participants.
Recognition
Fe/male Switch has received media attention for its innovative approach to closing the gender gap in tech entrepreneurship. The platform has been featured in various publications highlighting its unique "play to learn and earn" model.