Shopping for cleantech at Ikea

Sweden's Ikea may need to super-size its shopping carts. The furniture retailer unveiled an investment group today to put €50 million into cleantech startups over the next five years, with the eventual goal of seeing solar panels and other clean technologies on sale in its stores or used by Ikea suppliers.

Ikea GreenTech plans to focus on five areas — solar panels, alternative light sources, product materials, energy efficiency, and water saving and purification. The group said the investments will be made in companies that offer commercial prospects within a four to five year horizon.

"We're already talking to companies," Johan Stenebo, managing director of Ikea GreenTech, told the Cleantech Group. He said Ikea is likely to make its first investments this year. "That's certainly our aim to make happen."

Stenebo said the cleantech products will follow the same guidelines as the company's other products.

"Really low prices, and they should be of very good quality. That's the only thing we look at, we would never look at anything else, we would discard anything else that doesn't fall into those boundaries," he said. "Whether it's home furnishings or it's greentech products."

Over the next two years, Ikea plans to work with five or six companies, with a target of bringing the first products to market within three to four years, helping the startups reduce their prices and develop better products.

Ikea expects to invest in five to 10 companies overall, keeping the portfolio relatively small so it spend a lot of time with the startups.

"We will be very active on the boards of these companies," he said. "I think we can contribute somewhat in terms of commercializing the product they are developing, and then, obviously, distributing the product as well."

Ikea certainly knows distribution. It has about 270 stores in 35 countries, and half a billion customers per year. The company designs its own furniture, creating the concept of flat packing its products to cut down on transportation costs, and works with 1,300 suppliers in more than 50 countries.

Ikea started operating in Sweden in 1943 and has 118,000 employees, but Ikea GreenTech, located in Lund, in southern Sweden, was only formed about eight months ago and currently has four people on staff.

"Within one or two years I think we'll be between eight and 10," said Stenebo.

In addition to selling housewares, Ikea also sells houses, and there could be an opportunity to integrate the clean technologies in houses from the ground up.

Last year, Ikea introduced its pre-fab homes in the U.K. (see Free pencil and tape measure with every house). The homes are aimed at first time, low income buyers, and are sold along with a plot of land.

Ikea's pre-fabs were started in Sweden in the 1990s. The U.K. houses have already been designed to be ecologically friendly, using renewable materials in the construction, and solar and geothermal for power and heat.

But the startups will need to make it to market before they can make it to pre-fab. "Our first focus is what we sell in the stores and what our customers need," said Stenebo.

Different products could show up in different stores, depending on where a store is located. "It's quite natural that, for instance, solar panels are more interesting to Spaniards and Californians and so forth than they would be to Swedes."

In terms of the geography of the startups that Ikea plans to invest in, the company could start off close to home.

"Initially, we will be looking more in Europe than anywhere else, but we do not have any geographical restrictions for our investments."

Ikea will be looking at firms in the development stage and later. There are no specific plans for funding beyond the €50 million investment at this stage, but Stenebo said it will be an evergreen fund.

"Once a company is up and running in five or seven years or something like that, and if we exit from that company, the money that we've earned in that investment will stay within the Ikea GreenTech fund."

Start measuring now for your Skär solar panels, Hörup LEDs, and Alsvik water purification system.