The world of startups: the Norwegian model
What comes to mind when you think about Norway? The country of the midnight sun, where everyone drinks Akevitt and eats organic salmon while browsing the Internet on Opera software from their vernacular houses amidst magnificent Nordic landscapes.
In the last couple of years, Norway began transforming from being one of the major oil suppliers to one of the leaders in tech and innovation in Europe. With 78 private investments totalling 165 million euros in 2016, Norway gets Palme d’Ore among all Nordic countries in startup ecosystem growth.
Only a couple of years ago – the startup ecosystem in Norway was one of the least developed in the Nordics. Oil industry sneaked all the best talents from the market and made sure they are paid well enough to not to leave for a venture of their own. However, in the last 2 years, the value of Norwegian state-owned oil and gas resources dropped by $50 billion, or nearly by one third. In response to that – the Norwegian government realised that it cannot live on salmon and oil forever and decided to move its focus towards tech innovation.
Government-backed Innovation Norway started to provide various services for start-ups as well as investments, reaching 61.5 MNOK (659 million euros) in pre-seed capital in 2016. Those efforts resulted in 78 investments in 2016 as opposed to only 28 in 2015.
The royal family of Norway also sympathizes with the start-up trend. The Crown Prince Haakon was seen at various tech events, including Slush in Helsinki in 2016. His visit brought some 50 Norwegian startups to the event, introducing them to the Nordic startup community.
“I have been an entrepreneur for 20 years and I have to admit that the conditions for being an entrepreneur in Norway are better than ever before. There are a lot of new startups and incubators, and pretty good government incentives to start a business” – says Bent Skaug, CEO of Domos Labs, an Oslo-based startup that builds AI solutions for wifi networks and in-the-home devices.
Indeed, the government investments into early stage start-ups increased by 160% last year. That is not too far from Sweden with 171% growth. Plus, the amount of capital invested in 2016 increased by 130% compared to 2015. According to the NordicWeb “pre-seed and seed investments below $1 million accounted for 48.57% of the private investments in 2016.” This numbers clearly demonstrate that Norway’s startup scene is at its rise.
“Being a startup in Norway is exciting and surprisingly easy. Many people don’t realise how many opportunities there are, and how much support you can receive from local incubators,” reveals Gautam Chandna, co-founder of TikkTalk, and AirBnb for interpretation services.
“In the recent years, Norwegian startup scene changed dramatically. The new generation of talent came into the startup world as many realised that tech and innovation are the future. I see a lot of passionate young people at StartupLab who really like what they do. They do startups not because they want to be rich, but because they want to change the world.” – Rolf Assev, Startup Lab’s partner.
Yet, there are some issues that still drag the country behind its neighbours. First of all, Norway is missing out on a number of engineers and technical talent. Oil sector still holds a monopoly on nation’s best engineers. For startups that means they have to compete with high capital and low-risk oil companies for new recruits. Guess which one pays more? Plus, Norwegian startups face a lot of difficulties when it comes to regulations. High tax rates, restrictive labour laws, and a small domestic market are the biggest factors that hold the local startup ecosystem from taking the next step.
Although Norway does not have its own “unicorn” yet, it has all the preconditions to create one. Some Norwegian companies such as Fast, Opera and Tandberg have already shown a tremendous financial success. Plus, the country’s tech education is quite strong not just in Oslo, but in other cities as well. Stavanger, Bergen and Trondheim are quite advanced in edtech, life science, and design.
When it comes to capital Norway has both feets on the ground. Having the resources to support innovative ideas and turn them into successful businesses helps a lot. The more success stories there are the bigger the chances of the entire ecosystem to accrete with new companies.