Norway startup ecosystem is developing at a quick pace and entrepreneurs can find very many resources available to utilize.
But not all entrepreneurs are aware of the resources that are available, nor which is the right resource for them and the difference between them.
In the recent past Sweden and Denmark have been breeding grounds for successful technology startups. But there are other countries in Scandinavia that provide ample opportunities for startups as well – Norway. In this blog we bring you valuable information regarding the country of oil, fjords and expensive foods.
With nearly 5 million inhabitants, Norway startup ecosystem may not seem a sustainable market for consumer-banking businesses.
But Finland and Denmark with 5.3 million and 5.5 million population respectively are going great guns is an apt reminder that Norway can make it happen.
Key Strengths Of: Norwegian Startup Ecosystem
Norwegians were inventors of the object-oriented programming language and the modern GSM technology. Even though not many people would agree regarding the success of early-stage Norwegian startups. Norway holds necessary elements that could help flourish a startup environment.
While Nordic and Baltic startups seem to thrive, Norway doesn’t seem to keep up with its neighbors.
Let’s get straight to the point. We list out factors that portray key strengths of the Norway startup ecosystem.
- Abundant early-phase capital
- Educated workforce
- Ample governmental support
- High digital penetration / digital readiness
- Norway startup ecosystem that’s rapidly evolving
1. Early-Phase Capital Options Aplenty
Norway consistently ranks among the richest nations in terms of GDP per capita.
Major contributors to Norway’s GDP comes from oil and gas. Oil and gas have chipped-in roughly $1.7 trillion to Norway’s GDP. Scores of Norwegians have made a decent living from the oil and gas industry and the service industry that banks on it. Additionally, the fishing and real estate industries have been money spinners too and have attracted fair share of investors.
There is not dearth of funds in Norway with individuals and families ready to pitch-in. Many people are beginning to direct part of their wealth towards startups. Some do it to diversify their investment portfolio, while some others for the excitement the asset creates, and some might have their personal reasons.
Whatever their motivation, the availability of capital for early-phase startups is noteworthy. In addition, there are many accelerators and incubators providing startups with capital, along with mentoring, marketing, and a range of other professional services.
Startups with an above average competent team should be able to raise $100,000–200,000. But onwards above $300,000 could get tricky.
2. Well-Educated Workforce
Norway has an ostensibly educated and productive workforce. Norway ranks 11th among OECD countries with share of the population that have completed tertiary education. May not be the best in the world, but it proves citizens are well educated. As far as productivity goes, Norway ranks 2nd among OECD countries.
Having a skilled workforce is admirable, but that doesn’t help the Norway startup ecosystem if most of the work force are employed for large corporates. This is a stark reminder of the situation during the past few years before the pandemic struck. But there is a shift in the trend with passing out graduates willing to take the risk of working with a startup.
The reasons could be, millennials want to make an impact, and find it more attainable with a startup company. And many people want to make their dreams come true and hope to experience a unicorn-run.
The oil price drop in 2014 and massive layoffs had a positive impact on the Norwegian startup ecosystem. Many talented youngsters went on to found companies or joined startups – which bolstered the Norway startup ecosystem. There is a considerable talent pool in Norway that is making a move towards startups, which should augur well for them.
3. Strong Governmental Support
Norway is preparing for a future ‘after oil what’. Norway and its government is well aware that time would come when there would be little or no oil left to extract and electric vehicles would hit the tarmac in hoards. Norway must then find new pillars for their economy.
To support the development of new economic growth the Norwegian government is investing heavily into the Norway startup ecosystem. Government resources invested in the startup ecosystem spring from “Innovation Norway”, a state-owned body.
During the past decade ‘Innovation Norway’ has contributed 45,000 grants worth $2.89 billion and 8,480 loans worth $3.90 billion.
In addition to investment, ‘Innovation Norway’ offers various services to startups such as guiding, mentoring, consulting, showcase-events and providing courses. Norwegian government is investing money to grow and develop the Norwegian startup ecosystem.
4. High Digital Penetration & Digital Readiness
Norway stands 6th on the International Digital Economy and Society Index (I-DESI Index). This combined index evaluates relevant indicators of EU and non-EU members’ on their digital performance and tracks the progress in digital development.
The I-DESI measures performance via:
1. Digital Connectivity (Norway 3rd)
2. Human Digital Skills (Norway 10th)
3. Use of Internet by the population (Norway 1st)
4. Integration of technology by businesses (Norway 7th)
5. Digital services (Norway 11th)
Norway ranks among countries with the highest digital readiness and digital penetration in the world. Not the best, but still worthy to be considered. This is important as it prepares a verdant birthplace for new technology ventures. Norway is not among the larger markets in the world, in fact, it is paltry.
But it certainly is a nice place for getting off the ground and testing the viability of a new tech company, before pervading into the world.
The “I-DESI Index” does not account for the digital competitiveness of a country. That is, the willingness for the country’s businesses to work with new-fangled technology startups. Norwegian corporates’ and the government is willing to stick out their neck to engage with startups. They are ready to test out new products or solutions, and be the first pilot-client.
Even though these are early days, more corporates are getting involved with startups either as investors, partners, pilot customers, or mentors. Firms like DNB, OBOS, Orkla, Schibsted and Telia, are increasingly playing an active part in the Norway startup ecosystem.
This trend is beneficial for startups as it provides an opportunity to clamber close to potential customers (mostly B2B startups). The startups get to trial their products and test their business model while circumventing red-tapes, which is the case while working with large corporates.
5. Rapidly Evolving Startup Ecosystem
An investor event was held in 2018 at Oslo with Norwegian VC investors, corporate investors, Norwegian angels, and International VC investors showed that not many were aware of the Norwegian startup ecosystem. This was because of the dearth of interesting deals compared to what other Nordic countries (Sweden and Finland) offer.
But a lot has changed in the past couple of years. Sweden gets most of the attention from international VCs, but Norway is beginning to get noticed.
A lot has started to happen as more promising technology startups are emerging from Norway. Spacemaker.ai recently raised a $25 million A-round from Atomico and Northzone. Other examples are Tibber $12 million from Founders Fund, and Kahoot.
Slowly international VCs are becoming interested in the Norway startup ecosystem. Danish byFounders have chosen to focus on Norway and give investor-crowded Sweden a miss. Accel Partners also made their intentions clear when the recently hosted a dinner at Oslo with all those who matter.
Inventure, a Finish fund, is also training their sights into the Norwegian ecosystem, hosting various events and dinners.
Lots of Norwegian VCs have birthed such as SNÖ Ventures, Idekapital, Propagator VC and Momentum Partners. And of course not to forget Alliance Venture and Startup Lab’s Founders Fund, who have been part of the Norway startup ecosystem for years.
The Norwegian startup investment is on the right path, capital invested increased by 60% from H1–2019 to H1–2020 and number of investments by 68% during the same period.
Summing Up: Norway Startup Ecosystem
Norway has the necessary raw materials to build a successful and thriving startup ecosystem. The influence of new investors entering the market is beginning to show. The ecosystem continues to develop and grow, and an increased number of new quality startups are birthed.
The government can begin to crease out bottle-necks such as foreign labor regulations to revitalize the Norwegian startup ecosystem further.
But Norway is still grappling with shortfall of engineers and technical talent as the oil sector still holds clout on the nation’s best engineers. Norway startup ecosystem will have to contend with the harsh realities of regulations such as high tax rates, restrictive labor laws, and a limited domestic market. These factors impede local startups from flourishing.
Some Norwegian companies such as Fast, Opera and Tandberg have gained financial success. Norway’s education system is advanced in tech, life science, edtech and design not only in Oslo, but in Stavanger, Bergen and Trondheim.
Having necessary resources to support innovative ideas and turn them into successful businesses counts. Success stories will provide ample encouragement for the entire ecosystem and create new companies.
