Norway isn’t usually the first place on anyone’s list of European tech centers. Even in the Nordics it usually falls behind Finland and neighbor Sweden, whose band of hip, new unicorns have made it Scandinavia’s go-to startup hub.
That’s partly because Norway’s scene has traditionally been fixed on B2B business. The large country, of a little over five million people, is Europe’s largest producer of oil by far and the lion’s share of technology has been developed for the industry. Little surprise when it commands 21.5% of Norway’s GDP.
That hasn’t completely changed. But the past few years have seen a significant slump in oil prices, from a high of $109.45 per barrel in 2012, to just $29.96 today. In Norway it has coincided with the country’s leanest drilling period in a decade.
Oil production is half what it was in 2000, and 12,000 – or 10% – of the industry’s workforce – has been laid off. That has “forced people to do other things,” Rolf Assev, of Oslo incubator/accelerator StartupLab, told Red Herring. It’s one of several networks that have appeared in recent years to cater for a growing, and diverse, tech ecosystem.
“We’ve seen a tremendous growth in the quality of people starting startups here,” he said. “Ten years ago most innovation in Norway was done by ten people sitting in an R&D office. Now (corporates) have realized they have to acquire, learn and hire from startups, which is very positive.” Assev turns down nine of every 10 applicants to StartupLab, which now has 65 residents.
Assev formerly worked at Opera Software, maker of the Opera browser that came within a sniff of becoming the Mozilla or Explorer of its time. The company still employs over a thousand staff from its headquarters in Oslo. But a new generation of firms is stealing the limelight.
One such is Viva Labs, whose smart products read a user’s daily habits and confer them to the home. It most recently won a $435,000 seed round from StartupLab and Investinor, a $588 million fund established by the Norwegian government. Co-founder Henrik Holen told me that the country’s investors are “still quite risk-averse,” and that late-stage injections are easier to come by than early.
But, he added, there has been a definite shift from B2B to B2C. “There are a lot of very interesting up-and-coming B2C companies in Norway, so I think we’ll see some more global action there soon.”
Other firms that have excited the media recently include electric vehicle-sharing platform Meshcrafts, social media company Socius and nLink, whose range of robotics has sprung out of the oil industry. The widely-used media aggregator Meltwater also had its foundation in Norway.
But Meltwater, like an increasing number of local firms, did not have its inception in Oslo. And Norway, thanks to the oil industry’s concentration in the north of the country, and a push to diversify industry beyond one location, has a thriving tech sector across its major cities. Trondheim and Stavanger, both oil strongholds, have nurtured promising companies in recent years.
One example – which includes Meltwater- is the media tech sector growing up in Bergen, Norway’s second-largest city with a population of a quarter of a million (Oslo is home to a shade under a million). It has emerged in part thanks to its hosting TV2, Norway’s largest commercial television network. It has spun out several successful companies in the past few years including Eks, StormGeo, Vizrt and Vimond Media Solutions.
At the heart of this ecosystem will be Media City Bergen (MCB), a 45,000sq m workplace for 1,2000 people ready by September 2017. CEO Anne Jacobsen says that with a member base of 80 firms, including state-backed Innovation Norway, “we have only seen the start of (Bergen’s tech scene).” 80% of MCB’s members launched innovations or new products last year, while membership itself has doubled. “Our goal is to be a leading international environment for innovation and knowledge within the field of media technology,” Jacobsen added.
Over-reliance on the capital may not be an issue but raising capital itself, whether through funding or tax breaks, is a challenge, according to Yvonne Edseth of Startup Norway, an umbrella organization for several Norwegian networks. She sees great promise in the growing pace of interest in startups – the country’s Financial Times now has a section dedicated to entrepreneurship and television media has just begun a buzz around startups. “We see that more and more people want to become entrepreneurs,” she says. “It’s sexy.”
Norway’s robust welfare system may have held back risk previously, Edseth added, though that is changing. She says, “Also, people are thinking big. People dare to say, we’re going to be the best in the industry. We see this mindset changing and it’s a slow process.
“But people are starting to think differently.”
Norway’s high cost of living could be something to put off potential expatriates, it has been suggested. Rents in Oslo are 0.19% higher than New York, and 57% higher than Berlin, another of Europe’s tech epicenters. Tor Grønsund, a speaker and blogger, says this is where the welfare state comes into play. “It’s easier to start and fail here than elsewhere,” he told me. “We should embrace the idea of Norway being a safe place to launch a startup. Of course it’s expensive, but if your child gets sick you still have free access to hospitals.”
Medtech, as well as media tech, has flourished in Norway, Edseth said. Education technology is another realm with low comparable costs and high skill, that has been aided by the country’s strong higher education. But funding is still a problem. “Norway is the country in the Nordics that gets the least amount of investment – especially from Norwegian VCs,” she said. “They don’t necessarily have the experience or connections you need, and we don’t have a strong angel network. We don’t have that system of role models like they do in, say, Sweden.”
Whether the government should invest more in tech, given its renowned sovereign wealth – its Government Pension Fund Global is worth a world-topping $882 billion – is a matter for deep discussion among entrepreneurs and politicians alike. Grønsund admitted that it’s “an interesting discussion. People evangelizing entrepreneurship have always been of the opinion that the government should invest more. But of course this is a bigger picture about how to manage wealth.
“These days we need to deal with it,” he added. “We haven’t been quite so good at showcasing deals compared to some other nations.”
Exits, however, will likely increase the interest in tech investment. This February, local broadcasting giant Telenor Group paid $360 million for 95% of marketing technology company Tapad, founded in New York by a Norwegian. There have been other acquisitions in Norway of late, but the exit represents the country’s most visible, which should encourage more VCs and bureaucrats to part with their cash.
Once that occurs en masse, Norway might just move itself away from oil for good. It wouldn’t be a bad thing either. “The whole of Norway has had its eyes opened by the current crisis, no doubt about that,” Edseth said. “We can’t save oil forever.”