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From oil crash to tech startup boom in Norway

For countries highly dependent on oil, the global price crash had huge potential ramifications – one of which, in Norway, was the development of a thriving technology sector

Crisis has bred opportunity for Norway over the past decade. After global economic and oil slumps threatened the Nordic country’s most traditional industries, a burgeoning digital startup ecosystem has developed, offering more than just a silver lining.

Although not a direct consequence of those crises, Norway’s tech startup scene was accelerated by them, especially the international oil crisis, which saw a sector on which the country had depended for so many years come under new and unfamiliar pressures.

However, far from causing Norway to fold under the pressure, the oil crisis served as a positive link between the country’s former industrial landscape and its current tech-driven agility, according to Trond Riiber Knudsen, founder and CEO of Oslo-based advisory and investment firm TRK Group AS.

“It is important to note that Norway didn’t necessarily experience a dramatic crash – rather, we observed pockets of regional downturn,” he said. “Interestingly, what I noticed most of all at the peak of the oil downturn was the fact that the first wave of innovation following the crash was focused on creating digital tools to support the existing oil and gas industry.

“The downturn in traditional jobs in that industry led to rapid digital development in the field, rather than a radical migration from the oil industry.”

An influx of digital efficiency tools, big data optimisation and machine learning technologies took place, and from that oil-centred genesis, those same digital aids began to branch out into other areas of the Norwegian economy.

Knudsen added: “It was after this that startups began to diversify, with fresh waves of graduates looking to create innovative and exciting technologies. The success of these new companies inspired young people to embrace an entrepreneurial spirit, and Norway’s social security system means that fear of failure does not exist. I now meet with up to 850 new startups a year, which is truly inspiring.”

TRK Group currently supports about 55 startups as an indication of this still-evolving ecosystem. The business can witness first-hand how core engineering principles continue to transition away from their traditional oil industry uses – and venture capital firm SNÖ Ventures has also played an active role in this trend.

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The company’s founding partner, Teodor Bjerrang, said: “I agree that it was a combination and connection of factors that led to Norway’s diversification away from oil to this startup-driven culture. Initially, innovative companies were trying to help the oil industry, then people in the oil sector saw opportunities to move away from it, then youngsters in schools were encouraged to target startups instead of oil as future career goals, and finally investors like us were more attracted to a growing startup community and scene.”

Eventually, the oil sector itself began to feel the effects of people looking elsewhere – not just directly, but also via business service lines on the periphery of the sector channelling their expertise and funding to new and exciting frontiers.

“It has all come together to have a huge impact on the startup ecosystem,” said Bjerrang. “In the last three years alone, we have seen markets like fintech [financial technology] and edtech [education technology] boom, of course, but with that has come huge increases in co-working spaces and incubators, and all the infrastructure on the edges that make a startup community work.”

Inevitably, the main influence behind this transition has been people – those who were either involved in the oil sector and saw an opportunity to break away, or those who were yet to begin their career, but now have a more exciting, varied and often socially impactful area of business to aim for.

The engineering expertise has remained the same, only the application of it has been altered. Oceantech, or digital marine technology, was one obvious source of startup ideas. And even finance, education and the public sector offered startup potential for skilled talent seeking a route out of the oil industry.

Pastures new

But perhaps most importantly, talented individuals looking for pastures new were all inspired by the way Norway had weathered the economic and industry storms.

“It signalled the fact that innovating in the face of adversity or change should not be shied away from, but embraced,” said Knudsen. “In Norway, we are fortunate to be able to encourage innovation, and a shift has now occurred whereby larger companies are looking to startups to learn how to innovate.

“This has helped to bridge the gap between Norway’s longstanding institutions and the newer generation of startup companies. By sharing learnings, Norway is adapting, and is well equipped to face similar challenges in the future.”

Knut Dyremyhr, CEO at Dymax Invest AS, an investment firm with a front-row seat to Norway’s evolving business landscape, said: “I think the general shift towards a greener world has had an impact on the younger Norwegian crowd. It has made Oslo and Norway a much more interesting place for hubs, accelerators, labs and social investors, which in turn has given Norway’s startup scene more global recognition.”

SNO Ventures’ Bjerrang agreed that Norway has transitioned from oil, to oil-centric solutions, to a more diverse sector demographic, to a new focus on socially and ecologically motivated projects, such as clean tech and energy.

“For us venture capital firms, investors and incubators, we want to keep this momentum going and put Norway on the map,” he said. “We are seeing it happen already as the quality of digital startups improves year on year, and with this renewed focus and feeling that there is opportunity beyond traditional industries, we look forward to seeing the ecosystem’s development pick up even more speed in the years to come.”

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