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Bergen Boosts Norway's Tech Success

A view over Bergen harbour

writer icon Hina Javed     T. Jensen   |   Startups     🕐 05. Sep. 2018

In Norway, the city of Bergen is buzzing with meetings and events offering advice and assistance to the next big thing on the startup market. Such events offer up the chance to meet, interact and learn from the brains behind some of the most innovative and successful startups in the region.

These networking and learning opportunities for budding entrepreneurs show that while some startups might have difficulty turning into profitable businesses, there is a vibrant culture surrounding new companies.

Over the years, Sweden may have grabbed all the tech headlines, and with good reason. After all, it has some prolific companies to its name such as Skype and Spotify. At the same time, Norway is no stranger to tech success.

Innovation Norway
One of the biggest incubators for the country is the government-run Innovasjon Norge, which in English translates into Innovation Norway. It helped Tor H Endresen build Simp, one of the most successful new businesses in Bergen, Norway’s second largest city.

"When I pitched the idea to Innovation Norway for the first time in 2013, they supported me because it was good."
He says the pricing model and the way the product appears in the market were both competitive.

The company’s main focus is to turn physical shoppers as well as patrons of restaurants, bars or pubs into digital profiles through data collection. “It’s a great marketing opportunity as the data is collected based on the customer’s age and visiting, shopping and billing histories." 

The government can do more
Endresen stresses that the Norwegian government can do more to help and encourage young businesses.

“I think that starting up a business in technology is a lot harder than these environments want to promote it to be.”
He feels that apart from introducing more business-friendly laws for startups, authorities have to change policies on VAT, social costs and taxation. He asserts that not all such ventures live a fairytale and many go bankrupt.

“I’ve heard through the grapevine that [this happens} because of taxation, VAT, social costs and the enormous amount of capital needed if you’re a growth company. Over 90% of startups go bankrupt or close shop within the first three years.”

Endresen says only the truly great ideas make for a success story, but even the best of them require a tremendous effort. “I think there will be a lot more startups if the government gives more subsidies and tax relief in the first or second years.”

Be more startup-friendly
Even with incubators like Innovation Norway, he feels the Norwegian government is not doing enough to create startup-friendly legislation. He points out that their grants for innovative ideas are between 200 000 and 400 000 NOK. Even then, the company seeking the grant has to match the investment with its own funds. When it comes to the amount on offer, he quips, “400 000 is not a lot of money if you are going to conquer the world”.

At the same time, Endresen is hopeful that the government will make the necessary changes to promote startups. “Norway has done a fantastic job with the things it has achieved.” He elaborates that there are companies, with solid investment, that have good ideas. “The reason good companies get money is that they are the innovators.”

Focusing on the positives
Arvid Torset, the CEO of SeniorDev and technical lead of startups Diggecard and Simp, sees a bright future for startups. He recalls that when he established his venture in 2003, it was the first company to step into what is now a busy landscape.

Torset has seen the culture of new businesses boom over the last few years in Bergen, where his company is based. “Now there is a more solid path to follow and get help from others,” he says. Torset outlines that there is a focus on entrepreneurship now, unlike in the past. “Back then it could be a little negative to be an entrepreneur. Today, it is a thumbs up.”

He sees Norway as on the path to being the “best in class”. Torset also does not shy away from crediting the government with allowing fresh businesses to flourish. He says it incentivises startups and the creation of new companies.

Lower taxes
The recent development of lowering taxation on investment into startups is a key initiative in creating an interest to build companies or entities from scratch. Torset explains that the financial outcome of one company investing in another will be taxed considerably less.

“So it’s little tax on the income [made from] investments. If you keep it in the company, the amount can be used to reinvest.”

The encouragement, according to Torset, is in line with Norway’s broader goal of diversification. “The oil industry is one of the biggest things in Norway. However, now we have shifted to electric cars and green energy.”

The SeniorDev CEO sees these as indicators which suggest that the oil income will start to dry up. “We are working on how we can transform our oil dependency to something new.”

Create jobs
When it comes to employment opportunities, Torset says the expansion of companies such as his create more jobs for the local population. “We need project managers who understand local ambitions. So we are looking for Norwegian speakers to manage the day-to-day contact with our customers.”

The CEO also takes the time to look into Bergen’s future. He believes the city is competitively positioning itself in the fintech sector. He says there are numerous fintech startups of which his company Diggecard is one. “Financial services will grow in Norway,” he says.

Torset sees great things in the future for Bergen-based startups. “Of these startups that are here today, I am 100% sure some of them will be huge companies.”

Helping the business grow
Sumon Ahmed, the CEO of Maxwork, appreciates the role of government incubators in enabling the startup boom. In fact, Innovation Norway also gave Maxwork its big break. “I saw that the market needed good quality outsourcing and I presented this to Innovation Norway. I ended up with an establishment investment,” Ahmed recalls.

His company’s objective is to bridge the communication and cultural gap between Norwegians who aim to do business abroad and their partners/associates at the other end. He points out that the Norwegian government is also stepping up to help locals meet the massive challenge of acquiring the necessary knowledge to establish a business.

“The government is creating an infrastructure slowly, and quite successfully, for people to start their businesses [with the right support]. If one has a great idea, you can go to other places like the Bergen Technology Transfer Office (BTO) or business incubators and get the necessary training.”

Size does not matter
Tatiana Kolesnikova, the design lead for Simp and Diggecard, lays emphasis on having the right idea to succeed. Kolesnikova is a big advocate of the lean business model, which aims to eliminate waste in product and processes while satisfying customer needs. Diggecard, which offers electronic gift cards that can be sent electronically and redeemed globally, follows the same model. She believes it is the key to success for a young business.

She has her own unique definition of a startup and says it is less about the size of the company. “Startups are very small, but it is a company that tries to create a product – an innovative product, something unique.”

Elaborating on the startup culture in Bergen, where she is based, Tatiana points out that these new ventures-from-scratch no longer feel like they are created in a garage. Apart from the government, she points out that such businesses are supported by the community.

“There is a culture built around it. Just look at the events happening around Bergen, there are startup weekends and [events related to] getting loans. It’s everlasting.”

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