Bergen, a new startup ecosystem you might haven't noticed about

At least for the last 5 decades, Norway has easily topped the list of strong economy countries, purely with its rich petroleum resources from the North Sea, until the crude oil price plummeted to the record low of $29 per barrel since 2014, which rang the bell of its great dependence on the oil industry.

Bergen, the second largest city in Norway on the west coast, are one of cities which have experienced the most serious problems with unemployment as well as the economy recession resulted from the large-scaled cut in oil production in the past 2 years. With the urge to diversify the industries, tech startups started to be basked in the spotlight to transform the economic structure of Bergen and beyond.

I paid a visit to the Bergen Technology transfer Office (BTO) not long ago. By getting to know the startups under incubator Nyskapingsparken, walking around the co-working spaces running by BTO and running cross their bi-weekly startup event, I certainly see an early form of a startup ecosystem which I have never noticed about.

Government Support

Starting with a nationwide economic problem, the Norwegian government stepped in early, providing the startups with supports like research grants and financial investment. However at the very beginning, the funding is not quite helpful, or rather harmful. Due to the single funding structure, the founders are tend to paying more efforts to chase the funding rather than developing their business, which gradually turned the government grants into a “sleeping pillow”.

Realising the shortcoming, Norwegian government reformed the funding structure, by dividing them into different phrases. With constant performance tracking, the startups will develop into different stages step by step with follow-up supports accordingly. In addition to this grants valued from 50k to 500k NOK, the politicians nowadays also frequently propose new policies in order to build a supportive environment for tech startups, such as tax rebates etc.

Alongside the government support, the Norwegian royal house has also showed a positive encouragement to evoke the Norwegians innovation and entrepreneur spirits by showing up in various startup events. After speaking at the biggest Norway startup event Startup Extreme, Crown Prince Haakon of Norway was again on the stage of Slush 2016 a week ago in Finland, to join the talk with the startups all over the world, and all of these have obviously led to a topdown passion on the tech startup culture cross the country.

On the other hand, Norway is still expensive for setting up a company, with non-negligent cost of about 30k NOK according to Babou Olengha-Aaby, which could be prohibitive for many entrepreneurs. The country is rather new to the tech startup scene comparing with its other Scandinavia neighbours, they do have a long way to go to consolidate the infrastructure to support the ecosystem, but at least it is on its way.

Market Reach

If we take a closer look to the Bergen startups, it is easy to tell the close tie between their new tech innovation and the traditional industries. Such as Rock Physics Technology, which have developed reverse-rock physics modelling tools that can be used for quantitative analysis of seismic data to reduce the risk of resource uncertainty for oil production companies. Another startup Seasmart, founded in 2014, has invented drones for deep-sea operations, to provide environmental detection and data collection services with accurate data collected for the daily operation of the aquaculture industry.

Based on the nature of these products, the Bergen startups seem not aim to enter a bigger market, but to empower the oil and marine industry locally. As introduced by Mr. Hans Hag, the incubator project manager from BTO, this is a specialty of Bergen startup scene, which is also why they designed their co-working space divided by industry sector, connecting startups and project teams from big companies more closely to enable direct communication. Rolf Assev from Oslo incubator/accelerator StartupLab has also mentioned before “Ten years ago most innovation in Norway was done by ten people sitting in an R&D office. Now (corporates) have realised they have to acquire, learn and hire from startups.” This could arguably go both ways, of either guiding the startup business directly to the end market, or making the startups difficult to scale up.

Other from that, we have also noticed a few startups active in a broader international arena, such as the edtech company itslearning, which has millions of users worldwide, as well as the mobile game startup Dirtybit,which has created the legend of 50million downloads with the game Fun Run. However, for the time being, here are only a handful startups to be named with a global vision.

Talent

Why Bergen startup scene has a strong focus on traditional industries? There is a causal relationship possibly lying underneath: Talents.

The most popular subjects in Norwegian universities, have long time been Marine Engineering and Petroleum Science&Technology, more specifically in Bergen. Thus logically, to focus on the fields that they are most familiar with and have expertise in, will be the best option when setting up their own business.

To add on, Hag also explained that some of the startup founders in Bergen are highly experienced and professional in these traditional industries. Through many years working in the big companies, they understand most what need to be innovated, what need to be reformed with new technology. So they jump out of the old company structure, found a startup to supplement the development of the traditional industries.

With the development of the startup culture, the universities now are welcoming more students for the subjects of enterprise management or business administration recently. The incubator Nyskapingsparken has also launched a few programs to get uni student involved in startups operations. There is no doubt that the motivation of the young talents to be entrepreneurs is significantly higher than ever before, but again, it takes time to build up a sufficient talent pool with all the skill-sets that are possibly needed for startup operation. And for Bergen the most fatal cons is the diversity of the talents, as Bergen is obviously not a city which attracts significant amount of international students.

Funding

When it comes to funding, we turn to think about it financially, but in most of the cases, it is not what funding is all about. It stands for how much real “smart money” can be brought in, stands for the added-value that investors bring alone, and also stands for if every round has scientific coverage to cultivate the ecosystem as a whole. Bergen, is clearly in a early stage from this perspective.

Speaking about funding in Bergen, Hag also told me frankly: “There is Money, for sure, but the investors here are very unfamiliar with investing in startups, and even the VCs are rarely do so. We need more experience in startup investment, not only in Bergen but also in whole Norway.” As regard, not only for the startups, but also for the investors, the early stage of Norway startup ecosystem truly makes the peer learning hardly available.

Correspondingly, the Startup Challenge, Angel Challenge organised by Startup Norway, are exactly dedicated to bring more operational know-how to the front of the investors. Moreover, the Startup Extreme, which I mentioned earlier, has also involved experienced startup investors from all over Europe for in-depth communication and networking, which is indeed a good example of where their the efforts are currently making to. Good news has also been heard, like the exit of mobile service platform Meawallet for example, which would likely increase the interest in tech investment.

From 10 pitches per year to over 80 with Nyskapingsparken, Bergen is not only showcasing their flourished startup ideas, but also their ever increasing ambitions to ride the wave of the tech startup era.

On the day of my visit, I joined a startup brunch happened every 2 weeks in BTO. Looking at the startup founders who are passionately communicating their business ideas, innovative technologies or funding experiences, I had a deja vu popping up as what I have been experienced in any tech startup events in other European cities. Without doubt, in Bergen, everything is just starting up, with every aspect of the ecosystem to be developed from the very beginning, but at the same time, they also get the right ingredients that you might have seen in London or Berlin.

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