Venture Capital Market in Norway

 

Norwegian Flag

Norway Flag

Efraim Landa invests venture capital in companies that show great potential of becoming high growth companies. With today’s economic climate, it’s not worth the risk for most venture capitalists to jump into an investing transaction that is not solid. Almost all of Norway’s venture capital comes from international sources outside the country such as Effi Enterprises. The VC industry can vary greatly between regions based on the economic climate and various factors which influence investing firms. When a region shows great potential for substantial growth and profits, the venture capitalist sits up and takes notice to see if it is something worth investing their capital funds in or not. The Nordic region seems to be very integrated and has become very attractive to foreign investors in the venture capital sector. In the last decade, Nordic countries have seen tremendous growth when compared to the rest of Europe.

Early Stage Funding in Norway

Norway is one country which has a wide but complex demand for early stage funding. There are numerous early stage companies which have displayed great potential for substantial and constant growth that are likely being considered by investors from both the public and private sectors. From 2006 to 2008 alone there were nearly 80,000 firms established in Norway. Most of these did not become a high growth company. During these years only about 2 percent of all the startups were potentially high growth companies. Even though it is not exponential growth, just the fact that the company is investing in further developments is a demonstration of growth within the company. There are basically three ways that a start up can obtain funding in Norway: loans, government support or equity capital. There are also times when angel capital is available to start ups which are in the earliest phases. In Norway about 2500 angel investors put their money into 4500 companies. The problem is that a lot of these are not the typical companies that most would expect to become high growth companies down the road. From the 1600 high growth companies that can be identified only about 5 percent had received funding from angel investors. It is much more typical for a company to secure seed or venture funds from the business’ start. And actually seed fund capital almost does not exist in Norway. Most investors have turned their attention to larger corporations which own huge portfolios.

What About Government Interventions?

May argue that the government should step in and rescue early stage capital because of the market’s imperfections. There are several reasons why private capital just is not available for early stage businesses. For one thing, it is very difficult for an investor to assess how a project is likely to turn out when it is first being formed. For this reason, there are some investors who like to stay away from the early stages. The government is an entirely different entity and many times can benefit from supporting business ventures whether the innovator is a large corporation or an early stage company.  An investor is concerned about the risks associated with an early stage business where the government does not have to worry about each single investment as much as they are concerned with the whole portfolio of the investments that they made – that’s what they want to see yield a large return. And funds can strategically stimulate the economic environment which is beneficial to many governmental bodies.

What Drives the Economy in Norway?

When we think of Norway we typically think that its economy must be based up on raw materials like fish and oil. But despite these raw materials, Norway’s economy is driven by innovation. That is what drives most of the Western European countries. In the economy which is driven by innovation, businesses are not started just because the person has to do so, but instead it is about forming a business idea that they want to see carried out. This is what the venture capital market thrives on.

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About Efraim Landa

My name is Efraim Landa I am an entrepreneur and an expert in venture capital. I am the co founder of Effi Enterprises, a venture capital firm as well as the co founder and CEO of Gluco Vista, a company that is in the process of developing a non invasive glucose meter for those with diabetes.

Posted on July 31, 2013, in Business Financing, Effi Enterprise, History of Venture Capital, VC Firm, VC investments, Venture Capital, Venture Capital Markets and tagged , , , , , . Bookmark the permalink. Leave a comment.

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