NORWAY Trends and Developments Contributed by: Nicolai Julsvoll, Øyvind Mork Karlsen and Jørn Hove, Thommessen
Venture capital trends The Norwegian venture capital market is not insulated from macro trends; geopolitical uncer - tainty, inflation and rising interest rates have all affected financing rounds in all phases in 2024. Compared with the easy access to capital during and after the heights of rate-cutting under the COVID-19 pandemic, companies must now face a different reality of lower valuations coupled with more demanding investors. High interest rates and the aforementioned depreciation of the Norwegian krone against other key currencies has led to a shortened financial runway for some companies and increased the need for earlier financing rounds or bridge financing, while also making pricing in the Norwegian market attrac - tive to foreign investors. According to Dealroom’s report on European tech in 2023, the Norwegian market saw record growth between 2019 and 2023 compared to peer markets and entered into the top 10 Euro - pean countries for venture capital investments in 2023. Many venture capitalists and private equity funds also made the most of available capital during 2021 and early 2022 by raising significant funds. According to the Norwegian Venture Capital Association, Norwegian funds raised NOK27.5 billion in 2022, which – despite a decrease from the record year 2021 – repre - sents a 60% increase from 2020. However, data from 2024 suggests that such growth does not represent an enduring change. According to an annual review of early-stage funding of Norwegian technology companies performed by Norwegian venture fund Sondo Capital, financing rounds in the sector in 2024 are largely back at 2020 levels. Although the total amount invested increased from 2023, the number of financing rounds decreased by 25%. Data also indicates that investments by corpo -
Government-owned investment arms play a role in funding early-stage companies, particularly Investinor, which is controlled by the Ministry of Trade, Industry and Fisheries and is mandated to manage the Norwegian government’s inter - est in early-stage companies. Investinor, through their subsidiaries and funds, invest directly in the pre-seed, seed and venture capital phases of companies, as well as in other seed and ven - ture funds. They have a regional presence and a focus on sustainability. Crowdfunding Recent years have seen an expansion of crowd - funding in the Norwegian market, offering an opportunity for early-stage companies to secure financing. Various platforms offer equity financ - ing and loans provided mainly by retail investors. Low interest rates in 2020 and 2021 contributed to a significant increase in retail investments, many of which were made by way of crowdfund - ing, driving growth. The high risk involved in crowdfunded invest - ments has led to increased regulatory scrutiny from the Norwegian government. Rules have been in the making since 2020 and proposed legislation was circulated for comments by rel - evant actors in 2022. Instead, it has now been proposed to include Regulation (EU) 2020/1503 of the European Parliament and of the Council of 7 October 2020 on European Crowdfund - ing Service Providers (ECSP) for Business, and amending Regulation (EU) 2017/1129 and Direc - tive (EU) 2019/1937 in the European Economic Area Agreement. This EU regulation regulates both equity- and loan-based crowdfunding of business enterprises. Implementation of the regulation will entail, inter alia, licensing require - ments for crowdfunding platforms. Implemen - tation is subject to approval by the Norwegian Parliament, which is still pending.
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