Developing a thriving innovation and venture capital ecosystem in Oslo

Oslo’s challenges ahead

Norway is among the most productive economies in the world, supported by strong research institutions, high educational attainment, and sound economic structures. Oslo Science City represents the country’s densest concentration of universities, hospitals, research institutes, start-ups, and innovation actors – forming a strong foundation for research-based innovation in Oslo.

At the same time, Norway faces a structural transition. As the relative importance of oil and gas declines over time, new high-productivity growth engines must emerge in other sectors. Turning world-class research into scalable companies will be essential to sustaining future prosperity.

However, strong research alone is not enough. Commercialisation requires capital, competence, and a well-functioning venture capital (VC) ecosystem.

And building a thriving VC ecosystem takes time. International experience shows that it often requires one to two decades of sustained effort before a self-reinforcing ecosystem emerges – where successful founders become investors and scaleups generate new growth engines.

To investigate this further, we benchmark Norway against Nordic and European peers and assess how policy tools and framework conditions shape the ecosystem in this report commissioned by Oslo Science City.

The main findings of our study

Insufficient risk capital

• Our analysis shows that the primary constraint in Norway’s innovation ecosystem is a lack of risk capital – particularly at early stages.
• VC investments relative to GDP are significantly lower than in Nordic peers and below the EU average.
• Fundraising by Norwegian VC funds is weak, signalling limited investment capacity in the years ahead.

The role of policy tools and framework conditions

At the same time, the broader policy environment makes it less attractive for founders and investors to take risks: wealth taxation of unrealised gains and exit taxation limits incentives for start-ups, scaleups, and international talent. Additionally, public capital plays an important role in nascent VC ecosystems, but Norwegian levels are lower than in comparable countries and are to a large extent channelled directly to companies rather than through funds, bypassing ecosystem-wide effects.

Three key priorities to improve the VC ecosystem

• Strengthen incentives for research-based innovation, including higher founder ownership, better-aligned academic incentives, and closer collaboration between research institutions and corporates.
• Increase and refocus public capital to crowd in private investors, with a stronger emphasis on fund investments.
• Improve framework conditions, particularly by reforming exit and wealth taxation to strengthen incentives for founders, investors, and international talent.

Get the full details below, including methodology and what characterises a robust and thriving VC ecosystem.

This study was commissioned by Oslo Science City.