Talk by Arne Tonning, Partner - Alliance Venture, Oslo, at Stanford on Jan 12 2015, as a part of our session on 'Entrepreneurship in Oil Economies :: Norway & Scotland'. Website: http://www.StanfordEuropreneurs.org YouTube Channel: https://www.youtube.com/user/StanfordEuropreneurs

2. Norway – the geography basics
Finland
Denmark
Iceland
Scotland Oslo
Stavanger
Bergen
Trondheim
Tromsø
The North Sea –
where the oil is
Scandinavia =
Denmark, Norway
& Sweden
The Nordics =
Scandinavia +
Finland & Iceland
Norway:
• Pop.: 5.1 million
• Area: 323,803 km2
• Capital: Oslo

3. Short personal intro
• VC since 2008
• Working closely with 3
companies:
Encap Security
(encapsecurity.com)
poLight
(www.polight.com)
Novelda
(www.xethru.com)
• Investor in Residence
• “International Norwegian”
• Electrical Engineer
• Career:
– Research Scientist
– Consultant
– Founder
• Passion: Tech + Biz
+

4. Outline
• Norway – the basics
• Oil and the impact on the entrepreneurial ecosystem
• Entrepreneurship in Norway – what’s going on?
• Alliance Venture and some company cases
• Nordic Innovation House and link to Silicon Valley
• Q & A

5. Norway – numbers and rankings
Rank
Country
US$
1
Luxembourg
112
473
2
Norway
100
579
3
Qatar
98
986
4
Switzerland
81
276
5
Australia
64
578
6
Denmark
59
129
7
Sweden
58
014
8
Singapore
55
182
9
United
States
53
001
10
Canada
52
037
Rank
Country
Score
1
Norway
0.944
2
Australia
0.933
3
Switzerland
0.917
4
Netherlands
0.915
5
United
States
0.914
6
Germany
0.911
7
New
Zealand
0.910
8
Canada
0.902
9
Singapore
0.901
10
Denmark
0.900
Rank
Country
Score
1
Denmark
7
693
2
Norway
7
655
3
Switzerland
7
650
4
Netherland
7
512
5
Sweden
7
480
6
Canada
7
477
7
Finland
7
389
8
Austria
7
369
9
Iceland
7
355
10
Australia
7
350
Rank
Country
1
Norway
2
Switzerland
3
New
Zealand
4
Denmark
5
Canada
6
Sweden
7
Australia
8
Finland
9
Netherlands
10
United
States
GDP (nominal) per capita, 2013 (IMF), n=183 UN World Happiness Report, 2013, n=156
The Legatum Prosperity Index, 2014, n=142UN Human Development Index, 2013, n=196

6. Norway – oil facts
Norway is the world’s:
• 15th largest oil producer – 1 902 kb/day
• 11th largest oil exporter – 1 685 kb/day
based on 2012 numbers
Source:
hPp://npd.no/en/PublicaSons/Facts/Facts-­‐2014/,
www.iea.org
Petroleum's share of the Norwegian economy
Production profile

7. Petroleum sector impact on
entrepreneurship
Benefits Drawbacks
• A major entrepreneurial
opportunity in itself
• A successful oil & gas
entrepreneurial ecosystem in
Norway, including serial
entrepreneurs, angels
investors, VCs, R&D and
industry players
• A major driver for an affluent
consumer, business and
government market
• Competition for and retention of
premium talent
• Cost and salary inflation in the
petroleum sector is transferring
and setting the standard for
other sectors
• Less short-time need or urge to
create something new (non-oil
related) – less attractive to take
risk now

8. Innovation and entrepreneurship in oil & gas
- examples
• ProVenture Seed II is a new early stage
fund focused purely on oil & gas
• Statoil ASA (OSE: STL), a multinational
oil & gas company and Norway’s
“national oil company” was a catalyst
and is the largest LP (except
government)
• 500 MNOK (≈67 MUSD) fund
operational in mid-2014
• One of two new early stage funds with
direct government funding
• Norway is a hub for developing
advanced software for oil & gas
applications
• IBM has located its Center of
Excellence for Chemicals and
Petroleum in Stavanger, Norway
• Schlumberger active in acquisitions
§ Technoguide AS – reservoir software (Petrel)
§ VoxelVision AS – seismic 3D visualization and
interpretation (GeoViz)
§ Reslink AS – smart well solutions
§ SPT Group AS – dynamic modelling
§ GeoKnowledge AS - exploration risk and
resource assessment (GeoX)
oil
&
gas
so)ware
acquisi0ons
in
Norway

9. Entrepreneurship in Norway
50,100
45,491
49,216
49,997
55,905
55,957
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
2008
2009
2010
2011
2012
2013
Norway
-­‐
new
births
vs
new
business
registraDons
New
births
New
businesses
registraSons
Rank
Country
1
Singapore
2
Now
Zealand
3
Hong
Kong
4
Denmark
5
South
Korea
6
Norway
7
United
States
8
United
Kingdom
9
Finland
10
Australia
The World Bank’s
Ease of Doing Business Index
Source:
www.doingbusiness.org,
www.ssb.no

10. Industry
spin-­‐offs
&
splinter
co’s
New
start-­‐up
ini0a0ves
• Overall
the
deal
flow
is
increasing
• Select
investment
opportuniSes
are
aPracSve
• The
deal
flow
is
both
core
tech
and
services
• Successful
entrepreneurs
are
starSng
new
companies
• Easier
to
aPract
experienced
management
10
Universi0es,
research
ins0tutes
and
parks
Start-up community is growing

11. 11
Company
Acquired
by
EV
[mill
USD]
Sales
[mill
USD]
EV/Sales
3
700
808
4.6x
1
000
162
6.2x
25
0
(pre-­‐rev)
N/A
153
27
5.6x
200
28
7.1x
350
35
10.0x
1
390
350
4.0x
177
27
6.6x
170
10
17.0x
New
start-­‐ups
Acquisi0ons
of
Norwegian
IT
companies
Annual
avg.
value
of
all
Nordic
tech
exits
between
2005-­‐2011
is
€2.4
bn,
up
from
€1.4
bn
between
1998-­‐2004,
and
Nordic
VCs
were
involved
in
90
%
of
all
VC-­‐backed
tech
exits
>€100
mill.
(source:
Creandum)
Acquisitions as catalyst for hot new start-ups

12. 12
Microelectronics
Strong tech company clusters
Conferencing
tech
EdTech
Broadcast
tech

13. Matching entrepreneurial talent with
research-based start-ups
An approach from the Norwegian University of Science and Technology
Building
entrepreneurial skills
Norwegian School of
Entrepreneurship
Applying to university
projects
• Employing or
contracting talented ex-
students
• Running
commercialization
projects
Managing spin-offs
Project resources become
part of management team
after spin-off

14. 0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
0
100
200
300
400
500
600
700
800
2008
2009
2010
2011
2012
2013
MEUR
Norway
Rest
Nordics
Norway
%
14
Total
venture,
Norway
and
Nordics
0.360
0.115
0.054
0.041
0.038
0.032
0.029
0.027
0.023
0.021
0.011
0.005
0.000
0.050
0.100
0.150
0.200
0.250
0.300
0.350
0.400
Israel
United
States
Sweden
Finland
United
Kingdom
Denmark
Norway
France
EU
Germany
Spain
Italy
Venture
capital,
%
GDP
Venture capital in Norway
Source:
OECD,
EU,
Argentum,
Alliance
Venture
analysis
2014
vintage
funds
with
Norwegian
HQ
§ Northzone VII – 250 MEUR (≈306 MUSD)
§ Alliance Venture Spring – 510 MNOK
(≈69 MUSD)
§ ProVenture Seed II - 500 MNOK (≈67 MUSD)
§ SINTEF Venture IV – 209 MNOK (≈28 MUSD)

15. 15
Firm
&
fund
Strategic
investors
Execu0ve
Investor
Network
• Venture firm with HQ in Oslo, Norway
• Established based on Silicon Valley
principles and experiences to build US/
international bridge
• 3rd fund, Alliance Venture Spring,
established in 2014 – fund of
510 MNOK (≈69 MUSD)
• Early stage investor – i.e. seed & series
A + follow-up
• Full tech value chain investor –
semiconductor to digital content
• Focus on Norway, ability to invest
anywhere
• Investing in emerging tech
companies & supporting their global
expansion
• Access to innovation and new trends
• Joint deal evaluation
• Opportunities for co-operation between
portfolio companies and corporates
• 25 serial founders and executives
engaged with start-ups operationally or
as angel investors
• Has invested in the fund and may
co-invest directly
• May engage in BoD, advisory or
executive roles with portfolio companies
&

16. 16
• Four students in Trondheim,
Norway, invented a new 3D GPU
architecture
• Established Falanx Microsystems,
developed IP core and raised
money from Alliance Venture and
Incitia Ventures
• Sold pre-revenue to ARM
• Falanx is today ARMs Media
Processing Division with 350
employees world-wide and 100
engineers in Trondheim
• ARM’s Mali GPUs can be found in
>400 million units shipped in 2013 –
the #1 Android GPU IP supplier
• Established by key members of
ARM’s demo team in Trondheim
• Powerful tool for rich media cross-
platform native app development
• New Alliance Venture portfolio
company
• Established by former GPU engineer
from ARM’s team in Trondheim
• Database hardware accelerator using
parallel processing architecture
• New Alliance Venture portfolio
company
Case 1: &
– outracks.com
– swarm64.com

17. Case 2: .
SEE THROUGH
The ability to see through
objects enables hidden,
tamper proof sensors that
builds into walls.
PRESENCE
Presence tells you if
someone is in the
detection zone.
MOTION
Detecting the smallest
motions, as those from a
person breathing.
PROXIMITY
Proximity tells you if
someone is within a
certain range.
DISTANCE
Measuring distance to all
detected objects, enables
counting and speed
measurements.
XeThru Sensors
Combining all traditional sensor functions into one!
Check
out
the
XeThru
Respira0on
Monitoring
demo
video
here
www.xethru.com

18. From
MEMS
wafer
to
camera
module
Response
Sme:
1
ms
(VCM
=
5
to
15
ms)
Power
consumpSon:
<
5
mW
(VCM
=
220
mW)
Field
of
view:
Stable
(VCM
=
Unstable)
Smallest
Footprint:
3.2
x
3.2
(VCM
>
7
mm
wide)
(VCM
=
voice
coil
motor,
incumbent
technology)
Product
advantages
The
Tlens®
speed
enables
computa0onal
imaging
and
new
camera
capabili0es
Tunable Lens (Tlens®) – Autofocus lens replicating the eye
Case 3: .
www.polight.com

19. 59
15
6
5
#
of
NIH
companies
• Co-working and virtual office with community and programs for Nordic tech
companies, investors and local advisors
• Soft landing concept for entering the U.S. market, where the ultimate goals
is to enable companies to scale faster and with less risk
• Established in 2011 by Norway and joint Nordic initiative since 2014
• “Investor in residence” sponsored by Innovation Norway (Norwegian
government agency) – a win-win set-up
www.nordicinnovationhouse.com
470 Ramona St, Palo Alto

20. www.nordicinnovationhouse.com
470 Ramona St, Palo Alto

21. Arne H. Tonning
Partner
@AllianceVC
@eagleonamound
E-mail: arne@allianceventure.com
www.allianceventure.com