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Arne Tonning - Alliance Venture - Norway - Stanford Engineering - Jan 12 2015

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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

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Arne Tonning - Alliance Venture - Norway - Stanford Engineering - Jan 12 2015

  1. 1. 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
  2. 2. 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 +  
  3. 3. 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
  4. 4. 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
  5. 5. 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
  6. 6. 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
  7. 7. 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  
  8. 8. 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        
  9. 9. 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
  10. 10. 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
  11. 11. 12   Microelectronics   Strong tech company clusters Conferencing  tech   EdTech   Broadcast  tech  
  12. 12. 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
  13. 13. 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)
  14. 14. 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 &
  15. 15. 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
  16. 16. 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
  17. 17. 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
  18. 18. 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
  19. 19. www.nordicinnovationhouse.com 470 Ramona St, Palo Alto
  20. 20. Arne H. Tonning Partner @AllianceVC @eagleonamound E-mail: arne@allianceventure.com www.allianceventure.com

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