If you’re sick of prediction posts already, stop reading now. This is the second time I’m putting forward my predictions for the coming year, last year I got 4.5⁄7 right. I find writing predictions to be a good way to force myself to think about what’s ahead. So here we go; my predictions for the next year, mostly focused on Norwegian tech and startups:
Tech is not what it used to be: Following the public “dissection” of companies like Uber, Wework and Caspar, I expect we’ll see a decreased number of “tech” companies emerge also in Norway. Tech investing will gradually look more and more like regular investing, meaning it’ll be required that companies have planned out how to get a proper defensible position (not “economiese of scale magic”). I expect to see relatively more companies with clear IP strategies, be it unique technology, brands or something else.
High profile companies will die: take 2: I predicted this 12 months ago, claiming “it seems unlikely (from a statistical perspective) that all companies will be able to continue growing successfully”. I got this prediction wrong. I still believe this is very likely, and would like to put in the same prediction for the coming year.
Acquisitions from unusual suspects: There were a few acquisitions in 2019, including companies like Nabobil, Poio, Dragonbox and OncoImmunity. Judging by the announced valuations, none of the acquisitions we saw last year were what you’d call a “fund returner”. For 2020, I believe we’ll see a similar acquisitions activity - with few if any “fund returners”. Most of the large Norwegian corporates will continue to be absent from this scene due to their disconnected incentives, but international players plus the few local corporates with significant executive ownership will continue to see acquisitions as a viable path to growth.
ESG is the new standard: Every single investment fund announced in 2020 will have a clear and visible ESG strategy. It is no longer possible to ignore the massive challenges we are facing, and talent and capital is drawn towards the opportunities these problems bring.
The emergence of the reboot: There’s been quite a few investments in Norwegian startups the past 5 years. Naturally, many of these have folded, and a small minority has hit espace velocity. There’s also a number of startups that don’t fall within any of these two groups. Many have raised pre-seed funding followed by bridge, bridge extension and so on, and these rounds has impacted captables and with it the founders’ incentives. Most of these companies will fold or level out. Still, a number of these companies still have potential and motivated entrepreneurs, but for founders and new investors to bet on it it’s necessary to reboot the ownership. 2020 will be the year where doing a reboot is normalized. 2021 could be the year we see a firm specializing on this emerge.
Growth. Growth everywhere: A combination of a number of factors, including transition from oil, and increasingly tech-proficient talent pool and low interest rates, means we’ll see more money invested in more companies compared to the past two years. This in spite of reboots and high profile startups folding as predicted above.
Decelerating growth of aggregators: Google, Amazon, Facebook and the likes have continued to grow over the past years despite numerous attempts to challenge their positions. I believe they’ll continue to grow through 2020, but at a decelerating rate. Consumers and businesses are starting to realize the costs connected to “putting all your eggs in one distribution basket”, and will gradually shift towards products like Shopify, Substack etc. This is not a Norway-focused prediciton but if correct it’ll have broad implications.
Bonus: No new option rules: This is easy points, and also something I predicted last year (meaning I won’t include it in my 7 official predictions). Still, I find it very hard to believe the elected officials will suddenly grasp the massive benefits that comes with proper incentives in the new companies that are being built in Norway. Unfortunately…
These are my predictions for the coming 11.5 months. I look forward to revisiting this post then.