More people want risk loans from Innovation Norway
“Our role is to be a catalyst in the financial ecosystem and thereby help companies realise their projects and growth ambitions. The temporary grant programmes that were put in place during the pandemic to stimulate more activity and innovation in the business sector have since been replaced by increased demand for risk loans,” says Leon Bakkebø, Staff Director, Bank and Financing at Innovation Norway.
Innovation Norway’s offer of risk loans (funding for development and investment projects where the company cannot put up satisfactory collateral for the entire loan, ed.) for industry and commerce has become far more attractive to companies, and growth loans for internationalisation and exports in particular, as well as green growth loans, received the most attention in 2022.
“We established growth loans in late 2021 and found that this service met a previously unidentified customer need. Green growth loans were also key in funding multiple major projects at a critical phase in 2022. This helped to trigger capital from other capital players,” says Leon Bakkebø.
In total, we contributed more than NOK 7 billion in funding for the development and growth of Norwegian industry and commerce in 2022. This triggered a further NOK 17 billion in funding from other sources of capital for companies.
The Norwegian economy needs more legs to stand on
Over the next few years, oil and gas-related income is expected to be gradually phased out of the Norwegian economy. This means a more diverse industry and commerce structure will be required.
“The transition to a low emissions economy will require a major technology transition and substantial investment. We are contributing to innovation and greater competitiveness across the breadth of Norwegian industry and commerce via various forms of risk capital, both loans and grants,” continues Bakkebø.
International demand for green solutions presents significant opportunities for Norwegian value creation and exports. Norway has leading companies that deliver green solutions, including within renewables, energy systems, and green shipping.
“When we are able to connect capital and expertise, we create better results and real added value for the customer. Helping our customers realise their commercial opportunities in the international market is at the heart of our new growth loans for internationalisation and exports,” says Bakkebø.
Cooperation with banks and investors
These are turbulent times in the capital markets and many companies face a demanding equity market. Innovative growth and export companies are experiencing challenges raising sufficient funding in the external capital market.
“Our job is to serve as a supplement to the commercial market of banks and other players and make it more attractive for others to co-fund with us. We thus contribute to profitable commercial and socio-economic value creation and jobs throughout the country,” says Bakkebø.
Innovation Norway has systematically collaborated with banks in the past few years. In the growth guarantee programme, Innovation Norway has in the last five years helped to ensure that Norwegian companies have received more than NOK 2.5 billion in credits and repayment loans from their local banks.
“This is significant extra lending from the banks for funding innovation and growth that would not be realistic without a growth guarantee from Innovation Norway. Closer cooperation with private capital players will, over time, result in better access to capital for innovation, growth, and exports,” says Bakkebø.
A service for developing strong Norwegian companies
Entrepreneurship contributes to innovation and economic growth and is relevant in the transition to greener solutions. The cooperation between the different sources of capital is crucial. Innovation Norway is constantly working to establish good loan instruments and adjust existing programmes to match our customers’ demands. For example, our start-up funding is being adapted to make it even more relevant.
“The unique thing about Innovation Norway is that we follow Norwegian companies from the entrepreneurial phase to maturity and onwards through restructuring phases to new products, services, and industries. We contribute various forms of capital, expertise, and networks,” says Bakkebø.
Wenn ASA, which is based in Stavanger, has made use of Innovation Norway’s grant and loan programmes since it was founded in 2017. It is a B2B SaaS company that has developed technology that uses artificial intelligence (AI) in managing claims for damage to cars. Most recently, it received a NOK 20 million growth loan in connection with international growth in the European market.
The CEO of Wenn, Trygve Pedersen, is clear that the entire funding process, along with the latest growth loan, triggered the company’s ability to develop and opportunity to go international:
“We’ve found Innovation Norway to be a solid partner throughout our development process. The funding from Innovation Norway has accelerated our development and we have also taken part in the TINC programme and other courses that have caused us to focus on our business model and simplified our internationalisation. We find our points of contact in Innovation Norway, both in Norway and at the international offices, to be good strategic advisers who we include in important internal discussions. This is very valuable for a small company with, at the moment at least, limited resources,” says Trygve Pedersen.
Norway’s green industry bank
Many countries and regions are positioning themselves for the comprehensive transition process now taking place globally. As a consequence of the US Inflation Reduction Act (IRA), the EU has eased its state aid rules in 2023.
This also represents more opportunities for Norway and will give Innovation Norway more room for manoeuvre and opportunities to play an even bigger role in the green transition.
“This will also help to strengthen our role as Norway’s green industry bank, including by ensuring that all projects in receipt of funding from Innovation Norway will have a place on the road to the transition goal for 2030, and the fact that Norway wants to become a low emissions society by 2050. At the same time, we will continue to be a key and triggering funding player for the whole of industry and commerce, entrepreneurs, and established companies, of all sizes and in all phases,” concludes Bakkebø.