Sifted - Leaving Norway is taxing

Good morning there,

Founders in Norway are feeling a little claustrophobic. The latest iteration of the country’s exit tax has got under the skin of the Norwegian tech scene, which Mimi Billing digs into below.

Elsewhere today, we meet the UCL spinout that says it can help train AI 100 times faster while cutting energy usage and find out whether Europe’s crypto winter is over.

Plus… today we're dropping the first round of speakers for October’s Sifted Summit, including Starling founder Anne Boden, Seedcamp’s Reshma Sohoni and Fuse founder and former Revoluter Alan Chang! See the full list here and get your ticket before prices start going up.

— Sadia Nowshin, editorial assistant

Leaving Norway is taxing

Until recently it seemed like a walk in the park for Norway’s wealthy to relocate (mainly to Switzerland) for tax reasons. An exit tax on assets existed, however if an asset remained unsold five years after you left the country — you didn’t have to pay. 

But in the last week, a furore has kicked off among the Norwegian tech scene on social media over the latest iteration of that law — a proposed 37.8% exit tax on unrealised assets over €43k that have been accumulated in Norway. If you leave after seeing a big spike in your ‘paper’ wealth, you now have three options: pay the exit tax immediately, pay in interest-free instalments over 12 years or with interest after the 12 years have elapsed.

As Norwegian founder Alex Svanevik (long gone to Singapore) puts it, imagine the startup you founded hits a $10m valuation at its latest fundraise and you own 30% of the company. If you then decide to move to a different country for global expansion — Norway’s five million-strong population is hardly a big enough test market — you’d have to pay 37.8% of your ‘paper’ wealth of $3m in exit tax. Bye-bye $1m. “As a consequence, you’ll be kept hostage as a founder in Norway,” Svanevik writes. 

That also counts even if you don’t see a penny of your wealth realised, so for heaven’s sake, don’t fail.

“This latest stroke of genius from the government is frightening not only because it is a particularly bad tax solution cooked up to correct the failed effect of the previous one, but because it shows a total lack of will to understand what it means for the business community,” writes We are Human founding partner Johan Brand. 

If you decide to move back to Norway within those 12 years, by the way, the tax requirement is waived and you get back what you’ve paid. 

Looking at it from a European perspective, Norway is hardly alone in having an exit tax on unrealised wealth. Other EU countries including Spain, Estonia, Denmark, France and Germany all have an exit tax, though they’re not as steep as 37.8%. 

Let’s take Germany, which the Norwegian government has supposedly been influenced by when proposing the stricter law. The exit tax there is about 27% (plus church fees) and is to be paid over seven annual instalments (Norway is leaner in this respect). It can also be deferred indefinitely if the resident moves within the EU — which Norway isn’t a part of. 

Tech folk from outside Norway’s tech scene have also pitched in with their thoughts.

“Norway, this is dumb,” deeptech investor Michael Jackson wrote on LinkedIn in response to Svanevik. “I know you're not the only country in Europe that has done this, but that doesn't make it smart or right. Honestly, the fact that Germany does something similar should be evidence enough that it's not a good policy for startups.” 

When it comes to the startup scene in Norway, it’s a shame that such regulatory developments are taking the spotlight. In the last couple of years, lots of interesting startups have come out of the country, such as OpenAI-backed robotics startup 1X, fintech Two and energy tech startup Photoncycle. Whether or not founders and foreign investors will shy away from Norway because of the exit tax waits to be seen. My hopes of Norway leaving the ‘up-and-coming’ stage to become a proper startup hub have, however, moved to pending.

So, readers, what do you think? What will this do to Norway’s tech scene? And where’s the best place to incorporate in Europe? Let me know your thoughts.

— Mimi Billing, Europe editor

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🎓 Oriole Networks, a London-based spinout from University College London (UCL) founded in April last year, has raised a £10m seed round for network technology which it says could help train AI 100 times faster while also cutting its energy use. Investors include the venture arm of algorithmic trading firm XTX — XTX Ventures — Clean Growth Fund, Dorilton Ventures and the UCL Technology Fund.

• While there’s been a lot of iteration on the GPUs needed to power AI clusters, the networks that connect them together haven’t seen as much innovation, Oriole says.

🚁 German flying taxi company Volocopter could bag €150m from the country's federal government in April if transport minister Volker Wissing gets his way.

• The startup was hoping to receive €300m from the federal government and the state of Baden-Württemberg, but the latter dropped out of the discussions as the financial risk was deemed too high, according to a report by German media outlet Der Spiegel.
• Volocopter needs cash to go into series production for its so-called ‘VoloCity’ air taxi, which it hopes to put into flight with human passengers inside at the start of the Olympic Games in Paris in July.

🥶 Is Europe’s crypto winter ending?

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AI hotshot Mistral dominated a lot of the headlines in French tech last year, but how’d the rest of the ecosystem fare? According to new data from PitchBook on France’s VC and PE markets in Q4 2023, 2023 was defined by two new unicorns (gigafactory builder Verkor and Mistral), a dearth of IPOs and an enduring bias in favour of Paris-based startups. Here’s how things shaped up:

• At 275, VC deal count in Q4 was on par with the previous quarter — but remained well below France’s five-year average of 365 deals per quarter. €2.2bn was raised by French startups in Q4, making for a total €9.5bn raised through the year, compared to €13.3bn in 2022. 
• The past year saw just four VC-backed companies join the public markets, with the vast majority of 2023’s 170 VC exits driven by acquisitions. There wasn’t a single IPO from a PE-backed business.
• Taking a longer-term view, PitchBook found that the past 10 years saw startups in Paris raise €33bn from VCs — about 14 times as much as businesses based in Grenoble, which comes second on the list with €2.4bn. That said, the French capital trails Berlin, where deal value reached just over €34bn in the same period. Paris also remains far behind Europe’s leading tech hub, London, when it comes to overall funding. Since 2013 the UK capital has seen its startups raise nearly €105bn.

Aachen, Germany-based Protembis, which is developing a medtech device that protects patients from brain injury during left-sided heart surgery, raised €30m in Series B funding. Segulah Medical Acceleration, XGEN Venture and TechVision Fund co-led the round and were joined by investors including Coparion.

Edinburgh-based Ember, an electric coach startup, raised £11m in Series A funding. Inven Capital, 2150 and AENU co-led the round and were joined by investors including Pale Blue Dot.

Porto, Portugal-based Tonic App, a healthtech platform that aggregates various medical resources for doctors, raised €10.85m in Series A funding. BlueCrow Capital and Iberis Capital co-led the round and were joined by investors including Vesalius Biocapital, Armilar Venture Partners, Shilling VC, and FSNB Health & Care.

Den Bosch, Netherlands-based Keeyns, a tax planning platform for internal tax processes and auditing, raised €10m in funding from investors including Alea Capital Partners and Mountainview Capital Partners.

London-based Scaleup Finance, a financial management platform for startups, raised $8m in seed extension funding. Inveready led the round and was joined by investors including Crowberry Capital, Seed X, PROfounders, Fin Capital and CircleRock Capita.

Stockholm-based Dema, which is an AI-based decision-making platform for e-commerce companies, raised €7m in seed funding. J12 Ventures and Daphni co-led the round.

Umeå, Sweden-based Arevo AB, which has developed a precision nutrition solution to help plants grow better without the need for mineral fertilisers, raised €6.6m in funding from investors including Industrifonden, Navigare Ventures, Fort Knox, Stora Enso and Kempestiftelserna.

London-based Clean Food Group, a foodtech developing sustainable oil and fat alternatives, raised £2.5m in funding. Clean Growth Fund led the round.

Lisbon-based Cargofive, a sales and pricing automation startup for the shipping industry, raised €2.5m in funding from investors including Indico Capital and EIT Urban Mobility.

Paris-based Metyos, which is developing biosensors for patients suffering from chronic kidney disease, raised €2.3m in pre-seed funding from investors including Cenitz, Bpifrance and KIMA Ventures.

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