The smallest ones grow the most
“We have helped a long series of Norwegian start-ups out into the world. Along the way, we have acquired a network and insight into what technology actually does that is golden – and for our large clients as well,” says Stig Nordal, leader of the technology group at SANDS.
The Norwegian technology jungle is sprouting wildly. In recent years potent innovation environments have sprung up around the universities and Innovation Norway’s cluster project. Access to investment capital willing to accept risk has loosened up at long last, encouraged by new success stories. Incubators and clusters such as StartupLab, Aleap, Oslo Cancer Cluster, Norway Health Tech and Bergen Technology Transfer are heaving new ideas out into the world. In the midst of this swarm of innovation and business development sits SANDS’ technology group, the legal guide through all the operational and financial phases new technology companies must pass through.
“We go in and assist very early in companies we ourselves believe in, and we are involved throughout the entire growth and maturation until the beautiful day they go on the stock exchange. This makes us unique in the world of Norwegian law firms, even though it has long been a winning formula in international tech environments,” says Stig Nordal.
FROM START-UP TO STOCK EXCHANGE LISTING. When the tax lawyer and technology visionary Stig Nordal set out to develop the technology team at SANDS, he did not want to go after only the large, established technology companies. He chose a segment where no others were: the start-up segment in high technology. The assumption was that the success rate for this type of company would be higher than usual.
“By being almost supreme in law in the early establishment phases, we have secured for ourselves many agreements with technology companies. We have already been inside about 500 companies. More law offices are coming and sniffing around there now, but we have a strong position and a massive professional expertise that has been developed over several years in this field,” says Nordal.
Being with a company operationally the whole way requires a great deal of complementary legal expertise about everything from ownership structure and business models to financing and going on a stock exchange.
“It is a strength of our team that we have lawyers with broader backgrounds than just law. For example, several members of the team have additional education in innovation and entrepreneurship. Some have completed the Norwegian School of Entrepreneurship programme and others have additional training from abroad or a financial background,” reports Nordal.
PRESENT IN THE INNOVATION ENVIRONMENTS. The work in the early phase entails a form of investment by SANDS. Among other things, the lawyers travel weekly out to the innovation environments to assist the companies where they are located.
“Then comes a long series of companies with specific problems that we help them with,” says Nordal.
SANDS must have faith in the companies they assist. This requires an understanding of innovation processes and technology that is not prevalent in the legal profession. They spend a lot of time in conversations with the companies to understand both the business model and the technology. Nordal has himself studied innovation and entrepreneurship at BI Norwegian Business School, in addition to tax law.
“I use my background at the strategic level. It’s important to understand the business model when structuring companies and making good agreements. The ownership model you choose early on also has great significance for the opportunities you have to obtain capital. It is important to have an overview, and we work based on the objective that the companies at any time should have the greatest possible access to markets and capital,” says Nordal.
NETWORK. NETWORK. NETWORK. SANDS occupies a central position as the only law office in an innovation network originating at BI Norwegian Business School. Many of Norway’s leading established companies sit round the table and talk about what is happening with new technology and how it affects their business models. SANDS contributes knowledge and insights from the technology environments it works with.
“The start-up environments give us inestimable insight into the latest technology. We work with many companies in artificial intelligence, machine learning, big data, blockchain, biotech and the life sciences. We see how new technology changes the business models, takes markets established players don’t see and disrupts existing markets. For us, this insight is an enormous advantage for being able to assist all our clients,” asserts Nordal.
The willingness to lift your gaze from the legal system has also become an advantage in the search for new, capable tech lawyers. Nordal says that the job becomes more absorbing through the vision of being part of developing new technology companies and the faith in the companies they work with:
“For example, it has been fun to work with the smart video conferencing camera Huddly through all phases, up to obtaining major capital and working out agreements. No Isolation, with its increasingly famous robot AV-1, is a meaningful, heart-warming, feel-good success we have been part of the entire way. Currently we are working a great deal with reMarkable, which has come out with a sensational new paper tablet this year.”
WEST COAST CONNECTION. Many of the companies the Technology team works with have gone to the U.S. to get access to technology, markets and capital. Nordal realised that in order to be truly relevant, SANDS had to understand how the environment over there worked. Beginning in July 2015, he worked for more than a year at Perkins Coie in Palo Alto, the law firm that is perhaps the very strongest on technology start-ups in Silicon Valley. Several of the other lawyers also have experience from the American technology environment.
The Americans think the same as us, offer themselves, share networks, put people in contact with others. They think ‘we can assist in building companies, and if we do, then we’ll get business at one point or another’,” says Nordal.
“It’s fantastic to see this from the inside. Their advantage is the culture of sharing. The entire basis for growth in Silicon Valley is sharing, openness and access to ideas. And the network! Now we have a hotline to Silicon Valley and a large network over there that we can offer our clients. These are real short cuts into the market, with capital, mentors and potential customers.”
START-UP AS ECOSYSTEM. A good start-up scene must think like an ecosystem, in Nordal’s opinion. You have to have good advisers and you need intelligent capital through good angel investors. SANDS has developed a network on the investor side and has taken an intermediary role where they connect companies with investor environments. Together with StartupLab, SANDS has structured several targeted technology funds – Founders Fund I and II – based on previous entrepreneurs where the simple idea is to inject a million kroner into promising companies. Even more important than the capital is the network, and the willingness there to possibly be along for more of the journey.
“And it works! StartupLab has a sky-high 80 per cent success rate after the incubator phase. It is in our interest to get these companies up and running. When we see people like Karen Dolva at No Isolation, who are succeeding and will be up to 80 employees in the course of the year, and are being interviewed by The Guardian – then I’m actually touched. It is wonderful to be involved in assisting such a thing,” says Nordal.
THE ART OF AVOIDING CONFLICT. There has been some awareness recently about entrepreneurs who run aground in meetings with major players and investors. It is a strength to have a lawyer on the team who understands this culture.
“We have chosen for ourselves the entrepreneur side at the incubators and have created standard agreement structures in some areas that in any event are balanced – and perhaps a little entrepreneur-friendly. We see the problems that arise when they are going to collaborate with major players. Our advice for all parties is not to accept terms that limit the entrepreneurs’ latitude, even though you may have to swallow a camel or two to bring in capital for further development,” says Nordal.
Good agreements mean that all parties define themselves as being in the same boat and lead to something that is good for all parties, in Nordal’s opinion.
“With the shift in technology that is now playing itself out, the position of early-phase technology companies has been strengthened in recent years. Established companies are partly dependent on integrating new companies in order to keep up with technological development. As lawyers, we can optimise the course of the project for all parties.”