Norway’s startup scene is a hot mess. Why founders are
fleeing.
From unicorns to ghost towns. Taxes on "money you don’t even have" and "walls of shame" are pushing founders to pack their bags.
A few years ago, Norway’s startup scene was thriving. Oslo was buzzing with grants, venture capital, and ambitious founders. Unicorns like Kahoot, Xeneta, and Oda were proof that big things could happen there. Founders were living the dream. For a time.
But in a thread on X titled The Rise and Fall of the Norwegian Startup Scene, founder John Rush (who was formerly based in Norway) argues that things have fallen apart. Founders' dreams have turned into nightmares.
First COVID slowed things down. Interest rates rose. And then the government delivered a final blow: extreme tax policies that make it nearly impossible to build and scale a startup.
The most controversial of these is a “wealth tax” that doesn’t just hit income — it taxes unrealized gains. Founders are being taxed on their startup’s potential value, even if they haven’t seen a dime of that money in reality. For early-stage businesses, where founders are equity-rich but cash-poor, it’s a disaster.
Lasse Smedsvig, a founder in Norway, couldn’t even pay himself a salary this year, but was still hit with a $100K tax bill. His only option was to sell off personal assets to pay the government.
Another founder, Fredrik Haga, helped build one of Norway’s first unicorns. Faced unrealized gains and therefore was forced to leave the country. He packed his bag and moved to Switzerland, disappointed no politician was willing to listen to him.
Over 100 wealthy individuals, holding $50-60 billion in assets, have already left. The tax hike, which was meant to generate $146 million in annual revenue, has actually cost the country $400-500 million a year due to lost talent and capital.
Government's response? An exit tax, slapping on a hefty 37.8% rate, whenever you try to leave the country. The situation has become so dire that the Socialist Party created a “wall of shame” featuring photos of successful entrepreneurs who left the country because of the taxes. This has further alienated founders, who feel punished for building businesses.
Even banks and big companies are considering leaving. Startups are closing or moving operations abroad, and founders like Axel Hunter have had enough. Hunter is relocating to Spain, where lower costs and taxes give him the freedom to focus on growing his business.
“Norway isn't built for people like me, it's a place to settle down into a job, build a pension and retire, personally I've found it's not built for builders and founders."
The ripple effects go beyond the numbers. Norway’s startup ecosystem is losing its brightest talent and its reputation as a hub for innovation. For indie hackers, the story is a cautionary tale. Norway once showed what was possible when founders were supported. Now, it’s a reminder that ambition needs the right environment to thrive.
For those who can’t afford to be weighed down by bad policies, the message is clear: build where you’re valued, not where the system shuts you down.
Taxing unrealized gains shows just how far removed your officials are from the people. That's a sad situation. Some great tech has come out of Norway.
Canary in the coal mine for the US. This is one of the policy proposals that showed up in the recent presidential election. Uniquely alarming to people in the business world. Hard for me to imagine a more demoralizing policy.
A wealth tax isn't de facto bad. In fact, in the US, a well-written wealth tax would be a good thing.
A wealth tax that applies to shares owned in a startup that doesn't trade publicly? That's just stupid.
A wealth tax that applies to shares in publicly traded companies? A tax that isn't stupid about how it values the shares, so if the shares happen to be high at the end of the year but then crater before tax time, you can still count them at the lowest value? In fact, you should be able to report them at the lowest value for the entire fiscal year and right up to and including the day you file your taxes!
Also put the threshold at which the wealth tax kicks in at some arbitrary high point: $50M at least, maybe higher. But still exclude the "paper value" of a startup, because that's really not a real number until it goes public or someone actually buys it for a real dollar figure.
Then the wealth tax would only hit multi-millionaires and billionaires who absolutely could afford to pay it.
In fact, last time around the Trump tax changes did a ton of damage to the indie development ecosystem. Google "Section 174". It's a change to the law that requires basically all software engineering expenses to be considered R&D, meaning you can't deduct them in the year you incur them and instead need to depreciate them over five years.
So if you make $200k and spend $200k on software development to improve your product, in the first year you now need to pay taxes on $160k of "income" even though you've spent all of it on development.
I don't know why this isn't huge news. Except that politics are a nightmare at the moment and distracting everyone.
"A wealth tax isn't de facto bad. In fact, in the US, a well-written wealth tax would be a good thing." Yeah, I guess it is a "good thing" when the subject to pay the tax is anybody but yourself.
So this is the thing, paying taxes from unrealised gains is the most destructive tax that you can conceive. So just because on paper, you have a certain amount wealth, it does not mean that that wealth is at your disposal, most billionaires do not have their billions in "cash", they have them in assets, so you are saying that they should be forced to sell their assets to pay taxes?
So for any person that has actually tried to start and build a business, and knows how incredibly hard it is to actually make it, and how much work and sacrifice you have to put on it, what you are telling me is that after creating all this value for society, the reward should be to force me to sell my company so that I can pay taxes? That's just insane, and the response would be exactly the one the entrepreneurs of Norway are giving: leave the country and never look back!
This is weird and sound totally brain dead. Surely there is another side to this story?
Yikes, that sounds rough. It's crazy how fast things changed from booming to busting. Unrealized gains tax seems like a huge hurdle for startups. Can't blame founders for looking for better places to grow.
The startup scene in Norway is challenged by high operational costs, restricted access to venture capital, and a small domestic market, making it difficult for founders to scale their businesses. It is these factors that are driving entrepreneurs abroad to more startup-friendly ecosystems.
Norway's startup scene faces significant challenges, prompting many founders to leave the country in pursuit of more supportive environments.
Despite its wealth and a highly educated workforce, Norway's rigid bureaucracy, high taxation, and limited access to venture capital create hurdles for entrepreneurs.
The nation’s reliance on oil wealth has also fostered a risk-averse culture, where traditional industries dominate investments, leaving little room for innovation-driven startups.
structural reforms, Norway risks losing its brightest talent and innovative potential to more dynamic markets.
How unbelievably stupid. Certain countries seem to be run by people with no grip on reality.
Sad to see this.
Many countries in Europe have this unrealized gain tax: Germany, Netherlands, ... .
No, they do not.
https://germanpedia.com/capital-gains-tax-germany/
The capital gains tax is different. If you emigrate, you have to pay the unrealized gains tax: https://www.grantthornton.de/en/insights/2024/extinction-of-exit-taxation-introduced/