The Norwegian government launched StartOff (the Norwegian Agency for Public and Financial Management) in 2021 to bring entrepreneurs together with the public sector to co-create and enable increased cooperation. However, some smaller start-ups state that this programme targets more mature, institutionalised companies and, in practice, does not support smaller scale, social start-ups. Four main barriers for collaborating with social impact start-ups and conducting innovative procurements have been identified in Norway (Skogli and Nellemann 2016). The barriers are 1) limited competence, 2) fear of making mistakes, 3) lack of coordination, and 4) weak alignment/leadership. 

Limited competence is related to lack of knowledge about procurements. Often public agencies have only minor insights into other procurement regulations, especially about the possibilities for innovation. There is also a lack of specific expertise which makes it difficult to stipulate relevant criteria for good procurement. Fear of making mistakes is related to the way procurement is organised in the municipalities. Public procurers are often uncertain about the regulations and therefore choose the familiar path rather than risk making an error. Usually, procurement is taken care of in small entities, which means that time and resources are not always devoted to exploring all existing possibilities. Lack of coordination is evident from the public institutional structure. In Norway, each public agency carries out its own procurement, which means there are approximately 3,000 different clients. There are also challenges in terms of weak alignment and leadership. Several examples show that public actors have little incentive for taking ownership of the collaboration process and are instead distracted by the time, budget, and performance indicators required for establishing innovative procurements.

According to a 2020 report commissioned by the Norwegian Directorate of Labour and Welfare, some public sector employees comment that, because social entrepreneurs are new and/or do new things, it is difficult to know what is allowed or not allowed when it comes to collaboration and procurement of services (Aksnes et al. 2020). Others are sceptical about entrepreneurs’ motivations and question whether they are primarily driven by business or by social results. Other challenges mentioned by the public sector employees include data-sharing and privacy. Several perceive it as resource demanding to ensure leadership commitment within the organisation.  

The Norwegian think tank Agenda has identified several characteristics of different social impact start-ups. The start-ups in the first category are those that have already defined the key challenges and solutions. The primary concern for these start-ups is to convince public sector actors of the value of the welfare work they are proposing. Usually, these impact start-ups are suggesting tasks that are preventive and can save costs for the public sector in the long run. They need facilities for meeting and need to collaborate with public actors to determine the scope of the tasks and solutions they can deliver through public procurement. 

Start-ups in the second category are those that offer solutions on tasks the public sector is already procuring, and they are often in competition with larger, commercial suppliers. This group is dependent on the public sector prioritising welfare quality higher than experience and costs. 

Start-ups falling into the third category are more established social impact start-ups that are delivering regular services but have a more socially responsible profile by, for example, hiring employees who would not have been part of the regular labour market. Start-ups of this type are dependent on a specific social and inclusive criterion in the public procurement process. 

The public management models are a major barrier for public procurement for start-ups in Norway. The typical Norwegian municipality is small and has limited capacity and expertise in the nuances of procurement regulations (Agenda 2017). According to Agenda, the competence and organisation for public procurement in the municipalities are too weak to bridge the link between the start-ups and their contribution to the welfare. Among the suggestions from the think tank are to draw attention to evaluation criteria, establish support mechanisms for start-ups (e.g., by providing a chat and telephone line), and carry out measurements on effectiveness that can serve as inputs when evaluating tenders in the procurement process.