There are currently four venture capital funds in Iceland – three of them initiated in 2015. The investment capacity of these three is around USD 85 million to be invested in the next 3-4 years.
Historically, this is groundbreaking news for Iceland. Never before has so much funding been allocated to early stage companies. Since 2008, much discussion has been around how Iceland, like any Western country, could grow out of the recession in 2009-2010. Well, local investors, primarily Icelandic pension funds and banks, pulled themselves together, and placed a fraction of their capital to venture capital. This has been excellent to the highly innovative Icelandic startup scene yet capital deprived. At least, McKinsey stated in late 2012 that in order for Iceland to be at the same investment level as the United States, annual investment in early stage companies need be USD 25-30M. Finally, the country is getting closer to that reality.McKinsey’s report – Charting a Growth Path for Iceland
The four funds are:
- NSA Venture – The state owned/backed fund. Operated as an evergreen fund, i.e. it only invests if exits are made. It has been operated since 1998 and has invested in 145 companies since then and currently has 39 companies in its portfolio. The fund’s CEO is Helga Valfells.
- Frumtak II – Fund no. 2 was announced in March 2015 and is USD 38M in size. Frumtak’s CEO is Eggert Claessen, a seasoned entrepreneur and investor.
- Eyrir Sprotar – The fund was announced in March 2015 and is USD 19M in size. The fund is operated seperately but in parallel with the investment firm Eyrir. The Manging Director is Örn Valdimarsson.
- Brunnur – Managed jointly by SA Framtak and Landsbréf. The fund’s size is USD 31M. The fund is directed by Sigurdur Arnljotsson and Arni Blöndal.
Investment strategy is Icelandic & scalability
All funds have one thing in common which is to invest in Icelandic startups that have a scalable product with a global reach. This makes sense, since the Icelandic market is tiny. Interestingly enough, the small size of the market requires Icelandic entrepreneurs to think globally once they start their companies. The boozt of investments into the Icelandic startup scene will without doubt make a number of internationally renowned companies in the years to come.