With fewer than 400,000 residents, Iceland receives more than its fair share of tourists — and venture capital. Both are good reasons to keep an eye on what’s happening and coming out of this unique island nation.
“We need more pillars in our economy” Áslaug Arna SigurbjörnsdóttirIceland’s Minister of Higher Education, Science and Innovation recently told TechCrunch in Innovation Week in Iceland in Reykjavik.
Some diversification is already underway, and the country’s export earnings from intellectual property-based industries are steadily increasing. But more than being its own pillar, Icelandic innovation is linked to what already exists: startups are building technology to help the country make the most of its resources and economic activities — fishing and heavy industry are at the top of this list, but also marketing of local talent and culture.
However, it is difficult to infer trends from the scant data on the few startup deals made in Iceland each year. Here’s what you need to know about the types of startups that have taken root and are thriving in the island nation:
This medtech company says so Kerecisthat uses fish skin for new wound dressings is from Iceland: Innovation here often looks to unexpected places for inspiration.
Products from the ocean have branched out into high-end cosmetics, as has foodtech, new ingredients and more. While it wasn’t obvious even to Icelanders that fish skin or seaweed could be reused in many ways, growing support for the circular economy has brought the focus back to sustainability. this is one startup accelerator managed by KLAK – Icelandic start-ups aims.
A great source of inspiration for companies in the country is the past. Especially when it comes to fintech — the sector has less to do with the country’s natural resources and more to do with its history. “I think the power behind companies like [neobank] Indian are lessons learned from [2008] banking crisis. And the same with Monerium”, said Gunnlaugur Jónsson, its CEO Reykjavik Fintech Clusteran association that aims to nurture the country’s fintech companies.
There are more lessons to learn, according to Bjarni Gaukur Sigurdsson. His new company, Blikk, is working on an account-to-account payment platform as an alternative to credit cards to help reduce payment processing costs. It also has a security angle, helping its customers stop being overly dependent on platforms that could be compromised.
But all this innovation will be lost without support. Fortunately, entrepreneurs here have a good ecosystem to contribute and learn from as they build.
In addition to venture capital and accelerators, the country’s startups can receive funding through programs such as; Horizon Europea nice addition to the national grants also distributed by Rannisthe Icelandic Research Centre.
DTEfor example, it is a beneficiary of a grant from the European Innovation Council to bring more efficient processes to the country’s vast aluminum industry.
But funding isn’t the only thing a startup needs to grow. Talent builds companies, which is why so many startups flock to downtown Reykjavík, the center of Iceland’s cultural, economic and governmental activity. The area hosts co-working spaces and business hubs such as Hafnar.hauswhich provides co-working space as well as rental studios for the creatively inclined.
Iceland is known for its talent in the creative fields, and this trend has also seeped into its tech scene. Companies like Genki, Hypercoordination and Threefold they have created technology for music production, composition and even acoustic simulation. Gaming is also big, and Iceland is home to popular gaming company CCP Games, the studio behind the popular MMORPG EVE Online.
The presence of CCP Games inspired many Icelanders to start making games, Porcelain fortress CEO Ingolfur Aevarsson told TechCrunch.
“Having a big brother like CCP in the neighborhood really opened people’s eyes [to the fact] that we could actually make plays,” Everson said. “But Iceland has very strong roots in the writing of our stories and all these kinds of story-making.”
Porcelain Fortress is based out of Innovation Housea collaboration space created by Opera and the founder of Vivaldi Jon Stephenson von Tetzchner. It is also home to Heimaa platform that helps families manage and share household chores; PayAnalyticsa pay and workforce analytics provider and many more startups.
However, when startups get bigger and better funded, some move on Groska (a word for “development” in Icelandic), a modern space in the middle of it Reykjavík Science City. This new district also hosts the University of Iceland Science Park.
However, there are limitations inherent in a country with a small population: Once they reach a certain size, Icelandic startups often have to look abroad for AI talent or executives with scaling experience.
Startups from Iceland that have entered abroad include; Listed on Nasdaq eye care company Oculis; Prescriptionan opioid addiction prevention company he recently created 2 million euros to expand into Canada and enter the US. Sidekick Health, whose digital care platform has gained traction across Europe and the US. and Avowhich became the first Icelandic startup to join Y Combinator in 2019.
Some companies go global immediately, while others prefer to cut their teeth locally first. Crowberry Capital founding partner Jenny Ruth Hrafnsdottir has a caveat about the latter: Because Iceland is a country where most people are just a phone call or introduction away, it can make startups overconfident about a strategy market promotion. it won’t fly in larger markets.
However, the ease with which certain things can be done in Iceland makes it a good testing ground for foreign companies, especially when they can also tap into its natural assets. It also helps that validation in Iceland can often apply to Europe: Iceland is not part of the EU, but is part of the European Economic Area (EEA), with extensive legislative overlap.
Iceland has long had a strategic geographic location worth securing, but it’s about re-experiencing the sky winds when it comes to startups — bug bounty program Defend Iceland last year he received $2.6 million grant by the European Commission as part of the Digital Europe project.
And the fact that the NATO Innovation Fund (NIF) also participated in an event during Iceland Innovation Week underlines how much attention Iceland is getting.
Iceland rarely makes the list of top countries by global investment, but that’s mostly because the startup scene here is just taking off. On a panel at the event, NIF partner Chris O’Connor noted that Iceland’s venture capital ecosystem is fairly new, with most companies only using their first or second round of capital.
He has a point: With the exception of the state ones New Business Venture Fundfunds such as Crowberry, Brunnur Ventures, Eyrir Business Management and Frumtak Ventures were born this century, if not this decade (Iðunn).
It is too early to say which companies or funds will benefit from NIF’s €1 billion fund, but Iceland is on the list of potential recipients as one of 24 LPs. A technology company, manufacturer of wind turbines Icewindit is already part of the first accelerator cohort supported by NATO ARTEMIS. The trend will be worth watching.
Strategically, but also economically and culturally, the once isolated Iceland is now more of a crossroads.
As a Nordic country, it has a lot in common with Scandinavia (both have a strong gaming industry) and the Baltics (fintech and technology for governments). It’s also natural for tech companies to look to larger markets early on. This is likely good for startups and the emerging venture capital scene. For the rest of us, it means we can get used to hearing about Iceland and its talent.
Disclosure: Anna Heim traveled to Iceland at the invitation of Business Iceland by the Reykjavík Science City.
