Last week was eventful. Two funding rounds announced and Icelandic media wrote a lot about startups. Norðurskautið was also working on some interesting news – we’ll get to that later. Before the memo, a short request.

We would like your term sheet 🙏

We’re researching how the term sheet culture is in Iceland. To do that we need, you guessed it, term sheets. Anything from angel rounds to growth rounds. We’re focusing on Icelandic term sheets, from Icelandic investors.

We understand some of the things in the term sheet are sensitive. Feel free to black out anything that is either identifying or confidential. We won’t publish anything without talking to you first – and if we publish anything it most likely won’t be terms heets. More just interesting findings, if there are any. If you don’t have a term sheet yourself, please help us by spreading the word 🙂 Just send me a message if you can help.

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Now, on to the Memo:

The Startup Reykjavik term sheet

Viðskiptablaðið wrote an article titled “Controversial term in Startup Reykjavik’s term sheet.” (link) The article sprung up from a discussion in the Slack group about a anti-dilution clause. The article is pretty good, discusses the concerns that were raised, and gives Einar Gunnar of Arion Banki a lot of space to explain.

Most of the points make sense, but there was one point that stuck out to me. Einar says (translated from Icelandic):

This clause is meant to protect minority owners, in this case [Arion bank]. The issue could arise that someone is upset about something following the Startup Reykjavik investment, and decides they don’t want Arion bank as a shareholder anymore, and sell auntie Sigga a 94% share of the company for 100.000 ISK. That way they could dilute us in an abnormal way.

The clause in question ensures that Startup Reykjavik Invest keeps its 6% stake if the investment is 40 million ISK or lower (~$340K).  Many angel investments are well within that range. That means that startups that receive an angel investment after SR will often need to deal with the clause. Also, there are many ways in structuring the term sheet to protect small investors, that don’t involve giving that investor free shares in a small financing.

I applaud the debate, and thank Viðskiptablaðið for reporting on these topics. We as a community need to start talking about these things openly.

Two fundings

Last week we saw two announced funding events. Oculis Pharma raised an undisclosed amount from Brunnur Ventures and Silfurberg. Greenqloud raised a $4m investment from Kelly Ireland, who joins the board.

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Great news for the ecosystem. The Oculis Pharma investment reminds us of the vitality of the pharmaceutical industry in Iceland. Sadly, we haven’t covered it much. The reason is simple – we don’t know or understand that industry enough. So if you want to help, by either writing or just giving us tips about interesting things in the pharma space, send us a line.

Greenqloud had its struggles a couple of years back, when they switched out their CEO. Following that, the company pivoted away from providing infrastructure as a service. Their focus now is selling Qstack, cloud management software. The investment suggests that that bet is paying off.