Author: Kristinn Árni Lár (Page 2 of 14)

Ringing the Nasdaq bell – Helga Valfells’ speech

On Tuesday, a Nordic delegation of startups, investors and ecosystem organisations, rang the Nasdaq bell in New York City. This was part of the second #NordicMade delegation to New York. Helga Valfess, CEO of NSA Ventures gave a speech for the occation, and announced Rising North – a €1.5m fund to finance projects that work towards the internationalisation of the Nordic Startup Scene.


I would like to begin by thanking NASDAQ for hosting us here today.

We are here as delegation from the Nordic startup scene and we are truly excited to be here at NASDAQ and in New York City, one of the most vibrant and successful startup ecosystems in the world. 

In the Nordics we work hard, we are extremely loyal to our company and our cause and we love technology. It is therefore no surprise that the Nordics have produced a string of very successful technology companies.  Spotify, Skype, Supercell, Zendesk and Unity have all come from the Nordics.  

In fact over the last five years, the Nordics, which account for only 4% of the European population, have produced over 25% of all European exits.  If we look at this past decade, 1 in 10 technology companies globally valued at 1 billion dollars or more have come from the Nordics. 

In the Nordics, collaboration is an important part of our culture. The five Nordic countries not only share the midnight sun, but we work together, across countries and across organizations to support entrepreneurs building the next generation of billion dollar companies. 

Today, it is my honor to launch an initiative called the Rising North. The Rising North is a €1.5 million fund to support the internationalization of the Nordic startup ecosystem, to be allocated over the next three years to joint Nordic projects to accelerate the region.

Finally I would like to thank NASDAQ for building a bridge between the Nordics and America.  This truly Iinternational exchange has provided the capital to bring so many great Nordic companies to the global market.

Iceland has a tech-sector strategy problem

For the last 18 months, as I’ve been writing for Northstack, one thing has become clear. Iceland desperately needs a coherent strategy for its approach to the technology sector. The most recent plans and actions include a wishlist with lots of ideas but lacking strategy, and focused financial reform for startup companies. But I don’t see a long-term strategy, or focused attempts in moving Iceland in a particular direction. What is missing is an analysis of the challenges Iceland faces, a decision on where to steer the country, and a plan that makes sense.

One big challenge, or a symptom of a challenge, is brain drain. That includes individuals deciding where to lead their professional lives and companies deciding to build their operations elsewhere.

While this may sound overly pessimistic, I think it’s important. The world is getting smaller. Future generations will not let arbitrary concepts like borders or nations interfere with where they work and live. Due to it’s small size and location, Iceland might lack in big, exciting opportunities. That is, outside of servicing tourists, fisheries, and energy production, there needs to be a reason for the generations of the future to stay here. This sentiment is (somewhat) echoed in an interview with Hilmar Veigar (CEO of CCP) on Kjarninn:

The brain-drain is different now than before. Young, talented people are bolder than before. I see a lot of our smartest people going straight to work, for example at Google, rather than starting a company in Iceland. When I was young, that wasn’t an option, because there was no Google. Working at Microsoft or NASA was maybe a distant dream and there were maybe three Icelanders that went there. It’s completely different now and the multinational companies are so hungry for talent that they find them wherever in the world they are. And the talent looks for those companies as well.

I’ve witnessed this first hand through the winding down of QuizUp. People have asked themselves “Why should I stay in Iceland?” and there really is no clear answer.

For a long time, the lingering thought has been that Icelander’s always come back. They might go abroad to study or work for some time, but in the end, they want to come back. I’m not sure that will continue. There need to be opportunities for people to work at a global scale for Iceland to be competitive.

In the interview, Hilmar mentions how few companies have reached real scale in Iceland:

This means that we have two international companies in the technology sector that have turnover between $500-1000m. Those are Össur, founded 40 years ago, and Marel, founded 30 years ago. Then we have CCP, a 20 year old company, with around $100m yearly turnover, and Meniga and Nox Medical, both with around $10m in turnover. This might be good per capita, but it’s not groundbreaking.

While Hilmar forgot Tempo (on track for about $12-15m in revenue for 2016) he mentions a very important point. Number of successful companies in Iceland may be impressive per capita. But the global talent market doesn’t care about per capita.

As Hilmar mentions, Iceland has shown resourcefulness when it decides to do something. The national soccer team is a good example. In the case of technology, I think we need to do a similar thing. Officials need to analyse the situation and decide where to focus. Invest resources in making Iceland a great place for a specific technology. That doesn’t mean shun other types, it’s just a given that to create a competetive ecosystem we need to focus.

And I think we can do it. Singapore did it with biotech, Isreal did it with high-tech, Montreal is doing it with IT. We just need someone to pull the trigger and decide where to go.

Q3 2016 Funding & Exit report

This quarter’s funding report is the fourth we do, which means we now have a full year to compare to. This is exciting news, because we can now start plotting trends and reading more into the data and where we’re heading. That, in addition to our data gathering project, will help the Icelandic startup community and stakeholders back up (or refute) their opinions with data. You can find older reports here.

  • 6 investments, $20.4m total (disclosed)
  • Average round was $4.08m, four times the Q2/’16 average round, and the highest average since we started doing these reports
  • Iceland accounted for 4% of deployed capital in the Nordics
  • 81% of the capital was from foreign sources
  • 3 of 4 Icelandic VC’s invested in the quarter
  • No exits, which means two quarters in a row without an exit.


This quarter we recorded six investments, and no exits. The biggest investment was Meniga’s $8.2m round, which we record in Q3 because that’s when it was announced (although it closed in Q1).

Funding rounds

(millions of US dollars)

An interesting development is that all the investments were at least $1m. Four investments were into fairly old companies (Meniga, Mint, Greenqloud, Oculis Pharma), and two into younger companies (Datadwell, Takumi). We didn’t pick up any angel or early seed stage investments.

Investments, by size and quarter

We also see a small increase in investments quarter-over-quarter, up to six investments. This implies that the low of four investments last quarter was a seasonal thing (although we won’t assert that, yet).

In regards to the smaller rounds, it’s important to remember that Icelandic angel investors are secretive (or just don’t proactively share their investment data). The fact we didn’t track any doesn’t mean no investments happened.

Number of investments per quarter

This next chart reveals a big positive: We haven’t seen this amount of capital deployed in the Icelandic startup scene for three quarters, and if you don’t count CCP’s $30m round, even longer. The average round is almost double the size of the highest average we’ve had. This is obviously impacted by the age of the companies that were raising funds – maybe we should start tracking that as well.

Capital deployed and average round sizes

(millions of US dollars)

*The average for Q4/2015 doesn’t include the $30m CCP investment

Comparison with the Nordics

As we saw in the last report, recorded investments in the Nordics have grown steadily quarter over quarter. The dataset behind investments in Iceland, and the timeframe we’re looking at, is too small to plot any real trend, but it’s positive to see the number rising.

Number of investments compared to the Nordics

This quarter, Iceland’s $20.4m accounted for ~4% of deployed capital (total $516.2m) in the Nordics, as per The Nordic Web’s funding report.

Funding sources

Bigger rounds, older companies, higher averages. This all leads up to a (fairly) obvious assumption: The money is coming from outside of Iceland. And, it is. Around 81% of deployed (and disclosed) capital in the quarter is from outside of Iceland.

Funding sources

However, three of the four VC funds were active. Brunnur invested in Oculis Pharma, Frumtak in Datadwell, and NSA Ventures participated in Mint‘s round.

Important legal changes happening for Icelandic VC’s, and notes on Slush PLAY

This post was originally part of the Northstack Memo, our weekly commentary newsletter. You can sign up here.

Iceland doesn’t have venture capital association to lobby on behalf of Icelandic VC’s, which might be one of the reasons an important exemption wasn’t extended. I wrote about this back in April:

Raising funds became harder this year

On January 1st 2016, special exemptions for pension funds that allowed them to own up to 20% in a SLHF ran its course. Without the exemption, they can only own 15% of a given fund. That small drop means GP’s need more pension funds on board than before to raise a fund. That’s bad, because in Iceland, pension funds are the biggest pool of investors in venture capital.

One of the VC’s I’ve discussed the issue with, said it would be “very hard, if not impossible” to raise a new fund.

Six months later, the Ministry of Finance includes a provision in a new bill on pension funds to increase this limit to 20%. The change would fix this number at 20%, and not require parliament to extend exemptions every year, like it did the 10 or so years before.

This is obviously great news for Iceland and Icelandic VC. GP’s raising a fund won’t need seven participating pension funds (which is hard), so raising should be easier. That said, I believe asset managers at pension funds will want to see some successes (that is exits) before they pour more money into the VC market.

Slush PLAY and the future of VR in Iceland

Yesterday I wrote about Slush PLAY and its future:

Slush Play, second edition, showed that it’s possible to bring VR and gaming professionals from all over to Iceland. The schedule was full, interesting, and diverse. In addition to bringing people to Iceland, the event brought together the local industry for a two-day extravaganza. I foresee two important functions for the event going forward.

Firstly, as speakers mentioned, we might very well enter a desert walk in the next years. Fewer investments and less general interest. It’s part of the classic hype cycle, and the Icelandic community should be prepared for it. Continuing the event and growing it all the way through the desert is important. That way, when VR is closer to mainstream, one of the most relevant events will be in Iceland. Because when VR gets closer to mainstream, VR events will pop-up all over. Having a 5 year-old proven event happening in Iceland competing for attention will be a great asset for the Icelandic community.

Sorry for the long quote, but I think this is an important point. For an area to become a relevant place in any technology in the long run, it has to achieve competitive advantage. That requires a lot of factors, which I think can generally happen in two ways:

a) Naturally: The area’s industry has the necessary factors to have achieve competitive advantage. This can be gauged using tools like Porter’s five forcesIf the requisites arise naturally, like has happened in Iceland’s seafood industry, the area has a good chance of reaching competitive advantage.

b) With focus: The area’s stakeholders decide to focus on that technology, putting resources into building local expertise, infrastructure, and opportunities (like Singapore did with biotech). In the case of VR in Iceland I think this will be necessary. The reason is that we won’t be able to build a competitive advantage the natural way. That would require us to have forces like hardware producers and demanding consumers, neither of which we have (at the moment).

So – until we’re there, I guess we’ll have to continue putting effort into it, and fake it till we make it 🙂

Thoughts on Slush Play, 2nd edition

On Friday the second edition of Slush Play came to close, after two days packed with talks and panels about VR and gaming. All in all, it was a great event and the Icelandic Startups team deserves great praise for their work.

Iceland’s VR ambitions

Over the recent months, people and pundits have described Iceland as a (or the) place for VR. Journalists have announced that we’re in a VR boom and we’ve asked whether Iceland can become VR valley (link). There are promising signs. CCP’s big fundraise and launch of both Gunjack and Valkyrie. Sólfar’s Everest and RVX’s decision to focus on VR. Aldin Dynamic’s Waltz of the Wizard and data platform, and Breakroom’s productivity software. All are innovative VR products produced right here in Iceland.

In the Nordics, Iceland is definitely punching above its weight. We learned on Wednesday at the warmup event that Iceland has attracted 35% of the VR investments in the Nordics in the last year. Although CCP’s $30m investment is a big part of that, it’s only one of seven investments in the space over the last two years.

Becoming a hub for VR is possible, or at least people in the industry believe so. In our newest podcast, CCP’s new GM Stefanía G. Halldórsdóttir said she was optimistic for the outlook for VR in Iceland. In his talk, Lawnmower Man director Brett Leonard said that innovation in VR storytelling would happen outside Hollywood. Following that he believed Iceland could become a hub for VR content.


Icelandic Startups team on stage receiving applause

Where Slush Play fits in

Slush Play, second edition, showed that it’s possible to bring together VR and gaming professionals from all over to Iceland. The schedule was full, interesting, and diverse. In addition to bringing people to Iceland, the event brought together the local industry for a two-day extravaganza. I foresee two important functions for the event going forward.

Firstly, as speakers mentioned, we might very well enter a desert walk in the next years. Fewer investments and less general interest. It’s part of the classic hype cycle, and the Icelandic community should be prepared for it. Continuing the event and growing it all the way through a desert walk is important. That way, when VR is closer to mainstream, one of the most relevant events will be in Iceland. Because when VR gets closer to mainstream, VR events will start popping up all over the world. Having a 5 year-old proven event happening in Iceland competing for attention will be a great asset for the Icelandic community.

Secondly, Slush Play can build interest in the field from both the public and students. Introducing engineering and design students to the world of VR will further the chances of Iceland becoming relevant in the space. As we all know, talent is very important.

Of course, not everything was perfect. The venue, Austurbær, was beautiful and cozy but was on two floors, which hindered the flow of people. It was also a bit cramped during breaks. The lecture hall could have had more attendees (a big part of the seats were behind an “off-limits” tape). In hindsight, filling the room with students by giving away free tickets might have been a good idea. To be fair, both these points were minor and didn’t hurt the experience.

All in all – great event, promising outlook. Excited for next time.

Bullshit taxes and Icelanders abroad

The following post is from The Northstack Memo, our weekly commentary newsletter on everything startups and tech in Iceland. You can sign up here.

Bullshit taxes incoming

It continues to amaze me how politicians can be bullied by lobby groups that are at the brink of total irrelevancy. The newest death-spasm by music rightsholders is interesting to say the least. The ministry for education and culture put forward a law bill that requires the state to pay upward of $2 million every year to rightsholders. These taxes were already there, but outdated, and paid around $70K to rightsholders in 2015. So they’re basically increasing it by a magnitude of ~30x.

The state will pay 1% of the tollprice (CIF: cost, insurance, and freight) of all computers and smartphones imported to Iceland, and 4% of USB memory, datastorages and SD cards. (

Basically, smartphone users and photographers, will be paying music rightsholding organisations, because they’re using these devices.

We’re witnessing a clash of world views. Rightsholders think they should be compansated (through taxes, no less) because technology has allowed people to copy everything, all the time.

The world, however, is changing. Music and entertainment is no longer a limited good. Through the internet, it’s unlimited, and things that are unlimited will always approach zero cost to the user.

In the appendix to the bill, the lawmaker notes:

Due to this, a reduction in “damages” of rightsholders because of copying of music and movies is foreseeable in the future. It’s therefore unavoidable that the payments of compensation for copying will be revisited. (

It’s good to see that the state is looking to the future. However, I think they’re underestimating how far we’ve come already, at least according to the data.

The RIAA (Record Industry Association of America) released a report on music industry sales for the first half of 2016. Paid subscriptions in the US have doubled in one year (from ~9 million to 18 million). More importantly, the report states:

The revenue growth from subscriptions alone more than offset the declines from physical sales and permanent digital downloads. (RIAA report)

Basically, the times where the record industry can hide behind declining sales are over. Everyone in the industry should know this (if not, they’re probably in denial). Selling copies of music or movies isn’t how these industries will make money. They’ll find other ways, and many already have.

All this will die soon. It’s just annoying that they’re picking death by a thousand cuts, instead of just realising their demise and calling it quits.

Icelanders abroad

To end the Memo on a high note: Last week Google shipped its new AI driven messaging app Allo. Most of the big tech media wrote about the app and how Google assistant is integrated into the messenger to assist people at the tap of a button.

Fewer might know that one of the drivers behind this product is Guðmundur Hafsteinsson, formerly of Siri (acquired by Apple) and Emu Messenger (acquired by Google). His role is Product Management Director.

Although he might not be very well known outside of Iceland’s (tiny) techy group, he’s probably one of Iceland’s most successful technologists. Acquisitions and stints following them, at both Apple and Google, are feats few (if any) Icelanders can tout.

A heartfelt congratulations from Northstack to Gummi & his team for shipping Allo!

Autodesk in Iceland closing down: Is 2016 the year of “Closing-up-shop”?

Autodesk in Iceland (previously Modio) has laid off all its employees and is closing up shop.

Modio was founded in 2014 by Hilmar Gunnarsson, and sold less than 18 months later to 3D printing giant Autodesk. The company created a smartdevice app to build 3D printable toys that was later rebranded to join the Tinkercad family as Tinkerplay.

The team in Iceland was working on a consumer 3D printer called Thingmaker with toy company Mattel set to launch this fall. The layoffs were announced in late August this year, and includes everyone in Iceland and people working on the same project in San Francisco and Toronto. Keen Reddit users have pointed out that theThingmaker website has been closed down, and pre-orders of the printer have been stopped on Amazon.

The reason I bring this up is that it’s an interesting fate. Three fairly prominent tech companies in Iceland laid off all their employees in the same year. Oz began by laying everyone off in May (in what I coined as Black Friday). Oz still has some operations and might get back on track, but it suggest turbulence anyway. Plain Vanilla announced a wind-down several weeks ago, laying off the 38 that were left at the company, and while Autodesk (Modio) hasn’t sent out a specific press release, the operations in Iceland are closing down.

Will 2015 be known as the year of unprecedented VC investment in Iceland, and 2016 the year of closing-up-shop?

Influencer marketing platform Takumi announces $1.4m (£1.1m) funding round

Influencer marketing platform Takumi just announced a $1.4m (£1.1m) funding round from a number of UK angel investors. This brings total investment in the company to $3.3m (£2.6m) in three rounds.

“We’re excited to bring the Takumi offering to new markets,” said CEO Mats Stigzelius in a written statement. “We have seen an incredible 60% MoM sales increase in Q2 and Q3 this year and our list of 4,000 actively engaged users is growing every week.”

The investment will be used to fuel the companies international expansion. Takumi, which until now has only been available in the UK, is planning on expanding to Germany later this fall and the U.S. early next year. According to the statement, the company has $130k (£100k) in monthly revenue, and clients including Domino’s, Nickolodeon and Socialyse.

Takumi, product

The company has operations in both Iceland and the UK. The Iceland office is responsible for product development, and sales are located in the UK. Jökull Sólberg, co-founder of Takumi, said in the statement: “The funding will allow us to further innovate and continue to drive forward the influencer marketing industry.” Jökull has previously written a post on their experience starting Takumi here on Northstack.

Takumi allows brands to connect with micro-influencers (anyone with more than 1,000 followers) on Instagram. The companies post campaigns on the platform, that influencers can choose to work on, by posting pictures to Instagram, and then get paid by the brand. The app is available on iOS and Android, currently only in the UK.

Seven companies chosen for Startup Energy Reykjavik

The third batch of Startup Energy Reykjavik companies has been announced. The companies will receive $40,000 in seed funding from backers Arion Bank, Landsvirkjun, Innovation Center Iceland, and GEORG. The accelerator is operated by Icelandic Startups and The Geothermal Cluster (Gekon).

The following companies will participate:

  • Arctic Sea Minerals: Salt that is healthier and includes less sodium.
  • Health Snacks: Makes snacks from fishskin.
  • Ískristallar: Are working towards marketing proteins that reduce the formation of ice crystals, leading to longer shelf life for frozen foods.
  • Kjarni: Utilising insects for waste removal.
  • ELF Tech: Develops technology that makes it possible to look under the surface of the earth and listen to the northern lights.
  • Mýsköpun: Using geothermal energy to grow and utilise algae in Mývatn.
  • Zeto: Soap and skincare procuts where algae extract is used instead of water, without filling or added chemicals.

Two previous Startup Energy Reykjavik companies have received further equity funding: DTEquipment and Key Natura.


The implications of Plain Vanilla’s wind down

Note: Several months ago we started writing in English, to widen our possible audience. Now we’ve finally changed to an English name: Northstack. Hope you like it! Also, this post is a part of the Northstack Memo, you can sign up here.

As you all likely know, Plain Vanilla announced last week that the company was winding down, following a cancelation of the planned TV show with NBC. I wanted to devote this Memo to discussing my thoughts on the implications this has to the Icelandic startup scene. Disclaimer: I was / am an employee of Plain Vanilla.

Press coverage of the news has been generally neutral or positive, which is good, because we as a startup community must be okay with failure. It’s also important to remember that Plain Vanilla was almost entirely funded by investors from outside the country. I can’t even begin to imagine the sh*tstorm we’d be witnessing if Icelandic VC’s funded by Icelandic pension funds (majority of Icelandic LP’s) had been majority shareholders.

And while Plain Vanilla didn’t end in a successful exit, with a group of people cashing out a healthy amount to invest back in the community, the talent that’s unleashed is substantial. What do you think will happen when ~40 highly talented, creative, entrepreneurial people lose their jobs on the same day? I can’t wait to find out.

It’s obviously in the best interest of the Icelandic startup community, Icelandic investors, and Icelandic business, that teams are formed, companies started, and new startups launched. This is perhaps one of the most important things to remember about Plain Vanilla.

Yes, Thor and the QuizUp team brought in a substantial amount of capital, that was mostly deployed in Iceland (so a lot of it became taxes and such). But the bigger point is that they decided to stay here. There was no real business reason to grow and operate Plain Vanilla in Iceland – as we can see with Tempo, who are moving chunks of their operations abroad, or CCP who are moving their executive team to London.

Several years ago, someone made a picture of the effects the Oz adventure had on the Icelandic tech scene. I can’t wait to see a similar one for Plain Vanilla.

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