Category: Articles (Page 1 of 3)

Just One Click: Car Parts, Instantaneous Orders and a Late-night Email to Jeff Bezos

The company started with a basic idea: help businesses streamline and automate their sales processes. The usual administrative headaches ensued. Late one evening, in a fit of bleary desperation, a cofounder concocted an email to Jeff Bezos, Amazon’s CEO and the world’s richest man. And that’s when things started taking off for Clicksale, a small IoT startup based on the outskirts of Reykjavík.

Bjarni Ingimar Júlíusson, Clicksale’s CEO, has long been involved in information technology. His family owns Stilling, a company that has sold spare automotive parts in Iceland for almost 60 years, and Bjarni worked on a first-of-its-kind platform whereby vehicle owners could find all the parts they needed simply by entering their license plate number online.

But Bjarni soon encountered a problem: placing orders for products was far from efficient. Automobile shops often had a glut of general car-related materials but were often lacking in specific car parts. Furthermore, too much time was spent on ordering parts and waiting several days for them to arrive.

Why not allow mechanics to order parts immediately and have them delivered within the hour? Bjarni wondered.

So, in 2017, he formed Clicksale with Árni Jónsson, the first developer at Plain Vanilla Games, makers of the wildly successful trivia game QuizUp. The company ordered several Amazon Dash Buttons, which are physical pads a client can press to order prespecified products instantaneously over WiFi.

“We essentially hijacked the delivery system,” says Bjarni.

Clicksale wasn’t just buying up a bunch of buttons and redistributing them, however. The startup wanted to plug the gaps in Amazon’s system.

“What Amazon does is actually quite limited: they have this physical button that connects to the internet,” says Bjarni. “The purchaser have to do a lot of heavy lifting: connect it, program it, use the Amazon cloud. We created a cloud service for companies to implement this easily and also developed an app to deploy this service within a few seconds.”

Why not make the Internet of Things more accessible and intuitive? The only trouble was, ordering Dash buttons in bulk wound up being more cumbersome than the cofounders had anticipated.

“It’s almost like they don’t want you to order it,” says Bjarni. “We were getting really frustrated.”

It was only then that he considered writing to the founder of the world’s largest online marketplace and a man whose net worth was recently pegged by Forbes at nearly $140 billion: Jeff Bezos himself.

“It was kind of a moonshot idea,” Bjarni admits.

He fired off the email right before he went to sleep, and by the next morning he already had a reply from one of the corporation’s vice presidents. That executive invited the Clicksale cofounders to re:Invent, a massive annual developers’ conference sponsored by Amazon, where the Icelanders met the Dash Button team and ultimately resolved their ordering issue.

One question remained: did Jeff Bezos actually see Bjarni’s email?

The answer was unclear. Amazon staff simply said his email had had been forwarded to the director of their department.

“I don‘t know if Jeff Bezos personally forwarded the email or his team did, but it really paid off,” says Bjarni.

Today, Clicksale is focusing on expanding beyond the automotive sector and developing a platform for the optimization of all kinds of product sales. “We’re not a company that replaces your whole IT system,” says Bjarni. “We have small solutions you can hook into your existing infrastructure.”

By focusing solely on software and programming development, Clicksale hopes to respond nimbly to marketplace changes and hone its swift online ordering model. The startup is also partnering with Sigma, a Swedish technology company, to develop their own physical ordering device that would be more tailored to Clicksale’s needs than the Amazon Dash Button.

In the end, Clicksale’s vision is one that could restructure businesses’ purchases and free up a lot of time and creative energy as well.

“We think these repetitive processes—which currently tie down the market—can be automated,” says Bjarni.

Better Boats: An Icelandic Startup Sets a New Course for the Shipping Industry

The global shipping industry is a sprawling network of companies with a presence on every continent save Antarctica, responsible for delivering around 90 percent of the world’s goods. Its vessels move massive amounts of raw materials across national boundaries, shaping the ocean into a highway for trade. However, the industry is highly pollutive and grossly inefficient: air pollution from shipping leads to 50,000 premature deaths per year in Europe alone, according to the nonprofit Centre for Energy, Environment and Health. Maritime shipping is also a key driver of global warming. The industry is so vast and complex it seems impossible to change. But that’s exactly what a small Icelandic startup aims to do.

Enter the fray Ankeri, founded in 2016 by childhood friends Kristinn Aspelund and Leifur A. Kristjánsson. Engineers by training, they recognized a need for creating a shipping marketplace that rewards efficient, low-emissions vessels.

“We identified a problem in shipping management that hasn’t been solved,” says Kristinn, who also cofounded marine performance company Marorka in 2002. “The [industry’s] focus is more or less on the shipowners. But their customers pay for fuel. We wanted owners and charterers to examine fuel performance together and try to improve it.”

Thus Ankeri was born—an online platform that weaves real-time data, weather reports and performance metrics into one interface. Designed to increase transparency by utilizing available data, the technology carries the potential for partnerships across various parties in the shipping industry.

“Owners can share past performance of the ships and charterers can find the most suitable vessel for their trade,” says Kristinn.

But tackling emissions and energy consumption in the maritime world is no small order: there are over 50,000 cargo ships across the globe. Ankeri hopes to start small and gradually build partnerships, picking up steam as the model spreads. Already this year, the company has deployed a prototype to use with its first customer.

Kristinn notes that the service will expose shipping informatics normally left “under the hood” but which have an outsized impact on fuel efficiency, including engine maintenance and ship design. And the startup’s effort may very well dovetail with new environmental regulations: the International Maritime Organization (IMO) declared in early April it would slash emissions in half by 2050 (compared to 2008 levels).

Ankeri, only one among numerous Reykjavík-based startups, may be entering the market at a crucial moment for global shipping.

By founding a startup rather than going a more traditional business route, Kristinn says he’s been able to quickly see ideas into fruition. “The first few weeks, when there are no rules, anything is possible—there is complete freedom,” he says. “There are no shareholders, customers or employees. It’s just two co-founders with a piece of paper.”

But Ankeri has already taken off. Whereas the shipping industry is historically slow-moving, Ankeri can be agile and push the industry to innovate.

Kristinn also notes that, with the local startup scene booming, it is relatively easy to gain access to business leaders, clients and the broader innovative community. “We’re beginning to accept that, here in Iceland, people are creating solutions for the whole world,” he says.

The Year of the Seed Round: The 2017 Funding Report

The past year had several interesting highlights when looking at the funding landscape. The $240m monster round invested in WuXi NextCODE, the first investment from Index Ventures, and the first Icelandic startup (that we know of) to receive investment from only foreign sources – Authenteq. In this funding report we’ll go over the highlevel datapoints and discuss the developments in the ecosystem.

Note: Although based on Icelandic innovation, we decided not to include the WuXi NextCODE funding round in our analysis.

A record number of investments

This year surpassed 2016’s record in terms of tracked investments, with 22 investments on record. The number of investments is growing, albeit slowly, but whether that is due to more investments or better availability of data is uncertain.

But amount invested has declined

At the same time that we’ve never recorded as many investments, the amount recorded has declined. The total investment amount this year was around $35m, down from roughly $57m last year and ~$190m in 2015, which included three big investments that skew the comparison.

Never as much capital in early stage

Probably the most telling graph of this report is the following one where we look at the amount of capital that comes from smaller early stage rounds ($2.4m or less) and bigger, later stage round ($2.5m and up).

In 2017, almost half of all invested capital was in smaller rounds. This is massive change from earlier years where most of the capital invested came from larger rounds, often made by international investors.

This also shows when we break down the number of rounds per year into size brackets. In 2017, the overview is very much skewed to the left: that is, most rounds are small and we don’t have bigger rounds to balance it out.

This is echoed in the fact that only four (~19%) of the investments made in 2017 included foreign investors: Meniga, Teatime Games, Authenteq, and Takumi.

Another interesting point is that Investa, the early stage investment fund run by the likes of Hjálmar Gíslason, Hilmar Gunnarsson and Jói Sig, was the most active investor in the Icelandic ecosystem. They invested in three companies: Teatime Games, Viska Learning and Travelade.

Five investors’ first investment in Iceland

Although we saw fewer rounds with international investors, we added to the list of foreign VC’s that have invested in Icelandic companies. In addition, we saw (to our knowledge) the first seed round entirely funded by foreign investors, when Authenteq raised $1.3m. The new investors can be seen below:

No signs of seasonality yet

We’ve tried to use the data to build up some kind of projections or high-level overview of when investments happen in Iceland, but haven’t been succesful. We can’t see any seasonality in the data, which suggests that summer is just a good a time for raising money as winter. However, we have too little data for any analysis on this to have real meaning.

Exits

One of the most important stories of the year, was of NetApp’s acquisition of Greenqloud for $51m in cash. It profited all the investors (one of which has already invested in another startup), and the fact that NetApp looks to further develop the office in Reykjavik is great news for the tech ecosystem.

Another, smaller and less publicised exit was the sale of audiobook publisher Skynjun to Swedish Storytel for €200k.

What it means in the bigger picture

A lot of small, early stage investments in one year suggests that – if the companies are successful – we’ll see more bigger rounds in the upcoming 12-24 months. This, in fact, is already showing. In the first two weeks of 2018, three investments were announced: Oculus’ $20.3 Series B, Solid Clouds $2.5m Series A and a convertible bond by Kerecis. All three had previously raised smaller amounts from Icelandic investors.

Other “Icelandic” companies in the wild

Apart from the startups and tech companies in Iceland that we track, there are Icelander founded or co-founded companies that raised capital this year:

  • Klang Games, maker of the endless runner ReRunner, and now working on Seed, a simulation where the goal is to ensure the survival of humanity. The founding team includes Oddur Snær Magnússon, Ívar Emilsson and Mundi Vondi.
  • Catapult, a on demand staffing platform that helps people get temporary work and companies get workers, co-founded by Óli Johnson
  • Vitro Labs, a biotech company that’s working on 3D tissue engineering and went through Y Combinator in 2017. Co-founded by Ingvar Helgason

Note: While we try to catch all investments, we never can. We mostly look to specific funding rounds, and don’t go after things like bridge loans or funding extensions, although we do cover them when the data is readily available. We time the investments based on their announcement, not the date of signing. Our methods and rules are there to try to ensure compatability with other databases and data sources.

Top tech and startup news from 2017

We’ve compiled a list of what we believe are the most notable and important news and happenings in the Icelandic startup and tech ecosystem in 2017.

GreenQloud acquired by NetApp for $51 million

Although this list is not in any particular order, NetApp’s acquisition of GreenQloud  is likely the most important for the Icelandic startup scene as a whole. It’s both a successful exit for investors (all of whom made money on their investment), the tech ecosystem (because NetApp is investing heavily in building an office in Iceland), and founders / employees (many of whom had options and / or will move into interesting roles at NetApp). In addition, NSA Ventures was an investor, which means that the fund – whose role and purpose is being discussed in a working group – has some money to invest.

WuXi-NextCODE raises $240 million from Sequoia China and others

One part of the startup and tech scene in Iceland that isn’t covered as much as the more approachable traditional software startups is the genomics space. And this year we had huge news on that front. WuXi-NextCODE, the former DeCODE spinoff that was later acquired by WuXi for $65m in cash (hence the name WuXi-NextCODE), raised a monster round this year, $240m from Sequoia’s China arm. Led by CEO Hannes Smárason, the company has offices all over the world, with a big development office in Reykjavik, Iceland.

Teatime Game’s seed round marks Index Ventures’ first investment in Iceland

Last year (2016) was the year that QuizUp – the startup ecosystems darling child – announced they were closing their doors. This year (2017) is the year that a part of the core team behind QuizUp launched their next venture into the mobile gaming space. The team raised a round from Index Ventures, probably Europe’s best venture fund, which had never invested in Iceland before (the Icelandic connection might have helped there).

An Icelander on stage at Apple’s iPhone X keynote

The fall of 2017 was the first time (to our knowledge, please let us know if we’re wrong) that an Icelander was featured on the big stage at Apple’s keynote presentation. At the keynote, where the company among other things introduced the iPhone X, founder and CEO of Directive Games Atli Már Sveinsson showcased Apple’s AR Kit possibilities with their game Machines.

The new government’s policy document mentions innovation 19 times

Following scandals and a new election, a new government comprised of the Left-Green party, the Independence Party and the Progressive Party, unveiled their big policy document for the next four years. “Innovation” was mentioned 19 times, with big promises on developing the ecosystem for startups and tech companies further. And although the new government hasn’t put any of it into action yet, they’ve only been at it for several weeks, and we’re willing to give them the benefit of the doubt.

CCP lays off ~100 people, scaling down VR efforts, focusing on EVE universe

In a somewhat surprising move, to outsiders at least, CCP announced they were laying off around 100 people and shuttering their VR ambitions, for now at least. The company closed its development office in Atlanta and will sold its operations in Newcastle. Following the layoffs the company shifted its focus on two previously announced projects: Project Nova, a first person shooter for the PC, and Project Aurora, a free to play mobile game. The company cites unfavorable market conditions in the VR market (i.e. too little sales and too little near-term potential) as the main reason for the move.

Crowberry Capital closes its first fund making it the fourth private VC fund in Iceland

Last summer the trio behind Crowberry Capital announced the first close of their new VC fund. Helga Valfells, Hekla Arnardóttir and Jenný Ruth Hrafnsdóttir, who previously worked at NSA Ventures, left their jobs at the end of 2016 to venture into their own fund. The fund’s first close was at 4bn ISK (~$38m) backed by a mix of institutional investors (pension funds) and individuals.

Klappir Green Solutions listed on First North

Klappir Green Solutions, a consulting and software solutions company focused on sustainability and responsible operations, listed its shares on the First North stock exchange. While not currently a popular way for startups to get liquidity, it might be a precursor of what’s to come, as some have suggested that startups should look more towards listing.

What do you think were the most important tech and startup news of 2017? Let us know via email or in the comments (on Facebook).

A reminder that you can sign up for our newsletter with news and analysis about the Icelandic startup and tech scene. Sign up here.

The Q3/2017 Funding Analysis

A quiet quarter on the funding side, but very interesting on the exit side. The effects of having only one active Icelandic fund still linger. Now that Crowberry Capital has officially started and NSA Ventures have more capital available due to an exit this quarter, deals might  start ticking up again, and some of the earlier Eyrir and Frumtak companies are due for a round soon.

Three seed rounds

We recorded three rounds in the quarter: Viska Learning, Ghostlamp and Teatime.

Last years Q3 was very active, and this time around there’s less than half of the investments YoY.

Comparing amount invested shows an even steeper drop, as we didn’t see any late stage rounds.

Brunnur the most active investor

Brunnur Ventures led two of the three investments. The fund has for the last quarters been the only active Icelandic VC fund, but now that Crowberry has been founded and NSA has some money to invest, they’re no longer alone in the market.

Investa, the angel / seed fund run by Hilmar Gunnarsson, Hjálmar Gíslason, Jói Sig and more veterans from the Icelandic tech scene participated in two rounds (Viska and Teatime)

The biggest news of the quarter, however, is definitely that fact that Index Ventures, a top tier VC, did its first investment in Iceland.

Seed money is Icelandic, growth money is foreign

This quarter most of the investment came from Iceland. The only non-icelandic capital were participants in Teatimes’ round (Index Ventures et al).

Although we don’t have a lot of deals to go on, you can see a trend emerging. The seed rounds are driven by Icelandic investors, but the later stage rounds are driven by foreign funds. There might be several reasons for that and we’ll discuss those in the upcoming Memo.

Two exits and a listing

Greenqloud was acquired by Netapp, in what is the first acquisition of an Icelandic software company by a Fortune 500 company (the completely first was probably DeCODE, acquired by Amgen in 2012). The amount was undisclosed, but we’ve discussed the acquisition in more detail here. The other exit was when Skynjun, an Icelandic audiobook publisher, sold to Swedish Storytel.

In addition, Klappir Green Solutions – a consortium of three companies, including Ark Technology and Data Drive – was listed on First North. Although no new shares were offered (it was only a listing, not a public offering), that move definitely created some liquidity for employees and investors.

This is the most exit activity we’ve tracked since the beginning of Northstack, which hopefully is a signal of things to come.

Looking ahead

This year will probably be the first of (hopefully) many where the Icelandic scene reaches some kind of equilibrium and predictable deal flow. Two to three active, local, venture funds that mostly focus on the earlier stages, and several later stage investments led by foreign funds.

It’s also a when the VC industry in Iceland reaches a certain crossroads: some of the management companies – Frumtak and possibly Eyrir – will likely start raising a new fund because they’ve fully committed their current capital, and whether or not that happens, might depend on whether the funds have success stories to tell. Others, like Brunnur Ventures or Crowberry Capital, are not in as much a need of raising more, because they have more available.

The Q2/2017 Funding Analysis

The second quarter of the year brings the first funding report we do in 2017. The reason: we only recorded one investment in Q1, so there’s no need for a special report on that. This report also is the first one since we started our big Icelandic startups scene data project which means that the data we’re using now is augmented with data from Crunchbase.

Four funding rounds, $14m

This quarter we recorded four funding rounds: Meniga, Takumi, TripCreator, and Mink Campers.

This quarter was much more active than the one before (which only had one investment – Goodlifeme / SidekickHealth), and has the same amount of investments as the year before (Q2/2016).

The main difference between the years is the amount invested; the amount invested increased by over 240%, mainly due to two rather big rounds; Meniga and Takumi.

This leads to a (rather obvious) next chart: the majority of capital invested came from outside the country; around 70%.

The bigger picture

In 2015 we had a big influx of capital; three funds that started and were very active in the first quarters. Those rounds were in general fairly small (never above 500m ISK or between $4-5m) and early stage. As we’ve talked about for some time now, two of those funds have stopped investing in new companies, which leaves only one active Icelandic fund at the moment.

Naturally, the rate of investment will slow down. Hopefully for the ecosystem, the sizes of rounds will increase (because the companies that raised before are raising follow-on rounds). In fact, three of the four companies that raised money in Q2 2017 had at least 2 funding rounds before the one they announced this quarter.

There are also some interesting takeaways in regards of the capital coming in. It’s mostly foreign – when our startup companies need growth money they venture abroad to get it. Which makes complete sense; the Icelandic funds aren’t big enough to be able to go as big as the bigger foreign funds.

Sign up for the Memo – commentary and important news about the Icelandic startup scene.

A record number of startup investments: The 2016 Iceland Funding Report

After an incredible 2015, where Iceland contributed more than 10% of deployed venture capital in the Nordic region, 2016 shows continued growth in number of investments, while total dollars invested take a deep dive, mostly due to the lack of mega rounds. While 2015 had three investments amounting to $30m or more each, the biggest investment in 2016 was $11.4m (€10m) in Fintech startup Five degrees. Also, if you haven’t signed up for the Northstack Memo, we’re publishing some thoughts and predictions for 2017 this Monday. Sign up here

This is our (from now on) annual funding report, analysing and discussing the high level trends in venture and early stage investing. We only include disclosed investments and translate all amounts to USD at an exchange rate close to the day of announcement. All data on the Nordics is from The Nordic Web. If you’re interested in more detailed analysis or the data, you can reach out to us.

New record in investments

Last year was the biggest year on record in regards to dealflow. We recorded 19 investments, 8 of which had foreign leads or participants. A good trend for the Icelandic ecosystem, that could easily reverse in 2017 if the VC industry isn’t able to raise enough new funds.


While the number of investments graph trends up-and-to-the-right, the amount invested isn’t as pretty. While still considerably higher than in 2014, last year was far behind 2015 (from now on termed the Monster Year of Icelandic Startup Investments), in terms of invested dollars. This is only due to three big rounds – $95m Verne Global, $45.6m CRI, and $30m CCP.


A look at the year

Looking at the year, the outlier is the lack of activity in Q4, with only one investment.


Overall, the distribution of round sizes is interesting. Smaller rounds should vastly outnumber the bigger ones, but here they don’t. This could be explained by the fact that the Technology Development Fund plays a very big role in early stage funding in Iceland and angel activity goes mostly unreported. (If you have info on angel investments in Iceland, please let us know).


 

Compared to the Nordics

If we compare the activity in Iceland to the Nordic region we see that Iceland is following the general trend in the Nordics in terms of deals (that is, up and to the right). The jump in investments in the Nordic is dramatically bigger though, suggesting a different pace – we jumped 2014-2015, the region is jumping 2015-2016. The data on the Nordics is from The Nordic Web.


In terms of capital deployed, 2015 is a clear anomaly.


In fact, if we remove the three big rounds (Verne, CRI and CCP) from the 2015 numbers, the trend for Iceland is even more similar to the nordic region.


And if we play the national sport of comparing ourselves to other countries based on headcount (known as Par-Capita-ism), we see Iceland is contributing just a bit more to investments in the Nordics than to headcount in the region.


Active investors

In 2016 we had good mix of foreign and Icelandic investors. Seven deals included foreign investors. One of them, Velocity Capital, participated in two rounds – Meniga and Five degrees.

Active investment companies
Baliopharm
BOM Venture Capital
Brunnur
Capital A
Eyrir Sprotar
Frumtak 2
Glu Mobile
Investa
Karmijn Kapitaal
Klappir
Life Sciences Partners
NSA Ventures
Probiocon
Seventure Partners
Velocity Capital

Outlook for 2017

While this report shows a good year for Icelandic startup financing, the future isn’t all rainbows and unicorns (heh). Potentially fewer active local VC’s and shortage of successful exits make raising funds – both for startups and venture capital funds – harder. More thoughts and predictions about 2017 will be published in next week’s Northstack Memo, you can sign up here.

Northstack is Iceland’s premier analysis and reporting institution on the Icelandic startup and tech scene. This is part of our regular funding reports. You can find more here. If you’re interested in data or reporting the Icelandic startup or tech scene, let us know, we can help.

Why is it so important that TravAble recieved funding

A social enterprise gets funding from the Icelandic Technology Development Fund

bardur

Bárður Örn Gunnarsson

The Icelandic Technology Development Fund announced its funding just before Christmas. 25 companies received grants ranging from $85K to $420K. There is a wide range of startups on the list, from VR to Robotics, from Ed-Tech to Food tech. They are all built by strong teams looking for funding to scale their business. In many ways they are similar even though the products and services are different. Still one startup sticks out: TravAble. TravAble is an Icelandic startup trying to facilitate access to places and services for the physically impaired with an app. It is a true social enterprise, the only one in the group. It is still built like the others with a strong diverse team and strong technological know-how and meant to scale.

What is a Social Enterprise and what are Social Entrepreneurs

Social enterprises are companies or organizations that are funded to solve social or environmental problems with commercial strategies and often with a startup approach. Social entrepreneurship has often been viewed as an alternative way to tackle issues the public sector has not managed to solve and the private sector has not found profitable. Most Social Startups differ from other startups due to the fact that the driving mechanism in the company is doing good by solving a problem, not profit. They can still be run as for-profit, so if the solution ends up being profitable that’s not a bad thing, social enterprises can of course also be run as non-profits.

“With all the challenges our society faces from health care, education, technology or the environment, we need social entrepreneurs and social enterprises to create solutions that benefit people and the environment sustainably.” says Tanja Wohlrab-Ryan CEO and Founding member of Kveikja a NGO raising awareness, promotion and education on social entrepreneurship. “The concept of social entrepreneurship is still quite unknown in Iceland. To date not many social innovative projects have been supported by the big grant giving funds. For this reason, we would like to see a special grant fund created by the government (common in many countries) that specifically invests in projects that can demonstrate a high level of social and/or environmental impact, as well as profitability.”

Tanja pinpoints that one of the greatest problems with starting and running a social enterprise is funding. Why would anyone invest in a company that is not profitable from the get go. That’s where public money and grants come in. It is essential for social enterprises to meet their goals to have access to capital. That’s where Rannís and the Icelandic Technology Development Fund have stepped in and opened up to funding new types of companies by including a social enterprise in its funding this year. That is really applaudable.

So why is this funding so important

TravAble is a clear example of a social enterprise. The company is lowering barriers in our society for the physically impaired with making information on accessible services, entertainment and facilities easier to find.

TravAble aims to meet that need by connecting in a new way existing information on services and accessibility information in an app for mobile devices. The app will use location services, making it easy for users to plan ahead or navigate to nearby locations.

“TravAble´s vision is to be a global leader in it’s field. This requires close attention to technical implementation, the core system needs to handle high volume of concurrent users and be able to scale easily. TravAble has worked on the system design with experienced experts in the field. Usability is a key factor for success, and the implementation will be user centric and done in collaboration with top tier partners e.g. the Reykjavik University.” says Hannes Pétursson, CTO and founder.

The needs and wishes of physically impaired persons are targeted and those that cater to them. According to Ósk Sigurðardóttir, CEO and founder, “It is estimated that physically impaired, their immediate friends and family are about six million in the Nordics alone.” TravAble aims to build a crowdsource community to ensure collection of information and its reliability.

TravAble will initially use the Icelandic market as a test bed but has already began expanding to the Nordics with partnership agreements.

With such a large market segment, a scalable solution and a constantly growing market TravAble might eventually become profitable.

I hope this will be a motivation for other entrepreneurs to use their skills to solve social and environmental problems. With this gesture the Icelandic Technology Development Fund has indicated that social enterprises stand a chance against the profit driven tech startups that rule the startup scene for now.

You want to start a company. But why?

Hjálmar Gíslason, VP Data at Qlik

Having been through the startup process several times (DataMarket was my fourth as a founder), I have come to the conclusion that the most important part of starting a company is for the founder or founders to think about and agree upon why they want to build the company in the first place, and what they want to achieve. Interestingly enough, this is typically not a priority for founding teams. Working on “the what” – i.e. building the product, growing the team, funding the operations, figuring out how to make the business model work, etc. – is so challenging, time consuming and exciting that we never stop to think about “the why”. Why do we want to start a company? What is our motivation, our purpose and our end goal? But thinking about this in the beginning will help guide many important decisions further down the road.

Let’s imagine a few possible motivations one might have for doing their own startup:

  • Autonomy: Wanting to be independent, working for yourselves and not be controlled by somebody else’s agenda.
  • Desire to create: Wanting to see your idea become a reality.
  • Riches: You want to become wealthy.
  • Glory: You want to become known for your creation whether in certain circles or simply become famous.
  • Fun: You’re in it for the excitement and the joy of working with a good group of co-founders and co-workers.
  • Challenge: You want to prove to yourselves (and/or others) that you can achieve something that’s notoriously hard to do.

There are surely other possible motivation, and most likely your motivations are a combination of more than one of those. But you should really think about what they are, because this will help guide you through some key decisions as you build your company. What follows is an attempt to illustrate that for a few key areas.

The team

The most important part of any start-up – or any company for that matter – is the people. However, the composition, size and nature of your team may be guided by your core motivations. If your primary motivation is to become rich, you may want to have a smaller founding team. If your primary motivation is to have fun, you might focus on a different group of people, and if it’s autonomy you’re after you most likely want to make sure you are the one(s) in charge. It might also change how you want to compensate the team, who get’s in on a founding share, who gets stock options, how much you pay in salaries, bonuses, etc. It is even likely to guide how fast you want to grow the team, and how urgently you want to fill certain positions.

The funding

When it comes to the funding strategy, your core motivations have to be crystal clear. We’re so used to the startup stories that make the headlines that we tend to think about this almost as a single track: First you bootstrap and/or self fund, then you take in an angel investment, next a seed or Series A, then Series B, C, D, etc. until you IPO (or get acquired somewhere along the way). It is true that in most cases as soon as you take in external funding from a typical outside investor, this is the expected path. Money may already be one of your motivations, but rest assured that for outside investors it is almost guaranteed to be the primary – if not the only – reason they want to be involved.

There is nothing wrong with that. In most cases that is the reason for their existence as “investors” (otherwise they would be called something else, like “givers” or “splurgers”). But if you have other motivations too, you now have conflicting interests. When you take in an investment, money becomes the primary target, and you’ve started down the single-track path described above.

If your core motivations are any different, the honest thing to do is to either have an open discussion with your potential investors before they come on board or give in to the fact that money is now your primary game. Some – especially early stage – investors will in fact be open to a different or supplementary agenda. And all of them will appreciate your honesty. You will too, even if it ruins some of your funding opportunities. Also: You may have to compromise some of your motivations in order to achieve others. Many ideas are very hard to make a reality without serious funding, so even if your primary motivations are different, you’ll have to make the money part work out too.

There are other paths, less traveled in the tech startup world. In fact most businesses outside that world are started with much more modest plans and needs for funding, and yet they sometimes manage to make their founders well off, or flat out rich without ever taking in outside funding. This usually takes longer, and doesn’t get as big as a Silicon Valley-type startup, but can get quite big nevertheless.

And this is where your best interests and those of a typical VC investor may diverge significantly. Their business is about maximizing their potential upside even by taking excessive risk: Go big, or go home.

Modest success is not among their desired outcomes, but it may well be yours.

The end-game

Are you prepared to see your baby go? On the typical start-up route there are only three possible outcomes: an acquisition, an IPO or – the most common one – a failure. In the case of an IPO or an acquisition you may still be in a position to control some things, but getting there will take years of good fortune and great execution. Well before the exit you are likely to hold a minority of the shares, often a smaller stake than one or more of your investors. You will be in control as long as everything is going relatively well, but if things go south – you’re no longer in a position to control the outcome. The same is true after an exit. In the case of an IPO you will now be subject to the forces of the markets, quarterly filings, growth and profit expectations and general emphasis on short-term results. Often at the cost of longer term goals. In the case of an acquisition, your level of control will depend on the motivations and goals of the acquirer, as well as the success executing on those plans after the acquisition.

But all of this may be fine. By this time, you may well have reached your goals. The product is out there, the money is in the bank, you managed to pull of something extremely hard that most that try fail at, and you may still be having a lot of fun and autonomy. In fact, even in the case of a “failure”, many of your motivations may have been met.

But if you didn’t think about your motivations beforehand, you may actually realize that you went down a path where your motivations or those of some of your team members weren’t fulfilled. That’s why spelling them out, discussing them and monitoring them on the way is so important.

Hjálmar Gíslason is the VP of Data at Qlik, and formerly founder and CEO of Datamarket (acquired by Qlik).

Seven Startup Reykjavik companies to watch

Today is investor day at Startup Reykjavik 2016. This is the fifth time the accelerator is operated and today’s pitches by the ten companies participating this year are a culmination of 10 weeks of work. The event invites investors, corporate executives, and press to see, and potentially invest in, these companies.

To commemorate this, we’ve created a short list we call Seven Startup Reykjavik companies to watch. To make it on to the list, the company needs to have received equity funding since finishing the accelerator program. The list is ordered alphabetically. We don’t include information on funding other than equity funding.

Activity Stream

slider-activity-stream

  • Founders: Stefán Baxter, founder, and Einar Sævarsson, co-founder
  • Funding received: 270m ISK ($2.1m) in one round
  • Startup Reykjavik batch: 2013
  • Industry: Software, SaaS, Operational Intelligence

Activity Stream is developing operational intelligence software. It monitors a company’s operations and uses artificial intelligence to improve daily operations and customer support. As of this September, the company will have paid subscribers that have actively participated in the last phases of their development.

Last December, the company raised a ~$2.1m funding round from several investors, including VC funds Eyrir Sprotar and Frumtak. The company is preparing for a Series A round financing by the end of 2017.

They recently opened an office in Denmark responsible for sales and customer success, and are building infrastructure in Iceland to on-board new customers and keep them happy. Further scaling will depend on their Series A. The company will officially launch in October, after being in stealth mode since inception.

According to Stefán, the main value they got from Startup Reykjavik was access to the mentors, a “free pass” to be completely focused on their new venture, and to meet the people in a young and growing startup scene. Remember, this was three years ago, and a lot has changed since then. Also, one of the drivers for their participation was that they wanted to “pay it forward” in a way. They were (obviously) hoping to succeed, and by going through Startup Reykjavik, their success would help raise the profile of Startup Reykjavik. Stefán acknowledges that “this may sound arrogant, but we were hoping to be able to contribute, as well as receive.”

Authenteq

Authenteq User profile

  • Founders: Kari Thor Runarsson, Runar Karlsson, Adam Martin
  • Startup Reykjavik batch: 2014
  • Funding received: $80K in two rounds
  • Industry: Software, SaaS, authentication

Authenteq is an automatic identy verification platform. Their initial product was an app that took photos that couldn’t be altered. They pivoted after Startup Reykjavik, and decided to build on the tamperproof core they had created. The current product takes two pictures – one of the user, and another of the user’s government issue ID – and compares them to issue an Authenteq ID that people use to prove their identity.

The company participated in the accelerator Startup Bootcamp after Startup Reykjavik, and has now launched their MVP. They are currently working with select development partners before fully launching. They’re currently raising a seed round to hire more developers and get their product to market.

In terms of the value the company got from Startup Reykjavik, Kári said it was mostly twofold. First – it validated their idea and encouraged the team to work on it. Secondly, the funding that came with their participation allowed them to focus completely on the company.

Datadrive

Datadrive-1

  • Founders: Guðmundur Grétar Sigurðsson, Höskuldur Þór Arason, Ingi Björn Sigurðsson, Þórólfur Gunnarsson
  • Funding received: Undisclosed
  • Startup Reykjavik batch: 2015
  • Industry: Hardware, IoT

Datadrive helps car owners lower costs, lower emissions, and operate more efficiently. They currently offer two products – one for car rentals, and another for other businesses. The car rental solution tracks that car’s location through GPS – both for the safety of the passengers, and the car rental, to see if the car has gone through forbidden areas. It is connected to the car’s computer and measures its status, as well as creating a WiFi hotspot for the passengers. Their business product tracks and analyses the car fleet and efficiency. Datadrive supplies a mobile app and webapp to view the data.

Since finishing Startup Reykjavik, the company launched both its current products, and is working on their third, which will be consumer focused and launches later this year. They received an undisclosed amount in funding from Klappir earlier this year. Their next steps are getting more customers, building their business case and finding partnerships in Europe. They aim to enter the European market in 2018.

Guðmundur told Norðurskautið that the team got a lot of value out of the mentor discussions in Startup Reykjavik that helped them develop their product and business model. Regular lectures and workshops, that sometimes forced the team to rethink their plan, meant the team ended up with a better vision.

Florealis

Florealis

  • Founders: Kolbrún Hrafnkelsdóttir CEO, Karl Guðmundsson VP Sales- and Marketing, Elsa S. Halldórsdóttir VP Research and Development
  • Funding received: 100m ISK (~800K) in two investments
  • Startup Reykjavik batch: 2013
  • Industry: Pharmaceuticals

Florealis is a pharmaceutical company that develops herbal medicine for mild common diseases and symptoms. Their medicines are created using natural ingredients, scientifically tested, and approved by European Drug Authorities. Since leaving Startup Reykjavik, the company has raised 100m ISK, built up the team, and filed three pharmaceutical registrations in seven countries each.

The company expects their first products to ship to market in early 2017 in Sweden and Iceland. These products are medicines for mild symptoms and diseases, such as mild urinary infections, sleep aids, and mild arthralgia.

Kolbrún told us through email, that the biggest benefit they got from Startup Reykjavik was raised awareness of the company, and a platform to pitch and present their company and products.

Kaptio Travel

kaptiotravellogo28.08.15

  • Founders: Arnar Laufdal Ólafsson and Ragnar Ægir Fjölnisson
  • Funding received: 445m ISK ($3.4m) in 2 rounds
  • Startup Reykjavik batch: 2014
  • Industry: SaaS, Enterprise travel platform, Salesforce app.

Kaptio Travel is software built on top of the Salesforce Force.com platform with industry specific features for the travel industry. It’s designed for tour organisers and operators, hotels, and conference centers. It aims to streamline processes and give instant access to data important to these professionals.

The team entered Startup Reykjavik in 2012 with another company, Datatracker, while simaltaneously working on Kaptio Travel. Following Startup Reykjavik, the team decided to focus on Kaptio and finally merged the two companies. They have since raised two seed rounds, one led by NSA Ventures and another led by Frumtak Ventures. They launched their product in January 2014 and have customers in Europe, the US and Latin America.

The company recently raised the second seed round, and are now focusing on growing the team and making the organisation work smoothly, in terms of product development, sales, and implementing the solution for new customers.

Arnar told Norðurskautið that their main value from the Startup Reykjavik program was getting access to the network and feedback from mentors.

Mure VR

breakroom

  • Founders: Anton Þórólfsson, Bjarni Rafn Gunnarsson og Diðrik Steinsson
  • Funding received: 50m ISK (~$400K) in two rounds
  • Startup Reykjavik batch: 2014
  • Industry: Software, VR, Productivity

Mure VR is building practical VR applications. Their product is called Breakroom that aims to create a fully functional workplace environment in virtual reality. The reason is simple: many organisations now have open-space offices that, while good for some things, can make concentration and privacy more difficult. Using Breakroom will transfer users to a virtual reality workspace, where concentration and focus is easier. We recommend you check out the short video loop on their website to get a feeling for it.

The team has already soft-launched a product on Steam to try out the process and get feedback. They’re launching Breakroom on November 25th, and will be raising funds following that.

According to Diðrik, the main value they got from Startup Reykjavik was feedback and the network of contacts it created.

Wasabi Iceland

wasabi iceland

  • Founders: Johan Sindri Hansen and Ragnar Atli Tómasson
  • Startup Reykjavik batch: 2015
  • Funding received: 50m ISK in one round (~$400K)
  • Industry: Agriculture

Wasabi Iceland’s product is, as the name suggests, wasabi from Iceland. The duo started their venture into wasabi growing during an entrepreneurship class at university, and afterwards applied to Startup Reykjavik. The company raised a 50m ISK seed round from undisclosed, private investors, and have started growing wasabi in a green house in the east of Iceland.

According to Ragnar, one of the co-founders, they’re working towards shipping their first batch in 2017. A large portion of that batch has been sold to the restaurants Grill Market and Fish Market – two popular restaurants in downtown Reykjavik. The plan is to ramp up production in the beginning of 2017, and start exporting as soon as the production has reached enough mass.

The team benefitted greatly by connecting with mentors at Startup Reykjavik, some of whom have continued to help them long after the program ended. Ragnar also mentions experience pitching and public speaking as benefits the team gained from the program.

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Nortstack – Reporting and analysis of the Icelandic startup scene