Category: Articles (Page 1 of 3)

Reinvent the Pen: How an Icelandic Startup Is Tackling Diabetes

One day while visiting his father, Sigurjón Lýðsson realized a gaping hole in the medical treatment of diabetics: there was no straightforward way to monitor injections of insulin. Insulin pumps were too expensive—and though insulin pens might abound, patients could easily lose track of measurements and dosage.

For Sigurjón, the issue is personal. His father, who has type 1 diabetes, relies on daily insulin injections to stay alive.

And in 2010, when his father was also diagnosed with cancer, a brain tumor began to affect his short-term memory.

Thus the scene unfolded: while the two chatted over coffee, his father checked his glucose and injected himself with insulin. Moments later, he turned to Sigurjón and asked, “Did I inject?”

Sigurjón realized that, if he hadn’t been around, his father could have gotten himself into trouble: severe overdoses of insulin can cause seizures, loss of consciousness, comas and even death. Thinking that there must be an easy fix, he began to hunt for a device that could help his father keep track of his injections.

“Sadly,” says Sigurjón, “nobody has that yet.”

Undaunted, Sigurjón pressed on. His zeal for a solution led him to cofound the startup Medilync in 2012. After years of market research, the company has designed an app that utilizes computer vision and artificial intelligence to read usage on insulin pens and glucose meters, then readily tells patients when they’re due for another dose.

At the moment, those with diabetes still have to write down their entire regimen.

“It’s 2018,” says Sigurjón. “I’m like, ‘Why?’ It’s baffling that my dad’s insulin dosage and glucose readings are still scrawled on a piece of paper.”

So far, the company has netted a technology research grant from the Icelandic Centre for Research as well as a European Commission grant. A connection with technology titan Microsoft has proved particularly fruitful: Medilync is part of the corporation’s IoT & AI Insider Labs. Microsoft’s Iceland office also named Medilync its “Startup of the Year” in 2017.

Medilync plans to debut its app within the next few weeks.

Getting investors, however, has proven to be a struggle. Multiple factors could be at play—not only Iceland’s relatively small size on the global business stage, but also an ongoing stigma around diabetes. All too often, patients are blamed for a disease they did nothing to cause.

And Medilync sees its own goals as providing a fundamental service, not churning a profit.

“Everybody that you talk to—other than investors—they get it,” says Sigurjón, noting that most people are enthusiastic about a company that’s trying to help patients navigate the intricacies of a complex illness. “We need an investor who knows what this is about and understands what we are trying to fix. Perhaps we just haven’t been introduced to the right one yet.”

In the meantime, the company plans to take its show on the road: in September, it will partake in the UK Health Show, a London-based event that brings together a multiplicity of groups around the world working to interweave technology and personal care.

Medilync is also developing its own hardware—an all-in-one insulin pen with AI and computer vision—for markets with little smartphone adoption. For example, an estimated 82 million people have diabetes in Southeast Asia alone.

For Sigurjón, his dream is taking flight. He sees a streamlined, user-friendly insulin tool as just as necessary in 2018 as it was on that day with his father in 2010.

He often keeps in mind the story of a Microsoft employee who, won over by Medilync’s vision, began volunteering his time and resources to help the small Icelandic startup. When Sigurjón asked why, he said, “It’s really simple: I want to use my spare time to create something that helps people live better lives.”

Already Surpassing 2017: The Iceland H1 2018 Funding Analysis

Published a little late, this report looks at funding activity for startups and tech companies in Iceland in the first half of 2018, Jan 1 through June 30.

The year started with a bang with three notable investments announced in the first ten days of 2018. We’ve tracked one monster round ($75m+): a $150m round in Arctic Green Energy which we omit in some charts as an outlier, to get better information from the data (it’s noted where we skip it).

More cash flowing

We’ve already surpassed 2017 in total amount invested (not counting monster rounds, we had the $240m WuXi round last yearand in fact, reached that milestone in April. The first half of the year saw $48.9m invested in 11 companies (or $198.9m invested in 12), which will grow even more with investments from later in the year – 2018 is poised to be a great year in Icelandic venture investments, possibly overtaking 2016.

Note: Chart does not include rounds bigger than $75m

Even including big rounds, the outlook for the year is healthy.

Overall, we recorded 12 investments in the first half: five in the first quarter and seven in the second, on par with the last couple of years.

Skewed toward later rounds

Last year the investments skewed heavily towards smaller, early stage investments (<$2.5m). This time around, most investments are bigger, and most of the companies raising have raised before, suggesting a good increase in follow-on rounds.

In fact, of the investments we tracked, only two, Kúla3D and Kara Connect, didn’t have a previous round in our database.

Money is flowing in

Last year, most of the investments were from local investors. The first half of 2018, more than half of the funding rounds were funded partially or completely by foreign investors, and 83% of the capital came from outside of Iceland (not including the Arctic Green Energy investment).

Pharma and Gaming receive the majority of funding

It’s usually not worth it to break out specific industries, as the investments are usually too few for any interesting information to emerge. This time around, however, it’s good to point out two industries: pharmaceuticals and gaming.

  • Pharmaceuticals: Three investments totalling $27.1m, all into companies that have previously received investment.
  • Gaming: Two investments totalling $10m, both companies previously received investments.
  • Together, those industries received $37.1m, or 75% of the funding (not including the AGE round)

Connecting that to the bigger picture, where Iceland has big multinational success stories in both pharma and gaming, suggests that although neither is big enough to warrant its own breakout in Icelandic economic measurements, maybe we have industry seedlings in those two.

Exits

The only recorded exit was Bókun’s sale to TripAdvisor. The amount for the sale hasn’t been disclosed (I’ve dug through SEC filings, with no luck (yet)). Bókun is apparently doubling down on operations in Iceland, and recently sent out ads to hire 30 people in the city.

End note: Local VC is changing

In the first half of the year, the local VC funds (Frumtak I & II, Eyrir Sprotar, Brunnur Ventures, Crowberry Capital, and the government run NSA Ventures) only participated in three rounds, in both cases as lead investors. Brunnur did a follow on, and Frumtak and Eyrir Sprotar were completely silent (as expected, neither are really doing fresh investments at the moment).

NSA Ventures came back from a several year hiatus with a bang, taking part in a $3.8m round in Florealis, with fresh capital from the Greenqloud sale.

Similarly, Crowberry Capital has started to make regular investments, leaving three generally active funds (Brunnur, Crowberry, NSA Ventures).

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.

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Nortstack – Reporting and analysis of the Icelandic startup scene