Category: Articles (Page 2 of 3)

How to get the most out of Startup Iceland

On May 30th, the fifth annual Startup Iceland conference takes place in Harpa. This year’s roster of speakers includes entrepreneur and investor Ingrid Vanderveldt; Mark Solon and Jenny Fielding, both managing partners at TechStars; and Arvind Gupta, Investment Partner at SOS Ventures.

Bala Kamallakharan, founder of Startup Iceland

Bala Kamallakharan, founder of Startup Iceland

There are many conferences in the startup world these days, and attending too many takes focus and effort from entrepreneurs, that could be used building or selling a product. However, conferences can be a great place to expand your network and get some inspiration, but it is important to use your time wisely. That’s why Norðurskautið and the Startup Iceland team bring you a short and handy guide on how to get the most out of Startup Iceland.

Be open to inspiration

While building a company, everyone has their highs and lows. “It’s hard work, and everyone can do with some inspiration,” says Bala Kamallakharan, founder of Startup Iceland. Many of the speakers have gone through incredible journeys to get to where they are now, and hearing those stories can be a great motivator.

Connect with mentors

All speakers who participate in Startup Iceland also act as mentors the next day in a 20 minute one-on-one session with entrepreneurs. “We encourage founders to buy their tickets early because if we have a tie break on the slot for mentoring whoever bought the ticket early wins,” Bala tells us. The mentors all have experience and networks and can help you and your company. Some tips from Bala on how to prep for a one-on-one:

  • Do your homework on the pitch: Be able to clearly articulate your business in a quick and precise manner (you only have 20 minutes, remember).
  • Do your homework on the mentor: Read about the mentors to both help you pick which one you want to meet, and to understand how she may help. What are her areas of expertise? What kind of network does she have? Know as much as you can about the mentor.
  • Know what you want: Prepare questions and topics and know what you want to get out of the meet. Are you looking for an investor? Tell her that, and ask for feedback and guidance in that area. Need help promoting your product? Approach the mentor with questions on promotion

Connect with the community

Conferences bring people together, and Startup Iceland brings a big chunk of Iceland’s startup community to one place. Use it to get validation on what you’re building, sourcing possible customers or colleagues, or talking to potential investors. “Every startup that I have been part of got a break after participating in Startup Iceland,” Bala says. “No one knows what that is going to be but there is only one way to find out: Make it a habit to be there.”

Learn from others

A smart entrepreneur learns from her mistakes, a wise entrepreneur learns from others mistakes,” Bala says. A conference like Startup Iceland has speakers discussing strategy, operations, product and more. Make notes on what challenges you currently face, and try to spot if the speakers discuss them. That can also help when deciding what to discuss with a mentor.

More info on Startup Iceland on their website. Book tickets here.

Sling’s First Year in America: Lessons From an Icelandic Startup

Through the years, companies — not only tech startups — have grossly underestimated the cost of selling and developing businesses outside of their home market.

So a year ago, when a small Icelandic tech company, Gangverk, decided to start investing in sales and business development by opening an office in New York City, it was (and still is) risky business.  Worse yet, the software product we aimed at launching and selling wasn’t ready and had no users.

Helgi Hermannsson, co-founder & CEO of Sling

The idea we had in opening an office in New York was to investigate if there was a real market for a SaaS product we were developing called Sling,, find helpful American beta test customers for feedback, create go-to market partnerships, and start a dialogue with possible future investors. Basically: research the market and build contacts that would benefit our business.

So we went from one office in Reykjavik, Iceland to also having an office on Broadway in New York City (to be fully accurate, rented desks inside a co-op space).

We believe you need to sit at the table and have a presence in America to be taken seriously there, and we want to share our experiences from our first year in New York if somebody can learn from it.

Woody Allen says “80% of success is showing up.” Let’s hope he’s right.

So what is Sling?

Sling is a SaaS (Software as a Service) workplace communication and shift scheduling software for non-desk working industries.  It’s super simple to set up and use.  You go to, create an account, and invite your employees to join. Boom: in two minutes you’ve got your own company intranet.  It’s available both on the web and as iOS and Android apps.

From day one of developing Sling, before we wrote the first line of code, we’ve been in touch with potential users and customers, trying to gather as much feedback and input as possible.

Screenshot of Sling. Image courtesy of Sling

Sling was released in Beta tests with selected restaurant and retail store customers in March 2015, and we dropped Beta in July.

Everybody we meet loves the concept of Sling, but it’s our goal and challenge to get them to love the product Sling. There’s a great difference between the two.

Our product team is busy every day, tweaking things and listening to ever increasing customer feedback coming from all over the US.  Although Sling’s focus industries are retail stores and restaurants, we serve a variety of businesses including coffee houses, bars, hospitals, hotels, security companies, call centers, music venues, zoos and more.

So how has the first year in America been?

We’ve generally felt very welcome in New York, but we found out quickly that nobody in Manhattan was waiting for us or for a new SaaS software communication solution to hit the market. That doesn’t mean people don’t need such a product or love the concept. But getting customers to commit to and actually start using the product hasn’t been easy.  The main trouble is getting the decision makers’ attention and time.  The hurdle after they say yes is to get the entire company on board and up and running making full use of Sling. The second part can be as tricky as the first one.

Planning with the Sling Team. Image courtesy of Sling.

Planning with the Sling Team. Image courtesy of Sling.

It seems that in America everybody is selling something. Because of this, managers with decision power create a strong force field around themselves that won’t let new sales teams in.  To overcome this bias, we’ve had to write endless emails and make many, many cold calls to get attention and meetings.  These are all well-known sales difficulties, so in a sense, it’s nothing new, but for a small company coming from a tiny market (Iceland is 1000x  smaller than US in all economic aspects), it’s hard.

As the year has gone by, we’ve developed Sling quickly in response to customer feedback, and it’s become easier to manage as we go. We’re in touch with a growing potential customer base and go-to market partners, whom we make sure are following our progress.  Progress matters also to our American customers, who credit us for our efforts. If you’re honest, polite, and make sure not to close any doors, you can always come back in 3-6 months with an update and try to pitch the sale again. The American dream in this sense is alive and well.

Some advice: be yourself, or at least don’t strive to be an overcommitted, fast-talking “sales guy” (you know the type). Your customers know what you’re trying to do is difficult and respect you for your efforts, so speak the truth. Honesty goes a long way.

Time is the worst enemy of startups, but you have to stay in the game to build trust and connections and keep your head high.  If you’re feeling down, listen to Whiskey in the Jar by Metallica and Thunderstruck by AC/DC before meetings. Try to keep your energy up, drink a lot of water, and get enough sleep. And please, stay away from junk food.

In America, it’s all about the intro. If somebody makes an introduction, you’ll get the meeting and attention, so a good network is gold.  Well-respected managers and brand names can do wonders in getting you in front of potential new customers and partners. Ask people for help – you’ll be surprised how helpful good people are.

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NYC. Image courtesy of Sling.

Being in New York has also helped us better understand how Americans do business in general and build up our contact list.  It is a fact that software decision making is splitting into the hands of different mangers and divisions and away from one central CTO buying office. From our vantage, we can tell you that department heads within large hospitals in California and Georgia autonomously found Sling and implemented its use. The same likely happened when airport baggage handlers of one of the major airlines started using Sling. I’m pretty sure they didn’t call headquarters for feedback

With the fast evolving software world poking around in every business model on earth and trying to find ways to take over “conventional” companies’ business and revenue streams, there’s a changing attitude inside huge companies toward cooperation of smaller companies and teams.  They know that they have to take part in the Zeitgeist or become Kodak in 10 years.

In the past months, Sling has signed on hundreds of company accounts in America with many great customers.  Software products are sold online all the time without companies meeting face-to-face, and the same is true for Sling. We’ve never met 25 of our 30 biggest users.  We’ve chatted with some on Skype, asking for feedback after they started using Sling, but some have never replied to our emails or calls, which is fine.

How much has this sales and business development cost us?

New York is an expensive place to be, and it might not be the best fit for your company, especially if you’re trying new things and exploring what works for your product.

The total sales/business dev. cost of our first year (besides salaries, which would have been the same if we worked out of Iceland) has been around $140,000.   We’ve spent this money on rent, travel, a variety of testing sales related activities, a tiny budget on Adwords (which works well) and Facebook ads (which didn’t work so well — if anybody knows how to do it right, please contact me).  We’ve also tested content marketing with mixed results, hired a sales intern (didn’t work), hired an expensive fast talking sales advisor/consultant (mixed results at best) and hired a part time PR guy (didn’t work).  We attended the big NRA restaurant trade show in Chicago in May last year (which worked very well, it cost about $15,000) – see the photo below of our booth (we played a bit out of our league, as we where surrounded by big tech companies).

The booth. Image courtesy of Helgi Hermansson / Sling

The booth. Image courtesy of Helgi Hermansson / Sling

We benefited from this conference with a couple of great partnerships and sale – for example, US Foods where our company is partnering with an 22,000-person organization with deep roots inside the restaurant industry. We also made first contact with the company that licensed Sling for $2.5m early this year at this conference.  In a perfect world, we’d attend all key trade shows every year, but it’s expensive.

We got a buy offer for our company last year, to which we said “no thanks!” (we’re having too much fun).  It ultimately strengthens our belief that we’re doing something right, even though we can’t see into the future and might regret it greatly later ahaha.

We’ve found out that good sales people in America with the right connections are very expensive.

We had the opportunity to speak at a cool tech conference with big names from the restaurant industry.  This taught me that I need to take public speaking classes as it seems to me that all Americans can rock the stage as if they were giving a TED talk!

We’ve learned that it takes time to convince big brands names to work with us but it is possible and it is often not easy to find the right person to talk to inside big corporations.

So what happens next?

We have a rock solid product, that our current customers love (they send us “I love Sling” emails) and has the potential for continued growth in a variety of industries around the world.  But it doesn’t matter if we don’t have the resources to keep on going, to be able to hire more smart people, and test things out in order to keep moving forward every day.

Sling Boarding Shool. Image courtesy of Sling.

Sling Boarding Shool. Image courtesy of Sling.

I’m endlessly fortunate to be backed by the best tech team in the business, all of them much smarter than me.  I feel the responsibility and pressure to deliver as the company is investing in me being in New York.  Nothing beats the feeling of going into a product demo with a customer knowing we have a fantastic product they will like and use.   And the true drug of selling is doing live product development with my team in Iceland in front of a customer in New York – it’s pure magic.

We received $500,000 in pre-seed funding from two investors based on the concept and idea of Sling.  When I look at our old investor deck today, I can’t believe what they were thinking.  It’s a shadow of what our product has turned out to be.

Our investors are pressing us to spend fast (the American way!), but we’re trying to make the money last as everything takes longer than expected, and we have to be able to stay in the game.  Our funds will last until next year, though our dinners for the last months might be mac and cheese. But, hey, we shouldn’t complain. We’re the fortunate few who get the chance to take risks.

Atli, my partner and world’s best CTO likes to say, “Make it happen.”  I agree — we have to keep a razor-sharp focus and move forward every day, making every moment count as our window of opportunity closes.

If you’re still reading this, thank you for your time, and please find us in New York or Reykjavik for a chat over coffee.

Helgi Hermannsson is founder and CEO of Sling, a SaaS workplace communication and shift scheduling software for non-desk working industries. If you have questions or thoughts, reach out to him through email –

Eyrir Sprotar almost fully deployed – $17.2 million in ten companies

The last of the three venture funds, Eyrir Sprotar, announced it had raised 2.5bn ISK early 2015, and then closed its fund on $3.5bn in November. The fund has been active since 2012, which makes it the oldest of the three funds.


Eyrir Sprotar has invested in ten companies in its lifetime. The most recent investment is Key Natura, which is also the only investment where the amount was disclosed. Örn Valdimarsson, managing director of Eyrir Sprotar, says the fund doesn’t disclose individual investment amounts. The decision on whether to disclose it or not should be in the hands of the companies. We reached out to the companies and at the date of publishing have answers from Handpoint. Other companies didn’t reply or declined to comment.

The fund supplied Norðurskautið with total invesment amounts, as well as what they’ve commited to. They didn’t confirm the annual management fee, but said we could use the same 2% approximate as we’ve used with the other funds.

Company Quarter / Year Amount ISK / ~$
Handpoint  Q3 / 2015 260m ISK / $2m
Saga Medica  ?? / ???? Undisclosed
Remake Electric  Q3 / 2010 Undisclosed
Info Mentor  ?? / 2014** Undisclosed
Mure  Q1 / 2015 Undisclosed
Activity Stream  Q4 / 2015 270m ISK / $2.1m*
Sæbýli  Q3 / 2013 Undisclosed
Key Natura Q1 / 2016 311m ISK / $2.4m
Cooori  ?? / ???? Undisclosed
Lífdísill  ?? / ???? Undisclosed
 Total: 10 2.230m ISK / $17.2m

*The total amount invested in Activty Stream was 270m ISK. We do not have information on how much of that was by Eyrir Sprotar. Frumtak invested 116m ISK which puts Eyris investment south of 150m ISK.
**Based on annual reports from NSA we derive that Eyrir Sprotar joined the shareholders of InfoMentor in 2014.

Available funds

Eyrir Sprotar has been the most active of the VC funds we’ve covered, to the extent that it’s almost at full capacity. Counting in management fees and commitments, leaves about 220m ISK in the fund for further investment. Örn says they have capacity for 1-2 moderately sized projects but their main objective is to follow up with the companies in their portfolio.

Eyrir Sprotar.001

As a proportion of total available capital, we can see that the fund has around 8% available for either followup or fresh investments.

Eyrir Sprotar.002

These numbers mean that we shouldn’t expect much new activity from Eyrir in the coming years, leaving the ecosystem with two active VC funds. Eyris main project over the coming months and years will be to follow up with their investments and maximising the returns of the funds LP’s.

Picture by Moyan Brenn

Norðurskautið covers the Icelandic Startup and Tech scene. Follow us on Twitter or sign up for our mailing list to keep up to date. You can also join our Slack community –





Iceland Q1 2016 Funding & Exits Report

The first quarter of 2016 starts off with a $13.4 million disclosed in fundings in seven funding rounds.

Comparison to Q1 2015

The number of investments more than doubled from the same quarter last year (from three to seven) . Total amount invested, however, fell drastically, only due to one massive investment.

Last year’s Q1 totaled $99 million in three investments, according to The Nordic Web’s analysis. This huge amount is almost entirely due to a $98 million round in Verne Global. Other investments in that quarter were Kaptio ($900K) and Datasmoothie (undisclosed).

In this case we shouldn’t use the amount invested as an indicator of the health of the community due to the Verne Global’s outlier investment.


The first quarter of 2016 totals $13.4 million in seven rounds. The size of one of the rounds was undisclosed.


Round sizes

Unlike last quarter when we had the $30 million CCP round, this time around we didn’t see one huge round that eclipsed all the other investments. We had a healthy split of three small rounds – under $500K – and three above $1.5 million.


Who’s investing?

Like last quarter, the majority of the investment is from outside of the country. QuizUp’s $7.5 million round is almost solely responsible for that. The ratio between funding from within Iceland and outside it is as following.



We recorded one exit this quarter. Swedish Enzymatica acquired Icelandic Zymetech through a non-cash issue of approximately 20.9 million new shares. At the time of purchase, Enzymatica was trading at 3.35 SEK. That translates to an approximate value of 70 million SEK (~$8.6 million).

Please refer to our analysis for Q4 2015 in regards to our methodology.

Norðurskautið covers the Icelandic Startup and Tech scene. Follow us on Twitter or sign up for our mailing list to keep up to date. You can also join our Slack community –

Brunnur – one year later: $3.2 million in two investments

Last week we dug into Frumtak 2’s investment and funds and this time around we’re looking at Brunnur. Brunnur is a 4 bn ISK (~$31 million) fund, focused mainly on various technology sectors as well as food production. We covered the fund in more detail last year.


To this date, Brunnur has invested in two companies – ARK Technology and ATMO Select. Both investments were in the fourth quarter of last year. The investments total 425m ISK.

Company Year / Quarter Amount ISK / ~$
ARK Technology 2015 / Q4 225m ISK / $1.7m
ATMO Select 2015 / Q4 200m ISK / $1.5m
Total: 6 425m ISK / $3.2m

According to Sigurður Arnljótsson, GP at Brunnur, the fund foresees at least three investments in the first two quarters of 2016.

Available Funds

Based on public information and comments from Sigurður Arnljótsson, GP at Brunnur, we mapped out the available funds for Brunnur.


Note: We estimated the fees based on general practice in the VC industry, where funds take 2% of the total size per year in management fees. Frumtak has a operating lifetime of 10 years.

Dry Powder is the cash reserves the funds’ GP’s have allocated to followup rounds to their portfolio, which is at the minimum 30%, according to Sigurður. The fund could decide to hold up to 50% for followup cash, but Norðurskautið uses the lower number in our calculations.

Based on this, we can calculate how much of their capital Brunnur has invested. This number ends at around 21%, leaving a little under 80% ready for deployment.

image (2)

Having allocated 21% of its capital on two investments rhymes closely with their stated goal of investing in 10-15 companies over their investment period of 3-5 years.

Comparing Brunnur’s activity to Frumtak 2 over the last year shows that Frumtak 2 has been more active, both in terms of number of investments and deployed capital. Frumtak’s investments have been on a wider scale in terms of size and verticals – ranging from consumer tech to hardware to automobiles – while Brunnur’s investments have been B2B tech products – ARK focused on optimizing energy consumption of marine vehicles, and ATMO Select developing a music management software solution for retail spaces.

Norðurskautið covers the Icelandic Startup and Tech scene. Follow us on Twitter or sign up for our mailing list to keep up to date. You can also join our Slack community –

Frumtak 2 – one year later: $10.85 million in six investments

Roughly one year ago, GP’s at Frumtak announced the closing of their second fund, Frumtak 2. The fund is a 5 billion ISK ($38.5 million) fund focused on investing in companies that are past their seed stage and show promise of growth and expansion. For more info about the fund, you can read Nordurskautid’s detailed report on the fund last spring (Icelandic).


So far, Frumtak 2 has made six investments, of which four are fresh investments for the fund and two are followups. The investments total 1410 million ISK (around $10.85 M).

The fund was announced in Q1 2015, but understandably didn’t make its first investment until Q4 2015. We don’t have enough data yet to see a quarterly trend.

Company Year / Quarter Amount ISK / ~$
Arctic Trucks 2015 / Q4 400m ISK / $3.1m
Controlant* 2015 / Q4 260m ISK / $2m
Activity Stream 2015 / Q4 116m ISK / $900k
Apollo X (Watchbox) 2015 / Q4 50m ISK / $380k
Unannounced 2016 / Q1 284m ISK / $2.2m
Unannounced 2016 / Q1 300m ISK / $2.3m
 * followup investment Total: 6 1410m ISK / $10.85m

The average investment over the time period is 235 million ISK ($1.8m) and the median is 272 million ($2.1 million ISK). These numbers are right in the middle of their estimated investment span, which is between 100-500 million.

Smaller investments

Frumtak’s GP’s proposed to the fund’s board of directors to invest, lower amounts than the general rule, in several companies. According to Eggert Claessen, GP at Frumtak 2, the fund sees this as an experiment and will invest in two companies in that experiment. Eggert noted that even though the investment amounts are lower than in general, the companies fulfill all the requirements set by Frumtaks investment policy.

According to Eggert, this is based on their experience from Frumtak (their former fund), where they had instances of entrepreneurs they wanted to fund, but weren’t ready for the bigger investments the fund set out to make.

Frumtak’s Available Funds

Based on public information, we mapped out the capital available to Frumtak 2.

image (2)

Note: We estimated the fees based on general practice in the VC industry, where funds take 2% of the total size per year in management fees. Frumtak has a operating lifetime of 7-10 years, so we took the median, 8.5 years and multiplied by its yearly, estimated management fee which totals at 850 million.

As a percentage, we can see that Frumtak has deployed just under 34% of its total capital.

image (3)

The fund’s investment period is four years. Based on the fact that the fund has allocated ~34% of its capital in about a year, the fund is well on its way to finish its investments for the fund – given that the fund keeps investing at the same pace until now.

It should be noted, however, that the funds operating period is 7-10 years, where the fund is able to follow up on previous investments. That means, the fund doesn’t need to deplete itself in the four year investment period.

That would also be in line with the current activity in the Icelandic Startup scene, which has been growing fast.

Updated on March 3, 16:30 to better represent the funds available funds.

Norðurskautið covers the Icelandic Startup and Tech scene. Follow us on Twitter or sign up for our mailing list to keep up to date. You can also join our Slack community –

New, bigger grants introduced at the Technology Development Fund

Earlier this month, the Icelandic Centre for Research (Rannís) unveiled its strategy for the Technology Development Fund going forward. According to a statement, the purpose of the changes is to make the fund more open and effective for applications from a wider range of individuals and organizations. The first new grant, Applied Research Project Grant, has an application deadline of February 15th, and Seed (ísl: Fræ), a new grant aimed at entrepreneurs in the starting stages, will open to applications in late February.

Sigurður Björnsson | Photo Arnaldur Halldórsson

Sigurður Björnsson | Photo Arnaldur Halldórsson

“Work on this strategy started in May 2014 after the Science and Technology Policy Council’s published its Action Plan for the period 2014 to 2016. One of the actions was to propose a considerable increase in funding of the big competitive funds,” Sigurður Björnsson, Head of Science and Innovation at the Icelandic Centre for Research told Norðurskautið. “With increased funding, it was decided to work on the new strategy and reorganise the funding mechanism to make sure it can be of best use for innovation in Iceland.”

These changes address many of the things criticised in an opinion piece on the matter previously posted on Norðurskautið.

Four new types of grants introduced

The biggest changes for entrepreneurs and startups, is that two types of grants are turned into four types.

Previously Project grants (ísl: Verkefnisstyrkir) were the biggest grants and the grant that many startups applied to. Companies of all sizes and ages could apply to this fund which has led to criticism when big, old, profit bearing companies have received such grants. As of autumn 2016, the project grants will be changed.

In addition to the project grants, TDF has had Pioneer grants (ísl: Frumherjastyrkir) meant for early stage companies and entrepreneurs that have projects in the initial stages.

TechDevFund_Logo_ENThese two grant types, Project grant and Pioneer grant, will be changed in autumn 2016. “We’re discontinuing these two and introducing four new grants this year. We’ll open applications for the first of these four, Project Grant – Seed (ísl: Fyrirtækjastyrkur – Fræ) this April.”

These new types of grants bring many changes.

First of all, the fund now offers a wider range of amounts, from ~$11.5K (Seed / Fræ) to $540K (Sprint / Sprettur). The maximum allotted time has been shortened to two years (was 3 years), and company size and age limits have been added.

The smaller grants are only available to companies under the age of 5, and the bigger ones are for “small and medium sized companies” (according to their website).

According to Sigurður, small and medium sized companies are defined as the following:

  • Small:
    • Under 50 employees, or
    • Under €10 million in turnover, or
    • Balance sheet total of under €10 million
  • Medium: 
    • 51-250 employees, and / or
    • Under €50 million in turnover, and / or
    • Balance sheet total of under €43 million

This means that to be ineligable for these grants, companies need to have more than 250 employees, or more than €50 million in turnover, or a balance sheet total of more than €43 million.

Seed / Fræ Seedling / Sproti Growth / Vöxtur Sprint / Sprettur
Amount $11.500 (1.5m ISK) $80K / year (10m ISK / year) $190K / year (25m ISK / year) ($270K / year (35m ISK / year)
Length of project max 5 months max 2 years max 2 years max 2 years
Eligable applicants Individuals, companies under 5 years of age Individuals, companies under 5 years of age Small and medium sized companies Small and medium sized companies

Overview of the new project grants. See list of new grant types.

“We need to encourage entrepreneurs to go out there and explore their ideas. That’s the purpose of the Seed grant, to start the journey and test the idea,” Sigurður says.

Companies applying to the largest grant, Sprettur, will be expected to show additional capital, for example in the form of venture investment, to accompany the grant. “We have not decided if a new matching capital, for example from investors, will be a requirement, but the company has to demonstrate strong financial capability,” Sigurður says.

The other grants will be open for applications this autumn.

Special grants for research projects

Accompanying the changes to project grants, the TDF will introduce a Applied Research Project Grant, aimed at research institutions. “We’ll open for applications for the Applied Research Project Grant for deadline in February – to encourage technical transfer into the industry,” Sigurður told us.

“Iceland is strong in academic research, but in commercialization of the research findings we are behind our neighbors,” Sigurður says, and notes that the grant will require applicants to supply clear objectives on commercialization for their products.

This added grant resolves some of the criticism previously raised, where Universities and public research institutions received grants from the same fund as startups.

Norðurskautið covers the Icelandic Startup and Tech scene. Follow us on Twitter or sign up for our mailing list to keep up to date. You can also join our Slack community –

Iceland Q4 2015 Funding Analysis

We start the year 2016 off with a roundup and analysis of the Q4 funding numbers for Iceland. Norðurskautið has been documenting and publicizing investments since it started, and these analysis will be recurring content on the site. To kick things off, we’d like to establish our methodology, as to explain any possible discrepancies appearing between our analysis and those of other news agencies

Our Method

  • The funding analysis focuses on investments from investors, such as angels or institutions. Grants are not a part of these analyses.
  • We strive to include all funding events based on when they’re signed. That means, that if we have knowledge of investments that haven’t been published, we will still include them in our aggregate numbers.
  • We try our best to keep a balance of privacy and transparency. We respect the privacy of companies who wish to keep their investment private, but try to use those numbers in aggregate, if possible. This is to maximize the validity and coverage of our analyses, whilst recognizing companies’ wishes for privacy.


In Q4, we had a total of 9 investments totalling just under 6 billion ISK (~$45.6 m). The lion’s share of that cash went to CCP in a $30 million (~3.9bn ISK) investment led by NEA in November. The average investment (not calculating the CCP outlier in the average) was around $1.9 million (~253m ISK) and the median investment was $2.1 million (270m ISK).


Top 5 investments

The following graph shows the top 5 investments by size in Q4 2015. This clearly shows the massive difference between CCP and the other investments in the quarter.

Funding rounds

We categorise the investments by venture capital financing round based on several factors. For some of the investments, an official statement is released declaring the venture round of the investment.. For investments not classified as a specific round we use the following indicators:

  • Size of round: For example, rounds up to $1.5 million are generally classified as seed rounds.
  • Previous rounds: If the round is a second or later funding round, we generally consider it a Series A (or later).
  • Age and status of company: Whether the company has a product, how old it is, what the money will be used for, etc.

Screen Shot 2016-01-04 at 23.36.22

Who’s investing?

Although this quarter was the most active by Icelandic VC’s we’ve seen in a while, the vast majority of cash came from outside Iceland, mostly due to NEA’s investment.This image is skewed though, because of NEA’s investment. But we can see that all the Icelandic funds (Brunnur, Frumtak 2, Eyrir Sprotar and NSA Ventures) have been active in the quarter.Using the quarter’s information we can estimate the status of the funds in terms of deployed and non-deployed capital. We only have information on the funds Brunnur and Frumtak 2.

Last year’s appearance of new VC funds is starting to heat up the Icelandic startup space, and it will be exciting to follow their investments in the coming quarters.

Norðurskautið covers the Icelandic Startup and Tech scene. Follow us on Twitter or sign up for our mailing list to keep up to date. You can also join our Slack community –

Various tax-reform measures for the startup community likely passed in 2016

Last Friday at the Federation of Icelandic Industry’s Technology Summit, Bjarni Benediktsson, Iceland’s Minister of Finance, spoke of changes to the tax system to help the startup community.

Bjarni announced plans to change the taxation of both stock-options and convertible bonds, making both a more viable instrument than they are now. He also discussed changed taxation on foreign specialist, and much anticipated plans for tax relief for individuals investing in startup companies.

When will this happen?

These changes will all be proposed to the parliament in 2016.

Teitur Björn Einarsson

Teitur Björn Einarsson

“We aim to propose the bill that would change the taxation timing of stock-options and convertible bonds, as well as the tax relief measures for individual investors, in 2016. We’re hoping they’ll be passed before the end of the year,” Teitur Björn says.

“However, because they are of relief to the taxpayer, they might be applied retroactively. That would mean gains and investments in 2016 would fall under these new rules.”

Teitur told Nordurskautid that they hadn’t experienced much political opposition to these measures, which is good news to the community.

Stock-options and convertible bonds

Under the current tax law, stock-options are taxed at the date of exercise. This means that if an employee of a startup exercises her options under other circumstances than a liquidity event (i.e. if she buys stocks, without selling them right away, like often happens in acquisitions for example), she must pay taxes on the unrealised gains on her shares.

These gains are based on the last valuation of the company – usually a private financing round.

Let’s say Sandra has 1000 vested stock-options in the startup she works at, Super-Startup, with the strike-price of $1. The last VC round valued the stock at $5 per share. She’s leaving the company to start her own, but wants to exercise her rights. She would have to pay $1,000 to the company to buy the shares (1,000 * $1 strike price), and an additional ~40% income tax on the $4 of unrealised gains (i.e. $1.6 per share), even though she doesn’t sell the shares.

A similar rule applies to convertible bonds.

Convertible bonds are financial instruments investors can use to lower their risk when investing in startup companies. Rather than buying shares outright, they purchase a corporate bond, with the option of converting the bond into shares.

For example, a $1,000 bond could have the option of being converted into $1,200 of equity. If and when an investor decides to exercise this right, she will be taxed for the gains, in this case, $200.

The problem here is, that individuals – often early employees or individual investors – are being taxed for unrealised gains. Financial gains that only exist on paper. There is still the real possibility of the company failing, and their shares losing all value. In those cases, people will have paid taxes on nothing.

Eggert Claessen. Picture:

Eggert Claessen. Picture:

“This would be great progress,” Eggert Claessen, Managing Director of venture fund Frumtak 2, told Nordurskautid. “It would make the involvement of smaller investors much easier and turn stock-options into a better tool for retaining employees.”

Tax relief for individuals investing in startups

Bjarni Benediktsson also mentioned making investments by individuals in innovative, growing companies deductible. He mentioned that he was putting emphasis on creating a bill on these matters. He didn’t mention which specific criteria the companies would need to fulfil to qualify, but there would be some.

“A bill focusing on tax relief for individuals investing in startup companies has been discussed for some time, but until now, delayed by technicalities,” Teitur Björn Einarsson, political adviser to the finance minister, told Nordurskautid.

Concrete details on these deductibles haven’t been announced, but the hope of the community is that they will help increase both the number of angel investors and available early-stage capital. Similar measures, focusing on tax-relief for individual investors, have been successful in other ecosystem, notably London.

Norðurskautið covers the Icelandic Startup and Tech scene. Follow us on Twitter or sign up for our mailing list to keep up to date. You can also join our Slack community –

NSA Ventures: A profile of Iceland’s biggest VC fund

NSA Ventures is a permanent, semi-official early stage venture fund in Iceland. It was founded in 1997 by a one-time endowment from the Icelandic government of 3 billion ISK ($~25MM) but operates without additional official funds. Its current size is around 5.5 billion ISK ($~44MM). This makes it Iceland’s biggest VC fund, a bit bigger than Frumtak 2, which is 5 billion ISK.  Its mission is to “contribute to the growth of the Icelandic economy by participating in venture investments.” The current size of the fund is roughly 5 billion ISK ($~38MM), invested in 34 companies. It is also a Limited Partner in three funds; Brú 2, Frumtak and Auður 1. The fund’s staff are employees of the fund, unlike other the other VC funds we’ve covered, that have a LP / GP structure, and it doesn’t operate on a “two and twenty” basis, i.e. with management fee and carry-bonuses.

According to Helga Valfells, CEO of NSA Ventures, they invest early in companies and want to be able to follow their investment in later stages. They’re currently the only big fund to focus on the early stage in Iceland, as the other three funds are looking mainly at later stages, although they sometimes do earlier investments.


Helga Valfells, CEO NSA Ventures

A typical first investment is around 50 million ISK (~$370,000), with the possibility to follow up on the investment with an additional 150 million ISK (~$1,1 million). According to the fund’s investmen plan, it can invest anywhere between 20 and 400 million ISK. “However, the fund rarely invests so much in a single company,” Helga says. “We don’t want to have upwards of 10% of the fund in a single company.”

To emphasize their focus on early companies, Helga points out that the fund expects its holdings in companies to be diluted. “We go in early at a fair price, and expect to be diluted, when more investment comes in.” NSA is usually the first institutional investor, and most often takes a seat on the board of the companies they invest in.

The fund’s mission of contributing to the growth of Icelandic industry, differentiates them from other Icelandic VC funds, who have the main purpose of making money for their investors. Returns on NSA Ventures’ investments are to be invested again.

Some notable exits are Betware – now Novomatic Lottery Solutions, Clara – sold to Jive in 2014, Marorka – energy management for fishing boats, and Kerecis – developing pharmaceutical products from fish ingredients.

Norðurskautið covers the Icelandic Startup and Tech scene. Follow us on Twitter or sign up for our mailing list to keep up to date, with Norðurskautið and it’s Slack Community –

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Nortstack – Reporting and analysis of the Icelandic startup scene