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Why is it so important that TravAble recieved funding

A social enterprise gets funding from the Icelandic Technology Development Fund

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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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Paula Gould joins Frumtak Ventures as Principal

Paula Gould, who has worked with startup companies in the US, Israel, and Iceland on marketing, branding, and business development, will join Frumtak Ventures as a Principal to spearhead international brand and marketing initiatives.

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Paula Gould

“I’m thrilled to be joining Frumtak’s team and looking forward to working with their exceptional portfolio companies to help deepen their international network and strategize growth opportunities,” said Paula in a written statement.

Paula previously led marketing at Greenqloud, Dohop, and Oz, as well as serving on the board of directors at Clara.

“Paula’s experience working with startups on brand and market growth as well as her passion and advocacy for the Icelandic innovation and startup community fit well with our objective to create a role on our team that brings international awareness to our portfolio of companies,” said Eggert Claessen, Managing Partner of Frumtak Ventures in a statement.

This hire marks a first for the Icelandic VC business, following in the footsteps of the world’s best VC funds that routinely have specialist support on staff to help portfolio companies. Icelandic VC has until now solely had full-time employees in the form of investment managers or administrative staff, so this is what

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Crowberry Capital, and the funding environment report

Innovation ministry releases report on startup financing

From the ministry’s website:

On the basis of the action plan for entrepreneurship and innovation, Initative and Progress, announced by Ragnheiður Elín Árnadóttir, minister of Industry and Commerce, in December 2015, a detailed mapping of the startup funding environment has been made. The aim is to gather information about financing options for entrepreneurs and startups, from the initial stages through growth, identify needs for improvement, and diversifying the funding resources and options offered.

First off, calling the report a “detailed mapping of the startup funding environment” is a stretch. The report gives a brief introduction to the various funds and institutions that directly support startups financially, but includes no empirical data on the funding environment (in my opinion the most important part of mapping a funding environment). The reason is simple: the data doesn’t exist. The ministry knows it – Northstack met with the minister several months ago on this exact issue. While this may sound bitter, it’s not supposed to. We’ve funded the project (thanks to our awesome sponsors) and are working on gathering the data, so that an empirical mapping of funding in Iceland can take place.

This comment is not made to disparage the work of KPMG or belittle the report. The point is simply that doing a “detailed mapping of the funding environment” absolutely has to include empirical data. It’s a disservice to the ecosystem to suggest that we can have enlightened discussions about the problems of the ecosystem without any numbers backing up our hypotheses. I applaud the effort: diagnosing the situation is critical for the creation of strategy (strategy is sadly lacking in much of government). I’m just pointing out that we should have higher demands, and expect our diagnoses to include quantitative data. In this case, it’s mostly unavailable, and hard to come by. Next time, it’ll be more easily available, which can help in defining, evaluating, and choosing actions.

The suggestions are an interesting list of ideas that could, or could not, help. The main problem is that nobody can point to the thing that needs help. Just like a doctor has a hard time suggesting treatment when the only info provided is “I’m sick”, a consultant or government agency can hardly address any ecosystem issues based on a (possibly non-existent) “funding environment” problem.

What do you think? Have you read the report? What are your initial reactions? Shoot me a message with your thoughts.

Crowberry Capital: Iceland’s first female only VC fund announced

Late last week, news broke (Northstack of course broke it) that Helga Valfells, CEO of NSA Ventures, and two of her colleagues, investment managers Hekla Arnardóttir and Jenný Ruth Hrafnsdóttir, are leaving NSA to found their own fund. Their aim is a 5bn ISK / $42m fund, focusing on early stage companies.

Some thoughts:

The move leaves Egill Másson as the only investor at NSA Ventures – other staff are the CFO and the office manager.

According to the press release, the move is in part due to the Ministry for Industry and Inovation’s aim to turn NSA Ventures into a fund of funds. That suggests that the three women are more interested in investing directly in companies than funds.

They aim to raise 5bn ISK, and according to Helga have some commitments. If they succeed in raising that amount (which is probably the bare minimum they could raise to make this work in terms of operating costs) it would mean 17.5 bn ISK (between $140-$150m) in Iceland-focused VC funds in a couple of years.

The trio is betting their livelyhoods (they’re leaving the jobs without having raised the fund) on the interest of LP’s to participate in another VC fund in the short term, and the hypotheses that Iceland has a funding funnel problem that can be solved with more cash in the long term. That it’s the lack of cash, not lack of startups with potential, that is the source of most current problems.

As far as I know, Eyrir Sprotar wasn’t planning on raising another VC fund. Frumtak, however, is likely to take a run at the third fund. Both of their funds are mostly deployed. Frumtak 1 has been completely deployed for some time (and we’ll hopefully start to see some exits soon), and Frumtak 2 has little left for fresh investments. That would mean we have two VC funds competing for capital.

Of the four classic structure VC funds in Iceland, two are all-male, one is mixed, and one will be all female. That has to be some sort of par-capita world record. Most all-female VC funds per capita in the world?

I wholeheartedly wish the trio the best of luck!

What are your thoughts on this? How do you think the LP market will respond? Will they finish raising? (I know way too little about the Icelandic LP market, sadly). Send me a message with your thoughts.

This post was originally sent out as part of The Northstack Memo – our weekly newsletter with commentary and updates on the Icelandic startup and tech scene. You can sign up here.

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The companies funded by the Technology Development Fund

Mid-December is an important time for the Icelandic startup community, because the biggest financial supporter of startups announces what companies receive funding. 25 projects will be offered a grant, for a total of 450m ISK (~3.75m). The grants come in several types, Company grants, which can range from 20-70m ISK (~$160K-$580K) over two years, and Marketing grants, up to 10m ISK (~$85k) for marketing purposes.

Sproti (20m ISK / ~$160K over two years)

  • Blásúra  – We don’t know of this project, but the contact is for Sigríður Suman, a chemistry professor at the University of Iceland, which suggests it’s related to research.
  • e1 – Marketplace for electric car charging stations. It allows people and organisations that have charging stations to register their station, to allow other car owners to charge their car and the station owners to make some extra money. More here.
  • Travable – travel companion for those with special accessibility needs More here.
  • Yellow beetroot snacks – Founder of Crowbar Protein (Búi Bjarmar) wants to create snacks from yellow beetroots.
  • Platome – One of two Startup Reykjavik 2016 companies receiving a grant. Platome creates nourishment for stemcells.
  • Snakerobots – No info on this company.
  • Travelade – Former Linkedin Product Lead, Andri Heiðar, and his travel startup. More here. 
  • Chess-app – to train the mind.
  • Wasabi Iceland – Previously raised $380k from private investors, growing Wasabi in the east of Iceland.

Vöxtur (50m ISK / ~$420K over two years)

  • Omega Algae – Optimizing EPA-rich algae-oil.
  • Lauf Forks – The company behind the Lauf Forks bicyle forks is continuing development on their product.
  • Flow VR – Meditation in VR, Startup Reykjavik alum.
  • Aldin Dynamics – VR analytics, to analyse user behavior in virtual reality apps.
  • Frostmark – Creating refrigeration products for fishing boats.
  • IceWind – Developing wind turbines for communication masts.
  • InfoMentor – The company behind edtech solution Mentor receives a grant for what they call IM Insights.
  • Gagarín – Developer of exhibitions and shows, for a project they call Mapexplorer.
  • Sæplast – Creating new transportation vessels for fresh foods.
  • Oculis Pharma – The pharmacompany that raised 500m ISK earlier this year from Brunnur.
  • Valka – Fishing-tech company Valka receives a grant to develop their fish processing automation products.
  • SnapStudy – A team of ex-QuizUp people, including former CRO Vala Halldórsdóttir, receive a grant for SnapStudy.
  • asco Harvester – A “street-sweeper” for the oceans. More here (Icelandic).
  • GeoSilica – Creating health-supplements from silica. More here.

Marketing grants (10m ISK / ~$420K over two years)

  • Handpoint – maker of POS software for mobile devices receives a grant to expand to the USA.
  • TARAMAR – Maker of skincare products from algae, Taramar is expanding to the US.
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Former NSA Ventures investors raising new early stage fund: Crowberry Capital

CEO of NSA Ventures Helga Valfells, and two investment managers – Hekla Arnardóttir and Jenný Ruth Hrafnsdóttir – just announced that they will be leaving NSA Ventures to found a new VC fund: Crowberry Capital. They’re currently raising the fund.

“There’s a need for an early stage investor right now and we believe that our experience from working in this environment for a long time will help us with this project, Helga Valfells, departing CEO of NSA Ventures said in a statement.

NSA Ventures and the Ministry for Industry an Innovation have during the past several years discussed internally how to increase capital available to early stage companies. At some point there were ideas about raising an early stage fund – codenamed Silfra – as part of NSA to address this. Rather than following that route, the strategy set forth is to develop NSA Ventures into a fund of funds, that invests in venture funds, rather than directly in startups.

Crowberry Capital hasn’t finished fundraising, but according to Helga, the trio have several commitments and aim to raise 5bn ISK (~$45m). The fund will focus on smaller, earlier checks, to come after grants from the Technology Development Fund, but have the ability to follow on into later stages.

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Will CCP be Iceland’s first unicorn?

A huge news story (or rumour) for the Icelandic tech industry dropped just before the weekend. Bloomberg reports:

“CCP hf, the Icelandic game developer that created the cult classic Eve Online game, is exploring strategic options including a sale of the business after receiving interest from potential bidders, according to people with knowledge of the matter.

The closely held company’s owners […] are discussing whether or not to proceed with a sale. A sale of CCP could value the business at as much as 900 million euros ($955 million), the people said.”

There are points to be made about this:

  • I reached out to CCP for comment on various things related to this, and their line is “CCP doesn’t comment on rumours.”
  • VC fund NEA (and others) invested $30m in CCP last year at a rumoured $300m valuation. That would mean a 3x return in a year, pretty decent for an almost 20 year old company.
  • Novator Partners – one of the biggest shareholders – have been buying CCP stock from current and former employees. The going price has been around $23, according to several sources. Rumors followed, that a sale of CCP was the end goal of these stock purchases, and the Bloomberg story supports that. It’s all but certain that people won’t be selling their stock anymore at that price (if there are any small shareholders left).
  • The €900m valuation is mostly based on CCP’s VR efforts. Any regular valuation based on the company’s core business today wouldn’t come close to that price tag.
  • The valuation is great news for Iceland’s fledgling VR plays, and VR in general. It sends the message that someone is willing to pay top dollar for VR ambitions. which increases VR’s viability.
  • In the last year, the company has shipped two VR games: Gunjack on mobile & PS4, and Valkyrie on PC and Playstation. Both relatively successful – Gunjack is often touted as the world’s most sold VR game – and Valkyrie came with Oculus preorders. Now, the most sold VR game is most likely measured in hundreds-of-thousands of copies, not millions. Hilmar Veigar, CCP’s CEO, has said publicly that the company’s VR efforts have already broke even. No numbers have been released about the total number of games sold [all I’ve found is this tweet, retweeted by Hilmar Veigar, which says number is at “more than 500,000 copies”], which usually isn’t a good sign. CCP has, however, established itself as a leader in VR content creation.
  • This acquisition would be the biggest (I think, correct me if I’m wrong) in Icelandic tech history. Period. It’s silly, but I’m partly annoyed that it hasn’t crossed the $1bn mark (for headline purposes). Also, a unicorn exit would totally establish Iceland as the world champion of per capita – Iceland’s per capita unicorns would be off the charts 🙂
  • The “people with knowledge of the matter” in the Bloomberg story are most definitely leaking this strategically. What their strategy is, remains to be seen, motives could include raising interest to raise price.
  • Any discussion about the impact on CCP’s Iceland operation would be highly hypothetical. What we know is that CCP is building a new HQ close to the University of Iceland. We also know that most of CCP’s VR development is outside of Iceland. Gunjack is developed in Shanghai, Valkyrie in Newcastle, and Project Arena in Atlanta.

The company has remained publicly silent, but I would guess that some internal communication has taken place. In any case, these next weeks will be interesting, and rest assured, we’ll be following up on this.

The somewhat clickbait-y subject of this edition was “Will CCP be Iceland’s first unicorn” – and I haven’t answered that question. I personally think it could very well be; the news hopefully spark interest among other potential acquirers, sparking a bidding war, resulting in a higher sale price. Also: we could always calculate the sale price at this summer’s exchange rate, which would make €900m translate to more than $1bn 🙃.

This post was originally sent out as The Northstack Memo, our weekly newsletter with commentary on the Icelandic tech and startup scene. Subscribe here.

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Karolina Fund nominated for Best Social Enterprise at Global Startup Awards

Crowdfunding platform Karolina Fund was in the running for the Global Startup Awards in Kuala Lumpur, Malaysa on December 9th 2016. Karolina Fund was nominated in the category Best Social Enterprise. The company previously won that category at the Nordic Startup Awards, which qualifed them for the Global edition. The winner of the category was Romanian Mira Rihab.

Read More

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Locatify adds Thingvellir to growing list of local customers

The Icelandic tour and treasure hunt company Locatify just announced that Thingvellir – one of Iceland’s main tourist attraction (part of the Golden Circle and UNESCO heritage site – has become a customer of the company.

Read More

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Icelandic/Dutch fintech startup Five Degrees raises €10 million

Five Degrees, the Icelandic / Dutch Fintech startup, recently announced a €10m funding round from new investors Karmijn Kapitaal. Previous investors 5square and Velocity Capital (also an investor in Meniga) also participated.

“For us, Karmijn Kapitaal is more than just a new shareholder. Their investment is a sign of trust in our belief that delivering top technology is about people and creating an environment that is about unconventional thinking brought to perfection,” Martijn Hohman, CEO of Five Degrees said in a statement.

The company’s connection to Iceland (and the reason we’re writing about it) is deep. The CTO, and only listed co-founder in the management team, is Björn Hólmþórsson, and the company has offices in Iceland.

According to a statement, this new capital will allow Five Degrees to focus on product development and international expansion. The company develops the banking platform Matrix, which they say “offers an agile customer centric architecture that supports banking operations in a future proof manner, ready for the bank 3.0 paradigm where real, virtual and social meet.”

 

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Slush highlights, and why Iceland needs Slush Play

Slush Highlights

I’ve never been to Slush (or Helsinki) before, so everything was new. The first thing I noticed was the sheer size of everything: 17 thousand attendees, endless side events, enormous production value in everything. The size of the event allows for exceptional speakers (Chris Sacca, for example), and droves of investors, startups, and media. The talks covered a wide ranging subject; from cultured meat, to government and startups. There’s certainly something for everyone at Slush.

But the size is also the biggest drawback. The amount of speakers means a smorgasbord of topics, but also doesn’t allow for the depth of talks and discussion a focused event does. When a keynote speaker takes a couple of minutes to explain what machine learning is, you can rest assured that the talk wont go exceptionally deep.

That doesn’t mean the content is bad. It just means that the type of content is more introductory – a spark to investigate further. My two favorite topics were foodtech, companies that are changing how we consume proteins, and mini satellites. Both of the topics I will investigate further, and Slush was a big part of sparking that interest.

Why we must keep Slush Play going

This brings me to the main point of this post. My trip to Slush further convinced me that we (the tech community in Iceland) should absolutely make sure that Slush Play happens next year. There are several reasons for this.

  • First of all, people outside of Iceland are starting to reference it as a hub for VR activity – at least one speaker on the main stage of Slush referenced that.
  • Second, we need events like those to put Iceland on the map, bring media and investors to meet the scene, and build up an international presence. The full potential of an event like Slush Play won’t be realised until it’s been run several times – there are now two under the belt. Let’s get that to five at least.
  • Third, I think Slush Play is important is the focus. While Slush in Helsinki can afford having a wide focus, a fledgling event needs the focus to attract the top speakers and investors to participate.

So, please keep the bigger picture in mind when the Slush Play team comes knocking, asking for help 🙂

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Nortstack – Reporting and analysis of the Icelandic startup scene