Hefring Marine, an Icelandic startup that builds products to increase seafarer safety and give vessel owners insights into the use of their ships, just announced a funding round from New Business Venture Fund. The amount remains undisclosed, but it follows the announcement that the fund will receive a bit under a quarter of the company.
“We believe Hefring is an interesting company that falls well into the investment thesis of the fund,” commented Huld Magnúsdóttir, CEO of New Business Venture Fund.
Hefring participated in the Nordic Innovation House run TINC accelerator in Silicon Valley, and will unveil its product to customers in Iceland and Norway later this year.
Last week we wrote about Lava Cheese raising money through Funderbeam. The story is interesting to me on several points: A company raising a solid seed amount using somewhat unconventional methods; most of the money coming from outside of Iceland, and the fact that a foreign platform supports funding Icelandic companies with regards to legalities and so forth.
To dig a bit into that, I interviewed Guðmundur Páll Líndal, co-founder of Lava Cheese. Questions in bold, answers in italics. This is a post originally from the Northstack Memo, our newsletter on everything startups, tech and venture capital in Iceland. You can sign up here.
You chose to use Funderbeam to fundraise, which would be considered somewhat unconventional in early stage funding. Why did you choose that way?
There were a few reasons we chose to go with Funderbeam. First and foremost that the active Icelandic VC funds are focused on tech startups which immediately limited our access to domestic capital. As for private investors in the Icelandic food sector, we were raising in the middle of strikes and pay-raises which had many production and manufacturing companies spooked and fighting to conserve their resources.
At the same time we were speaking with a number of Scandinavian private investors which were immediately sold on our story and product. We figured that we would have much more luck there since the food startup sector in Scandinavia is very active and well funded. Funderbeam would give us access to all these investors.
Finally, Funderbeam, unlike the other European platforms, is active in Iceland and has done the legal background work here. They have incredibly engaged staff and Rünno Allikivi, Head of Funderbeam Scandinavia, has this perfect habit of making things happen.
How did people react when you first told them about this approach?
I think the reaction was mostly positive. Of course there was some skepticism, especially from the older generation, but having told my family I was quitting my law career to melt cheese I’m kind of used to that.
What’s the investor demographics like? Icelandic? Foreign? How much were people investing? Anything interesting there?
Very interesting to say the least! Only about 10% came from Iceland. That could be explained by a number of different factors. First of all the overall small population of Iceland. Second, Funderbeam has been operating in other markets for far longer than Iceland so they’ve had more time to build up a good user base. Third, Iceland is such a volatile market in general. For the past few years Icelandic startups have almost been competing with real estate in terms of yield, with the risk in real estate being comparably almost non-existent. Thankfully this period seems to have run its course.
The smallest investments were EUR 100 and the largest was EUR 200.000. We’re actually very excited about the many smaller investors since we believe we’ve got some super-fans there with actual skin in the game!
Would you choose this approach again? What kind of companies do you think this is good for? And which don’t fit?
We would definitely choose this approach again. We felt that this approach has benefits for us that definitely outweigh the flaws. The main one being that having 300 smaller investors in our company puts 300 stakeholders out there bringing the good word to the world. The only “flaw” to speak of is that you open yourself up to considerable scrutiny which you have to spend valuable time on. However, this is the kind of accountability that can definitely help us grow and continuously improve our game.
I think equity crowdfunding can be for any company, but I think some companies will definitely have an easier time fundraising there. On one end we have high tech startups with a complex B2B business model whose product will require years of development. On the other end we have companies such as Lava Cheese with an easy to understand, B2C business model that has created revenue from the get go. There’s a lot of grey area in between but I think these are the main factors to consider. Then again I could be completely wrong.
Lava Cheese is part of a growing scene in Iceland, small-ish, artisanal, new types of food and snacks. What are the main challenges for that industry?
Iceland is an island and that alone puts production and manufacturing companies at an insane competitive disadvantage since cost of goods is inherently higher, and shipping will put another slice of hell on your prices. Thankfully we were able to overcome that barrier by setting up a second production facility in Sweden and therefore on the mainland, but this is by far the biggest hurdle to overcome. We were both lucky to get an experienced angel investor in at the beginning and that Jósep was able to move to Sweden and oversee our operations there. Boots on the ground are important.
Another thing is that many food startups rightfully decide to focus on just one product. This is harder in Iceland since the market is extremely small and the cost of running a food production facility can rarely be sustained by just one product. It gets very tempting to start launching different products to lower unit costs and ramp up the revenue, but it usually causes the founders to lose focus on the original success. Now that we’ve closed this round we feel pretty confident that we can start thinking more about further product development without losing our footing.
Icelandic VR developer Aldin, recently announced Waltz of the Wizard: Extended Edition, following the success of their earlier game and the highest rated VR title on Steam, Waltz of the Wizard.
“The Extended Edition adds new spells and interactive objects, with major visual remastering, performance improvements and additional options that keep the experience a great showcase of virtual reality’s potential for friends and family,” Hrafn Þórisson, co-founder and CEO comments in a statement.
Icelandic food startup Lava Cheese, recently closed a €700k seed round using fundraising platform Funderbeam. The company, which is part of a growing scene of local, artisanal, specialty food producers, originally set aims for a round of €350-650K but had to cut fundraising short as they sailed passed their stretchgoal.
Lava Cheese is only the second Icelandic company to use this funding source (the other is FlowVR).
“There were a few reasons we chose to go with Funderbeam for our funding,” Guðmundur Páll Líndal, co-founder, told Northstack. “The local VC funds are mostly focused on tech startups, and we were raising in the middle of union-strikes and pay rises, which had the local food players spooked and fighting to conserve their resources.”
The funds will be used to scale up production in new markets, like Sweden, where Lava Cheese has already opened a production facility.
Northstack interviewed founder Guðmundur Páll Líndal for the Northstack Memo, sign up below to get it right into your inbox!
Frumtak Ventures currently has two funds, Frumtak and Frumtak II. They were one of the three funds announced in early 2015. They were very active for two to three years, with their last fresh investment in 2017.
This post is from The Memo, a newsletter from Northstack analysing the startup and venture scene in Iceland. You can sign up here.
Questions in bold, answers unformatted.
You’ve been a part of Frumtak for a long time, with Eggert. What is the reason for this change of roles? Eggert and I founded Frumtak Ventures as equal partners, but decided for the continuity from the first fund into the second fund that he would continue to be Managing Director and that I would take over at a fitting time. That time has now come.
Why at this point in time? We formally announced on May 9th that we will be raising a new fund, Frumtak III in 2020 which will operate up until 2030. Potential investors want to know who will be leading the fund the whole time. As Eggert had indicated that he wants the option to retire in 2025 we decided that now would be a good time to make the change we had originally decided, and that I will lead the new fund.
Frumtak II hasn’t done fresh investments since 2017 (Sidekick Health). Will your first undertaking be to raise a third fund? The experience from the first fund was clear in terms of the number of companies and amounts to invest in that were sensible and as there was ample supply of investment opportunities when Frumtak II was founded, it took only 2 years to select the investments that we deemed appropriate for the size of the fund. We also left enough in the fund to be able to support our companies going forwards. I am deeply involved with both funds and will simultaneously head the fundraising for Frumtak III.
How do you think the current landscape for raising a venture fund in Iceland is? I think the landscape is good for raising a venture fund in Iceland as the LP’s that have invested in venture funds in the startup asset class realize the importance of creating and building new companies and they understand that it takes time to create value and deliver financial returns.
I believe that the work we have been doing for the last 10 years is an important part of growing the venture industry and ecosystem in Iceland and it is important to preserve the experience and knowledge that we have built. It is important to grow that further by having a new fund which gives us the means to grow our team and continue to build a strong venture partner.
What could be better? What has changed since last time you raised a fund? What our industry needs is more success stories. If we had more good/ great exits, it would be easier to raise a fund.
When we raised Frumtak II, we were in the forefront of setting the traditional venture terms and activity of the funds with the LP’s in Iceland. The co-operation with our LP’s has been very good and they have shown us lot of trust.
Back in 2015 it was big news when three venture funds were announced in the same month. There has not been much fund activity lately beside new investment of Crowberry Capital and hopefully we can participate in new investments with our third fund next year.
General knowledge, paperwork and terms have become much clearer since 2015 which we hope will make our task easier when it comes to raising a new fund.
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Last week, dating app The One was released for iOS and Android, with the goal of changing how online dating works.
“Dating apps have become a way to nourish your confidence – that someone likes how you look,” comments CEO and co-founder Davíð Símonarson. “It’s the exception, not the norm, that people actually strike up a conversation in these apps.”
That is one of the main things The One is meant to solve.
“In The One you get one match per day that is chosen for you. The only information you get about your match is a picture, their first name, and their distance from you,” Davíð explains. “You then have less than 24 hours to chat with your match, and once the time is up, both have to choose whether to continue the chat or not.”
The One Company, which develops the app, is founded by Davíð Símonarson and Ásgeir Vísir. They previously co-founded and worked on startup projects like Blendin and Watchbox. The company raised a $120k angel round (15m ISK) earlier this year from angels Investa, Tennin, and Miðeind.
“If the matched people decide not to continue the conversation, the match is gone forever,” co-founder Ásgeir Vísir tells Northstack. “But if they decide to extend the chat, we offer more options to converse like images and GIFs, and are working on more ways for people to express themselves in conversation.”
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In stark contrast to the hectic life of startups, entrepreneurs and digital nomads can head to Þingeyri, a small town in the Westfjords of Iceland, to “decelerate.”
“What our ‘decelerator’ really offers,” Arnar Sigurðsson, cofounder of the Blue Bank which hosts the program, “is the rare opportunity to slow down, disconnect from everyday work life, to gain mental clarity and reconnect to projects with a greater sense of purpose.”
The Blue Bank is a community and coworking space in Þingeyri, a once-thriving fishing town in the majestic Westfjords, and now home to only 250 people, founded by Arnar Sigurðsson and Arnhildur Lilý Karlsdóttir. In their new program, Startup Westfjords, twelve participants will be picked from applications to participate in a two week (with two optional, additional weeks) program. For those chosen, the participation is free.
“When we were designing an event to build our own village startup community, we did not want to make a smaller or less interesting version of what was already being done in Reykjavík,” Arnar told Northstack. “We wanted a unique value proposition, and believe we have found that in the ability to disconnect from the distractions of every day life.”
While Traditional accelerators focus their program on product development, growth, sales, marketing and other “startup-y” topics, Startup Westfjords promises that “participants will be invited to get under the skin of Icelandic village life. Scheduled activities include Yoga Nidra, hot tub/sauna sessions and a hike to the top of Westfjords’ highest peak, Kaldbakur.
“While accelerators teach us to launch, grow, and even fail fast, finding a decelerator that shifts the focus to slowing down while starting up is a breath of fresh air,” Þórunn Jónsdóttir, founder of Poppins and Partners, and mentor at the 2019 program, commented.
The Blue Bank has already changed Þingeyri to some extent. “We’ve been running a remote coworking space and creative hub here for almost two years and are now getting the first visitors relocating here permanently,” Arnar said. “They’re working in creative industries for global clients online. When we started out, there was not a single person who worked an office-based job in the entire village, so this is a significant change.”
“What we hope do do is create a beautiful harmony between the traditional ways of life based on farming and fishing, and the digital creative industries of tomorrow”
The Startup Westfjords program is supported by KPMG, and local companies Arctic Fish and Kerecis (which just announced a $16m fundraise and is partly located in neighboring town Ísafjörður).
I usually don't brag but I'm pretty proud of this but this is a huge milestone for @monerium, the world's first company to be granted an e-money license for the purpose of issuing regular currencies on blockchains! #emoney#blockchainhttps://t.co/t9qZlXC7tA
Kerecis, the medical fish skin company, just announced a $16m series C financing. The company sold new shares to the value of $10m, and converted $6m of promissary notes at the time of closing. Investors include Emerson Collective, which was founded by Laurene Jobs, the widow of late Steve Jobs of Apple. According to the statement issued, the fundraise was oversubscribed. After the funding round, founders and related parties retain about a one-third share ownership in the company.
“Fish skin is becoming a mainstream therapy for treating severe wounds, including diabetic wounds,” commented founder and CEO of Kerecis G.Fertram Sigurjonsson. “The funds from the Series C offering will allow us to continue our rapid growth and improve medical care for patients suffering from terrible wounds, which too often lead to amputations.”
The funds will be used primarily to fund sales and marketing efforts in the US and Switzerland.
Kerecis develops patented fish-skin products to heal human wounds and tissue damage. Because no disease-transfer risk exists between cold-water fish and humans, the Kerecis fish skin is only gently processed and retains its similarity to human skin, making it an ideal substitute for human skin. Fish skin also contains Omega3 fatty acids, which enhance wound healing. More than 50 studies have been done on the Kerecis technology.
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Startup Reykjavik, Iceland’s main accelerator, is running its eighth batch this summer. The accelerator, owned and funded by Arion Bank and operated by Icelandic Startups, received around 200 applications, ten of which were selected for the program which kicks off this Tuesday, June 11th.
Baseparking: A valet parking service at Keflavík airport servicing over 20,000 customers.
CheckMart: Infrastructure for small and medium-sized companies in e-commerce.
Hvíslarinn: Health tech software solution using smart-tech, automation and AI to simplify documentation process for hospitals and healthcare facilities
Íslensk Gervigreind: Digital employee in the cloud using AI and data to make customer service more efficient.
Proency: Software solution using AI and evidence-based psychological methods to provide mental health analysis and counselling for staff and management within companies.
Rafíþróttaskólinn: A platform that serves anyone with the materials necessary to start their own esports training program with the aim to change the way esports athletes are made.
Rebutia: AI stylist software that carefully analyzes its users, classifies clothing according to their body’s figure to help them discover their true style.
SmartSampling: A software making a better and more efficient way to get intelligence from your customers about your product.
Snorricam: Hardware company making a tool called Snorricam for filmmakers to gain a unique camera angle.
TrackEHR: Health tech software solution that helps doctors create treatment plans and share them with patients.
The startups selected to participate each year receive 2,4 million ISK in funding from Arion bank in exchange for 6% equity. In addition the participants get access to mentors, office space and a host of perks.
The program culminates on Startup Reykjavik’s Investor Day where the participating teams get the opportunity to present their company to potential investors. This year Investor Day will take place on August 16th.
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