Do you like Northstack? Posts and analyses like these are made possible by our helpful community of supporters. Click here to support Northstack with a small monthly donation.
While 2018 was a very good year for startup funding in Iceland, with capital deployed almost reaching the record numbers of 2015, the year that just passed made its own records, as well as a couple of interesting firsts for the Icelandic ecosystem, and interesting shifts in the landscape.
New record in dealflow
In 2019, we tracked 29 investments, a new record and a roughly 30% increase year-on-year (from 2018-2019).
The most active quarter was the beginning of the year, with more than a third of all deals recorded being announced in Q1.
But any signs we might’ve seen that pointed towards seasonality – last year we thought the data suggested that the first half is more active – is fading, as deals were almost evenly split between the first and second halves of the year.
Capital invested remained strong
Although we recorded more deals than ever, the amount of capital invested declined – albeit minimally. The ecosystem still raised a good $81m over the year, ranking third in the last five years (if we don’t count monster rounds – $50m)
Unlike some previous years, we didn’t raise any monster rounds, leading to a big decline in overall funding raised when those are taken into account.
In terms of round stages and sizes, the pendulum swung heavily back to being mostly early stage. In 2018 we had relatively few early stage rounds, which explains to amount of capital deployed that year. In 2019, we recorded 22 early stage rounds (smaller than $2.5m), which should set us up for a late-stage heavy 2020.
Foreign participation remained strong
Foreign participation remained strong in 2019 – more than 72% of funding rounds by size included foreign investors (sometimes participating, sometimes leading, sometimes only foreign), and roughly half of all deals included foreign investors.
This is a predictable pattern: a lot of early stage activity, means there’s more local players active, and a bigger portion of the deals are local only. Early stage is driven by local investors.
More than $12 million in grants
We’ve mostly focused on funding through the lens of angel and venture capital, and sometimes private equity (when the companies are tech or innovation driven), but haven’t spent much time discussing grants.
However, it should be, as grants – especially the big European grants – are the size of decent seed rounds, and last year we had five companies receive them, for a total of more than $12m
Exits & Acquisitions
The Icelandic ecosystem has had interesting funding numbers for a couple of years now, but exits have rarely been a big topic. However, this year was interesting due to a lively secondary market.
- Meniga made what is one of the first (or at least – very few) cross-border acquisitions with its acquisition of Wrapp.
- Marel entered the acquirer stage with its acquisition of Curio, one of few (maybe the only?) local acquisitions to date.
- Secondary money entered the market, with private equity firm SÍA III acquiring Men&Mice.
- Private equity firm Alfa Framtak injected $10m into the merger of Nox Medical and Fusion Health, which formed Nox Health.
- Algrím consulting was acquired by blockchain giant Ripple in the only cross-boarder acquisition out of Iceland.
Did you like this article? Northstack has been tracking and analysing investment data since 2015, made possible with the help of our community of supporters. Click here to support Northstack with a small monthly donation.
We’ll be discussing the funding report in more detail in the upcoming newsletters, so be sure to subscribe.