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Big rounds and big money, but early stage is lacking – The 2020 Funding Report

Another year, another funding report, where we highlight investment data, discuss and (try to) analyse trends as they emerge. As a reminder, here you can find an overview of earlier reports, and for info on methods and data, please see the section at the end of the report.

27 investments tracked, evenly distributed through the year

We’re interested by seasonality – whether one time of year is better for venture and startup funding than others – but over the five years Northstack has been tracking investments, we’ve yet to find any seasonality.

This is true both if we look at the year by quarter (see above) or by halves (see below). No trends have emerged over the years to strongly indicate that one time of year is preferred by our fundraising companies, and although it looked like the first half of the year was starting to become dominant, 2019 and 2020 evened out that distribution.

2+ deals per month is becoming the norm

While we do not see any real indication of seasonality, one data point that we can say with confidence is that the Icelandic ecosystem is announcing on average 2+ deals per month (the average over the last 6 years being exactly that). Please keep in mind that we do not have good data from before the private venture capital funds (Brunnur, Crowberry, Eyrir, Frumtak II) where founded (they all closed in 2015).

2020: The eclipse of big money

The biggest headline by far for 2020 is the massive amount of money deployed into the ecosystem last year. When reporting on the total amount invested, we usually split the “monster rounds” (above $30 million) and others, which explains why the column for 2020 is so much bigger than all the years before. While we’ve had big years before (see below), we’ve never had this much money deployed in funding rounds where each round was $30m or less. This means more companies raised sizable funding rounds in the year, and the data wasn’t totally skewed by one or two massive deals.

When we include the monster rounds, 2020 doesn’t stand out as much in total amount. But the difference is that 2020 saw multiple companies raise big funding rounds, as opposed to multiple smaller ones, and one or two massive ones.

2020: Year of the Icelandic Growth Round

The biggest positive indicator of the year, is the number of rounds we could qualify as “Icelandic growth rounds.” Out of the 26 investments tracked, eight landed in the $10-$30m bucket, which for most Icelandic startups would qualify as a growth investment.

Note: We could get all philosophical and semantic around what is growth funding and what isn’t — based on the actual activity in the Icelandic ecosystem, raising $10m+ would be considered (right now at least) a good amount of money, and a bigger round than usual.

The flipside of this fact is that there was a significant drop in early stage funding: from 20 tracked early rounds in 2019 to 10 tracked in 2020. There are multiple possible reasons for this:

Exits and the closing of Frumtak 1

Looking at exits and other acquisition activity, we had some movement throughout the year. Sadly (for us that are interested in data) most of the numbers remain undisclosed.

The main story here is that Frumtak 1 – which was founded in 2008 and started investing in 2009 – is wrapping up, hopefully with some decent results for the rest of the industry.

Notes on method and data

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