Innovation, Startups and Venture Capital in Iceland

Amidst pandemic, Icelandic tech and innovation firms are optimistic and expect future growth

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Icelandic innovation and technology firms with business relations abroad increased their hirings by 14% last year and the majority of them are likely to continue growing this year. These firms seem to have fared better than other Icelandic firms and to be more optimistic about growth opportunities in the coming months.

Bigger than finance in 2026

Earlier this month, Business Iceland, a public-private partnership (PPP) promoting Icelandic exports, presented the results of a survey among 110 companies in the field of innovation and technology with business relations abroad. According to the survey, the proportion of export earnings these firms roughly doubled last year, from 7% to 15%. At the same time, the companies increased their hires by 14%, compared with 2019. Most of them are predicting further growth this year.

Moreover, the survey, which was conducted last December and January and included responses from 110 Icelandic companies, indicates that the sector was not badly hit by the pandemic. Although the respondents experienced a slight drop in income last year, the majority of them met their business plans.

If the companies’ current growth rate continues for five years, innovation and tech companies might employ 3,500 people in 2026, which is more than the current amount of jobs in the Icelandic financial sector.

Other firms less optimistic

These results are vastly different from those of a survey by the Confederation of Icelandic Enterprise (SA) and the Central Bank of Iceland in September last year on the overall outlook among Icelandic firms. The respondents of that survey, which were executives of the 400 largest companies in Iceland, were way more pessimistic about the growth outlook in all business sectors and expected a continuing decline in demand in export markets.

However, SA’s most recent survey, which was published earlier this month, indicates a mood change in the economy. Although the respondents lamented the current economic situation, a decisive majority of them were optimistic about the next few months.

Nevertheless, export firms in the innovation and technology sector seem to be more optimistic than other Icelandic companies, as only a quarter of SA’s survey respondents were considering more hirings in the next few months.

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