NSA Ventures: A profile of Iceland's biggest VC fund
NSA Ventures is a permanent, semi-official early stage venture fund in Iceland. It was founded in 1997 by a one-time endowment from the Icelandic government of 3 billion ISK ($~25MM) but operates without additional official funds. Its current size is around 5.5 billion ISK ($~44MM). This makes it Iceland’s biggest VC fund, a bit bigger than Frumtak 2, which is 5 billion ISK. Its mission is to “contribute to the growth of the Icelandic economy by participating in venture investments.” The current size of the fund is roughly 5 billion ISK ($~38MM), invested in 34 companies. It is also a Limited Partner in three funds; Brú 2, Frumtak and Auður 1. The fund’s staff are employees of the fund, unlike other the other VC funds we’ve covered, that have a LP / GP structure, and it doesn’t operate on a “two and twenty” basis, i.e. with management fee and carry-bonuses.
According to Helga Valfells, CEO of NSA Ventures, they invest early in companies and want to be able to follow their investment in later stages. They’re currently the only big fund to focus on the early stage in Iceland, as the other three funds are looking mainly at later stages, although they sometimes do earlier investments.
A typical first investment is around 50 million ISK (~$370,000), with the possibility to follow up on the investment with an additional 150 million ISK (~$1,1 million). According to the fund’s investmen plan, it can invest anywhere between 20 and 400 million ISK. “However, the fund rarely invests so much in a single company,” Helga says. “We don’t want to have upwards of 10% of the fund in a single company.”
To emphasize their focus on early companies, Helga points out that the fund expects its holdings in companies to be diluted. “We go in early at a fair price, and expect to be diluted, when more investment comes in.” NSA is usually the first institutional investor, and most often takes a seat on the board of the companies they invest in.
The fund’s mission of contributing to the growth of Icelandic industry, differentiates them from other Icelandic VC funds, who have the main purpose of making money for their investors. Returns on NSA Ventures’ investments are to be invested again.
Some notable exits are Betware – now Novomatic Lottery Solutions, Clara – sold to Jive in 2014, Marorka – energy management for fishing boats, and Kerecis – developing pharmaceutical products from fish ingredients.
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