Iceland’s startup scene is all about profiting from the nation’s assets

With fewer than 400,000 inhabitants, Iceland receives greater than its fair proportion of vacationers — and of enterprise capital. Both are good causes to concentrate to what’s happening and popping out of this distinctive island nation.

“We want extra pillars to our economic system,” Áslaug Arna Sigurbjörnsdóttir, Iceland’s Minister of Higher Education, Science and Innovation, just lately advised TechCrunch at Iceland Innovation Week in Reykjavík.

Some diversification is already underway, and the nation’s export revenues from IP-driven industries have been rising steadily. But greater than being its personal pillar, Icelandic innovation ties into what’s already there: Startups are constructing tech to assist the nation benefit from its assets and financial actions — fisheries and heavy trade high that record, however they’re additionally advertising the native expertise and tradition.

However, it’s arduous to deduce tendencies from meager information on the handful of startup offers which might be performed in Iceland every year. Here’s what you want to know concerning the kinds of startups which have taken root and are flourishing within the island nation:

It’s telling that medtech firm Kerecis, which makes use of fish pores and skin for novel wound dressings is from Iceland: Innovation right here usually seems to be to surprising locations for inspiration.

Products from the ocean have branched into high-end cosmetics, as did foodtech, new supplies, and extra. While it wasn’t apparent even to Icelanders that fish pores and skin or algae might be repurposed in so some ways, rising assist for the round economic system has introduced focus again on sustainability. That’s what one startup accelerator run by KLAK – Icelandic Startups is concentrating on.

One large supply of inspiration for firms within the nation is the previous. Especially in the case of fintech — the sector has little to do with the nation’s pure assets and extra with its historical past. “I feel that the drive behind firms reminiscent of [neobank] indó is classes realized from the [2008] banking disaster. And identical with Monerium,” mentioned Gunnlaugur Jónsson, CEO of Reykjavik Fintech Cluster, an affiliation that goals to nurture the nation’s fintech firms.

There are extra classes to attract, in accordance with Bjarni Gaukur Sigurdsson. His new firm, Blikk, is engaged on an account-to-account funds platform, as a substitute for bank cards, to assist cut back fee processing prices. It’s received a safety angle, too, because it helps its clients cease being overly reliant on platforms that might be compromised.

But all that innovation could be wasted with out assist. Thankfully, entrepreneurs right here have a great ecosystem to contribute and study from as they construct.

Besides enterprise capital and accelerators, the nation’s startups can get funding by means of applications like Horizon Europe, a pleasant addition to the nationwide grants additionally distributed by Rannís, the Icelandic Centre for Research.

DTE, for example, is a beneficiary of a grant from the European Innovation Council to carry extra environment friendly processes to the nation’s enormous aluminum trade.

But funding isn’t the one factor a startup must develop. Talent makes firms, which is why so many startups flock to downtown Reykjavík, the middle of Iceland’s cultural, financial and governance exercise. The space is residence to co-working areas and entrepreneurial hubs like, which gives a co-working area in addition to rentable studios for these with a inventive bent. 

Iceland is understood for its expertise within the inventive fields, and this propensity has bled into its tech scene as nicely. Companies like Genki, Overtune and Treble have constructed tech for music manufacturing, composition and even acoustics simulation. Gaming is large, too, and Iceland is residence to well-liked gaming firm, CCP Games, the studio behind the favored MMORPG EVE Online. 

CCP Games’ presence has been an inspiration for a lot of Icelanders to begin constructing video games, Porcelain Fortress CEO Ingolfur Aevarsson advised TechCrunch. 

“Having an enormous brother like CCP within the neighborhood actually opened up the eyes of individuals [to the fact] that we may really make video games,” Aevarsson mentioned. “But Iceland has a really robust roots in writing our sagas and all of those sorts of story constructing.”

Porcelain Fortress relies out of Innovation House, a co-working area arrange by Opera and Vivaldi founder Jon Stephenson von Tetzchner. It can also be residence to Heima, a platform that helps households handle and share family chores, PayAnalytics, a pay fairness and workforce analytics supplier, and plenty of extra startups.

Once startups get greater and higher funded, although, some transfer on to Gróska (a phrase “progress” in Icelandic), a contemporary area in the midst of Reykjavík Science City. This new district can also be residence to the University of Iceland Science Park. 

Still, there are limitations inherent to a rustic with a small inhabitants: Once they attain a sure measurement, Icelandic startups usually need to look overseas to seek out AI expertise or executives with expertise in scaling. 

Startups from Iceland which have forayed overseas embrace Nasdaq-listed eye care firm Oculis; Prescriby, an opioid habit prevention firm that just lately raised €2 million to develop in Canada and enter the U.S.; Sidekick Health, whose digital care platform has gained traction throughout Europe and the U.S.; and Avo, which turned the primary Icelandic startup to affix Y Combinator in 2019.

Some firms go international instantly, whereas others desire to chop their enamel regionally first. Crowberry Capital’s founding companion, Jenny Ruth Hrafnsdottir, has a phrase of warning for the latter: Because Iceland is a rustic the place most individuals are only a cellphone name or an introduction away, it may well make startups overconfident a couple of go-to-market technique that gained’t fly in bigger markets.

Still, the convenience with which some issues can get performed in Iceland makes it a great testing floor for overseas firms, particularly after they may leverage its pure property. It additionally helps that validation in Iceland can usually apply to Europe: Iceland is just not a part of the EU, nevertheless it belongs to the European Economic Area (EEA), with in depth legislative overlap. 

Iceland has lengthy held a strategic geographical spot price securing, however the theme is experiencing tailwinds anew in the case of startups — bug bounty program Defend Iceland final 12 months acquired a $2.6 million grant from the European Commission as a part of the Digital Europe plan.

And the truth that NATO Innovation Fund (NIF) additionally co-hosted an occasion throughout Iceland Innovation Week underscores how a lot consideration Iceland is receiving. 

Iceland not often makes the record of high international locations by international funding, however that’s principally as a result of the startup scene right here is simply simply taking off. In a panel on the occasion, NIF companion Chris O’Connor famous that Iceland’s enterprise capital ecosystem is kind of new, with most companies solely deploying their first or second funds. 

He has some extent: With the exception of state-owned New Business Venture Fund, funds like Crowberry, Brunnur Ventures, Eyrir Venture Management and Frumtak Ventures have been born this century, if not this decade (Iðunn).

It is simply too early to say which firms or funds will profit from NIF’s €1 billion fund, however Iceland is on the record of potential recipients as certainly one of its 24 LPs. One tech firm, wind turbine producer Icewind, is already a part of the primary cohort of NATO-backed accelerator DIANA. The pattern will probably be price monitoring.

Strategically, but additionally economically and culturally, once-isolated Iceland is now extra of a crossroads. 

As a Nordic nation, it has a variety of frequent floor with Scandinavia (each have a robust gaming trade), and with the Baltics (fintech and tech for governments). It can also be pure for its tech firms to have a look at bigger markets early on. That’s possible a great factor for its startups and rising enterprise capital scene. For the remainder of us, it means we are able to get used to listening to about Iceland and its expertise.

Disclosure: Anna Heim traveled to Iceland on an invite from Business Iceland on behalf of Reykjavík Science City.

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