The Q2 2017 Icelandic Funding Analysis

After just one investment in the first three months of the year resulted in us neglecting to do a Q1 funding analysis, things picked up for Iceland in Q2 as they recorded 4 investments totalling $14.75 million.

Once again, we’ve teamed up with our friends at Northstack combining our insight with Kristinn’s own observations.

(Note: They’ve now teamed up with Crunchbase, meaning their data (and graphics) are now augmented with Crunchbase data)

Kristinn: This quarter we recorded four funding rounds: MenigaTakumiTripCreator, and Mink Campers.


Kristinn: This quarter was much more active than the one before (which only had one investment – Goodlifeme / SidekickHealth), and has the same amount of investments as the year before (Q2/2016).

Neil: Although undoubtably a much better quarter than Q1, they were the only Nordic country to record no growth from the respective quarter last year, indicating that investments certainly aren’t growing right now. In fact, if we put the last three quarters together, they would still amount to less than what was invested in Q3 2016, demonstrating just how much investment in Iceland has tailed off recently.

Kristinn: The main difference between the years is the amount invested; the amount invested increased by over 240%, mainly due to two rather big rounds; Meniga and Takumi.

Neil: As Kristinn points out, two big rounds meant that in terms of amount invested, Q2 was a strong one, it also means that H1 2017 is only slightly behind H1 2016, meaning that although the number of investments may pale in significance to last year, it’s possible that with one or two more larger investments that the capital invested could remain steady or even grow this year.

Kristinn: This leads to a (rather obvious) next chart: the majority of capital invested came from outside the country; around 70%.

Neil: Due to its size, Iceland has to rely on International capital for its companies to grow and in a lot of instances, to even get funded in the first place.

Kristinn: In 2015 we had a big influx of capital; three funds that started and were very active in the first quarters. Those rounds were in general fairly small (never above 500m ISK or between $4-5m) and early stage. As we’ve talked about for some time now, two of those funds have stopped investing in new companies, which leaves only one active Icelandic fund at the moment.

Naturally, the rate of investment will slow down. Hopefully for the ecosystem, the sizes of rounds will increase (because the companies that raised before are raising follow-on rounds). In fact, three of the four companies that raised money in Q2 2017 had at least 2 funding rounds before the one they announced this quarter.

There are also some interesting takeaways in regards of the capital coming in. It’s mostly foreign – when our startup companies need growth money they venture abroad to get it. Which makes complete sense; the Icelandic funds aren’t big enough to be able to go as big as the bigger foreign funds.

Neil: This reliance on outside capital puts the Icelandic ecosystem in a very precarious position and relies heavily on them continuing to produce high-quality early-stage companies to attract the attentions of International investors. Whereas investors from outside of (and within) the Nordics regularly spend time on the ground in the rest of the Nordic countries, this isn’t really the case in Iceland, meaning they need to work extra hard to ensure their ecosystem is connected with non-Icelandic investors.

With only one active Icelandic fund, it was inevitable that the number of investments has slowed down, however, in order to be able to continue to attract International capital, the number of companies being started and invested in needs to increase sooner rather than later.

Neil S W Murray founded The Nordic Web in 2014 in order to provide the Nordics with the quality coverage it deserves. As well as being Founding Editor of The Nordic Web, Neil is also an active community builder in the region, participating in a number of initiatives, and has previously worked for