**Iceland’s Startup Scene: A Growing Tech Ecosystem**
Iceland’s startup scene has been making waves on the global stage, punching above its weight and attracting attention from venture capital firms. The country’s tech ecosystem is coming of age, and it’s no wonder that Iceland attracted the most venture capital per capita of all Nordic countries in 2023. While the relatively small population of fewer than 400,000 inhabitants may skew the statistics, foreign co-investments in Icelandic startups reached a record high in 2023, indicating a thriving entrepreneurial landscape.
**Frumtak Ventures: A Leading VC Firm**
One standout example of success in Iceland’s startup scene is Frumtak Ventures. The firm recently closed an oversubscribed fourth fund, raising an impressive $87 million. This amount is significantly larger than its previous fund of $57 million. Frumtak Ventures has established a solid track record, with the second fund performing exceptionally well. As one of the few VC firms in Iceland, Frumtak often co-invests with other local firms. However, it primarily focuses on working with global firms at the Series A, B, or C stage. The firm also benefits from deal flow through local acceleration programs.
**Investing in Icelandic Innovation with Global Potential**
Frumtak Ventures has garnered support from Icelandic pension funds, with most of its limited partners coming from this source. The firm’s geographic scope involves backing Icelandic founders while emphasizing local innovation with global potential. Given the country’s small population and cultural factors, Icelandic startups tend to look abroad early on. Frumtak’s portfolio company, Sidekick Health, exemplifies this strategy by going global with its gamified digital care platform in partnership with leading US-based companies like Anthem.
Furthermore, Frumtak is open to investing in companies run by Icelandic entrepreneurs but based abroad. An excellent example is Activity Stream, a US-based data platform for the live entertainment industry. The CEO of Activity Stream emphasizes the importance of thinking outside of Iceland for success. Frumtak’s investment strategy focuses on sectors at the intersection of software, AI, and deeptech, leveraging Iceland’s historical strengths in areas such as ocean tech, logistics, healthcare, travel, energy, climate, and gender equality.
**Adapting to a Changing Landscape**
While Frumtak Ventures has been sector-agnostic in its investments, it has predominantly supported B2B SaaS startups at the seed or Series A stage over the past 15 years. However, as the startup scene matures, Frumtak’s focus will become more diverse, reflecting the evolving needs and opportunities in the market.
**Hands-On Support for Founders**
Frumtak prides itself on being “super hands-on.” The firm takes an active role in its portfolio companies, providing support and guidance. Frumtak always takes a board seat and positions itself as the first call for founders during both good and bad times. This commitment is rooted in Frumtak’s vision of being run “by entrepreneurs, for entrepreneurs.” The managing partner, Svana Gunnarsdóttir, and general partner Andri Heiðar Kristinsson are both former founders themselves, bringing invaluable firsthand experience to the table. Their third partner, Ásthildur Otharsdóttir, contributes a corporate operator background to enhance their expertise.
**A Vision for the Future**
Looking ahead, Frumtak Ventures envisions fueling some of Iceland’s biggest listed companies in the next few decades. Despite being a small isolated island that has faced numerous challenges throughout history, Iceland possesses an entrepreneurial spark embedded in its DNA. This perseverance and dedication have played out well for Icelandic startups. Frumtak Ventures aims to harness this spirit and contribute to the growth and success of the country’s tech scene.