Iceland’s burgeoning tech ecosystem is making headlines once again. Frumtak Ventures, a leading venture capital firm, has successfully closed its fourth fund, securing an impressive $87 million. This milestone is a testament to the vibrancy and potential of Iceland’s startup scene, which continues to attract significant investment.
Iceland’s Tech Ecosystem: A Rising Star
Iceland’s tech industry is thriving, and its startup ecosystem is gaining global recognition. In 2023, Iceland attracted the highest venture capital per capita among Nordic countries, a remarkable feat considering its small population of fewer than 400,000. This achievement highlights the country’s growing appeal to international investors, with foreign co-investments in Icelandic startups reaching record levels last year.
Frumtak Ventures: Leading the Charge
Frumtak Ventures exemplifies the dynamism of Iceland’s venture capital landscape. The firm has closed an $87 million fourth fund, significantly larger than its previous $57 million fund. This oversubscribed fund underscores the confidence investors have in Frumtak’s ability to identify and nurture promising startups.
General Partner Andri Heiðar Kristinsson attributes Frumtak’s success to its solid track record. While the firm hasn’t disclosed returns for its third fund, Kristinsson notes that “the second fund performed really, really well.” Frumtak’s strategic focus on co-investing with global firms at the Series A, B, or C stages, combined with deal flow from local acceleration programs like KLAK, has positioned it as a key player in Iceland’s VC scene.
Local Roots, Global Ambitions
Most of Frumtak’s limited partners are Icelandic pension funds, highlighting strong local support. Kristinsson emphasizes that the firm will continue to back Icelandic founders, with a focus on local innovation that has global potential. This approach is exemplified by portfolio company Sidekick Health, which has successfully expanded its gamified digital care platform internationally, partnering with U.S.-based Anthem.
Frumtak is also open to investing in companies founded by Icelandic entrepreneurs abroad. One such example is Activity Stream, a U.S.-based data platform for the live entertainment industry. CEO Einar Saevarsson believes that for Icelandic startups to succeed, they must think beyond the country’s borders.
Strategic Investment Focus
Frumtak Ventures aims to invest at the intersection of software, AI, and deeptech, particularly in sectors where Iceland has historical strengths. These include ocean tech, logistics, healthcare, travel, energy, climate, and gender equality. Over the past 15 years, Frumtak has primarily invested in B2B SaaS startups at the seed or Series A stage. Moving forward, the firm plans to diversify its investment focus while maintaining its hands-on approach.
A Vision for the Future
Kristinsson envisions a bright future for Iceland’s tech ecosystem. He believes that as the startup scene matures, more exits will follow, leading to the emergence of some of Iceland’s biggest listed companies. Frumtak’s commitment to being “super hands-on” with its portfolio companies, always taking a board seat and providing relentless support, is central to this vision.
The Icelandic Entrepreneurial Spirit
Frumtak’s approach is encapsulated in the words of managing partner Svana Gunnarsdóttir: “by entrepreneurs, for entrepreneurs.” This ethos resonates deeply in a country where the venture capital industry is relatively new. Kristinsson believes that Iceland’s harsh conditions and historical challenges have instilled a unique entrepreneurial spark in its people, characterized by perseverance and dedication.
As Iceland’s tech scene continues to evolve, Frumtak Ventures is poised to play a pivotal role in shaping its future. With its latest fund, the firm is well-equipped to support the next generation of Icelandic startups, driving innovation and global success.