Iceland has become something of a mysterious, distant land to tourists in recent years, but for the startup community, its seemingly far-flung geographic location and cultural individuality make it one of the most conducive locations for mainstream business success in Europe.
With the US only four hours’ flight away to the west, the UK and central Europe even closer to the south, and Scandinavia as an engulfing ecosystem, few countries can claim the strategic advantage that Iceland has for startups to flourish.
“It’s not an obvious advantage, because people on the outside just see how tiny we are as a nation, but it’s actually what makes our ecosystem so successful,” said Helga Valfells, founding and managing partner of Crowberry Capital, a Reykjavik-based venture capital (VC) fund that has, in just three years since its inception, aided the rise of numerous startups in the city to successful international scale.
One company under the Crowberry umbrella is Travelade, an online travel guide platform that is looking to re-inject credibility into a mistrusted “travel reviews” industry. Its co-founder and CEO, Andri Kristinsson, can sum up the links between Iceland and the US better than most, having previously worked for LinkedIn in the San Francisco Bay Area.
“Travelade arose from helping friends of mine on where they should go and what they should see when visiting Iceland – so essentially through a love of my own country,” said Kristinsson. “However, when turning it into a business, it was about tapping into a trend where people are recognising that you can start a company anywhere – and you can do a lot worse than Iceland.
“There are, of course, upsides to being in the Bay Area and I could have stayed there, but it’s so much more expensive than Iceland, and it’s not as well situated.”
Kristinsson also points to the availability and quality of skilled engineers as a major plus for Iceland compared with the US, particularly when developing a tech startup.
“There are numerous factors, and it’s evolving so quickly,’ he said. “Iceland is now a thriving ecosystem as epitomised by VCs such as Crowberry. That creates a bigger network, a greater number of prospective partners and just generally a momentum that is encouraging not just Nordic entrepreneurs, but international entrepreneurs and VC funds to the country.”
A perfect fit for entrepreneurship
Even with the foresight of having worked in the Bay Area, and with the experience of being an established entrepreneur, Kristinsson still decided to return to Reykjavik as the ultimate endorsement of its potential in the global arena.
It is a trajectory shared by Tristan Gribbin, who left California to move into the arts and entertainment industry, but found herself lured to both meditation and entrepreneurship when visiting Iceland in the 2000s. The company she subsequently created, Flow, is a virtual reality (VR)-based meditative platform, and she agrees with Kristinsson that Iceland was the only place to go to see through such an idea.
“In Silicon Valley, you can get drowned out among the hundreds of others trying to make it too,” she said. “It’s a crowded marketplace not really geared up for guidance and support, but in Iceland you’re able to pick up a phone or even walk into an office to immediately discuss, network, seek advice or just generally broaden your circle.
“I think, as an entrepreneur, it’s important to start in a less crowded space to get your foundation and roots, and Iceland is the perfect starting point for tech platforms like ours. It feeds off trustworthiness, innovation, uniqueness, quirkiness and a continuous improvement mindset.”
But Iceland’s business climate wasn’t always so perfect. Just 10 years ago, the country’s entire economic infrastructure was derailed by the financial crisis. In such a situation, you would be excused for expecting professionals or budding entrepreneurs to batten down the hatches, seek employment with a big corporation and establish some job security.
Read more about the Nordic startup scene
- Nordic bank is shifting some of its workforce closer to fintech activity in the Swedish capital.
- While Stockholm is a recognised hub for tech startups, Malmo, in Sweden’s south, is attracting increasing numbers of digital entrepreneurs.
- The Nordic tech startup scene is attracting funding from a variety of sources, with private equity firms, banks and traditional IT companies all keen to put money in.
- Sweden’s second-largest city is by no means the biggest startup hub in the Nordic region, but its global reach is a distinct advantage.
In reality, the exact opposite happened, and a new generation of innovators were encouraged to take risks that they wouldn’t have done before – to set aside the traditional goals of moving to London and working for large hedge funds, and to seek job fulfilment in a startup setting.
“The worst thing that could possibly happen to our economy, happened,” said Crowberry Capital’s Valfells. “From that point on, the fear of failure had no meaning. The central bank had failed, so it didn’t matter if you did, too, after taking a bit of a risk.”
One company that epitomises this notion is Meniga. Now a thriving, internationally significant digital banking platform provider, its founder, Georg Ludviksson, built the company after returning from the US to Iceland to start a banking job just before the financial crash.
“I turned up for three days, and the job disappeared,” he said. “So that was clearly a sign that a switch into banking perhaps wasn’t best, and instead I went back to entrepreneurship, having long been passionate about personal finance management.
“The crash seems like it should have dissuaded such a move, but the crash was a global issue and in finding a model that safeguarded businesses against similar issues in the future, it was actually the best time to launch Meniga.”
Ludviksson added: “In 2009, it felt like we had a blank canvas to start something new. Things had got as bad as they possibly could, so it gave people a free shot at launching something completely innovative, especially in our sector.”
An innovative island between continents
Meniga calls itself a “child of the crash” – but it’s not an only child.
Jenny Ruth Hrafnsdottir, founding partner at Crowberry, said. “We’re small, we’re agile, and we’re vigilant. We react to business trends in the same way that we, as a population, react to the unpredictable weather or to the light, for example. Iceland’s uniqueness prepares us for a collaborative creativity that we need in the business world, too.
“Combining creativity and tech comes from being an island and from the creative culture instilled in us from school, through life. The crazier the idea, the better, and the more we have to multitask, the better.”
Travelade’s Kristinsson added: “I came from a company like LinkedIn, which was quite aligned to a US way of working where there are some amazingly talented people, but usually in one field as there are enough people there to cater for every niche.
“No one in Iceland is like that. Every Icelandic person is a generalist fundamentally. You have to juggle 10 different balls and wear different hats each day.”
Flow’s Gribbin adds a final thought: “It’s just such a feeling of freedom and rawness that you get here, which suits the tech startup mentality perfectly.
“Iceland was formed from the meeting of Eurasian and North American plates – the perfect metaphor for how and why its business climate is successful now as an innovative island between the two continents.”