Eight Icelandic Startup Teams to Watch in 2021

Over 50,000 earthquakes have shaken up Iceland over the past few weeks, culminating in spews of lava where hardy locals cook their sausages. But there’s more to this North Atlantic island than its volcanic activity and sulphurous culinary habits. Iceland also has a red hot startup ecosystem.

“As a testing ground, Iceland is extremely exciting,” said Melkorka Sigríður Magnúsdóttir, co-founder of Iceland Innovation Week, in an interview with The Org. “Our challenge is probably scaling and getting out of Iceland.”

Historically, getting onto Iceland was hard enough. Her country’s volcanoes, glaciers, winds, hailstorms, and abject remoteness were all traditionally a point of despair for Dark Age settlers — yet they have all largely turned into salient sectoral strengths, as startups have been able to build on renewable energy ecosystems for wind, tidal and geothermal.

Another traditional lodestar of the Icelandic economy — fishing — is helping to propel expertise and innovation at places like the Ocean Tech Cluster in the capital Reykjavik. More recent areas of Nordic know-how include genetics (most of Iceland has its DNA sequenced, and there are dating apps helping Icelanders decipher if they are related). Then there’s a good base to work with in pharmaceuticals, gaming, virtual reality, Bitcoin mining, and even space travel. That’s to say nothing of its soccer team. Or the majority of the country’s continued belief in elves.

In 2021, a year of pandemic that Iceland has handled better than most, the country is no longer remote; even its elf belief implies openness to unicorns.

“Covid has shown to the rest of the world that it doesn't matter where you sit — you can actually build a great company sitting anywhere,” said Bala Kamallakharan, founder of Startup Iceland and founder and managing director of Iceland Venture Studio. “Lots of very useful technology came from Iceland, and there's fantastic talent here. It's just that we've not been able to tell the stories at a broader scale.”

So here’s eight stories of Icelandic startup teams, told at a broader scale. Each team brings impressive products, traction, and growth to the table, chosen for their blend of talent, diversity, culture, or organizational setup.

Carbfix

Carbfix turns the greenhouse gas CO2 into stone. Once considered a pipe dream, the capture and storage of CO2 has received widespread attention as a way to tackle the climate crisis. Carbfix was an early mover here, originating as a research project back in 2007 between University of Iceland, Columbia University, CNRS in Toulouse and Reykjavik Energy.

Incorporated in 2019 and operating as an independent subsidiary of Reykjavik Energy, Carbfix dissolves CO2 into water before injecting it into rock formation: captured carbon turns to stone in under two years.

“Carbfix is an excellent example of how academia and industry can actually work together and come up with a brilliant idea,” said Kristinn Ingi Lárusson, Head of Business Development at Carbfix. “Now it's up to us to expand on that idea and make commercializable products and services.”

The small team of five holds a kaleidoscope of specialists — a chemist, a geologist, an astrophysicist, an engineer, and a business operative. So far, the team has stored over 70,000 tons of CO2 at the Hellisheiði geothermal power plant since the project began in 2014. A partnership with Swiss clean-tech company Climeworks from 2017 has upped the ante: Climework’s direct air carbon capture modules combined with the Carbfix mineralization process is the only direct air capture and storage chain in the world.

Yet the Carbfix technology has worldwide applicability, requiring only suitable rock types, water, and a source of carbon dioxide. “Whether it will be the next 10 years or 15 years, we will reach the gigatons scale for CO2 mineral storage,” vows Lárusson.

PayAnalytics

Iceland is world-leading in its efforts to bridge the gender pay gap, ranking at the top of WEF’s global index gender gap rankings of 2020. In 2018, the country introduced the first policy in the world requiring companies with more than 25 employees to prove that they pay men and women equally for a job of equal value - risking a daily fine without a certification of equal pay for the same positions.

Despite pioneering measures, there is still a lot of work to be done to achieve equal pay across genders. Since its founding in 2016, PayAnalytics has been working to eliminate the gender pay gap at scale by providing HR managers with quantitative decision-making tools that change how organizations measure and close the gender pay gap.

Expanding its SaaS solutions internationally over the last 12 months, the team now works with customers in over 40 countries. The diverse team of ten is distributed across the U.S., Iceland, Sweden, Germany and Spain. As a pay equity solution rooted in science and fairness, the startup applies the same principles to their team building, compensation and working environment.

“We have sought out talent that cares about pay equity and is passionate about equality more broadly,” said Dr. Margrét Vilborg Bjarnadóttir, Founder and Chairman of the Board at PayAnalytics. “We are very proud of our team and what we have achieved, we are delivering pay equity in over 40 countries now, and have been growing significantly every year.”

Controlant

In the fallout from the Covid-19 pandemic, the pharmaceuticals and life sciences supply chain startup Controlant has been seizing its moment. Founded back in 2007 by Icelandic engineer-entrepreneur Gisli Herjolfsson, the team’s technology offers real-time supply chain visibility via GSM networks, IoT data loggers, and a cloud-enabled software platform, offering real-time insights and automation of communications and workflow activities. These sorts of solutions have secured Controlant a high-profile role assisting the global rollout of the Pfizer-BioNTech Covid-19 vaccine, which is jolting the firm into rapid growth mode.

“We have doubled in size over the last year,” says Herjolfsson, who serves as CEO, and espouses a four-pillar culture of transparency, excellence, creativity, and fun.

As Iceland has not experienced the same level of Covid-19 related closures as other countries, the firm still talks of the importance of regular in-person meetups for team retrospectives or one-on-ones. Much of the R&D still happens at the firm’s Reykjavik HQ, but the firm now draws on a ‘distributed’ operational presence in the US and across Europe. So far, Controlant’s investors have been similarly Iceland-centric. Raising around $50M to date (after closing its $15M Series B funding round last fall) key early backers have flocked in from local VCs like Frumtak, institutional investors like Sjova and VIS, as well as various family offices.

For those working — or investing — at a distance, the team devised a manual for training, onboarding, and promoting company values, which could come in handy as the international headcount rises. Already a team of 175, Herjolfsson expects more than 200 employees by the end of 2021 but wants fewer jacks of all trades.

“As we have grown, we have moved from looking for generalist roles to specialist roles,” he tells the Org. “We are looking for individuals with expertise who can take a program and run with it.”

Lucinity

Ever since the financial crisis of 2008 wreaked havoc on the Icelandic economy, the country’s banking sector has been riotously unpopular. Dozens of bankers were even sent to jail, though that’s a surprisingly cosy existence in a liberal justice system focused on rehabilitation, with one banker causing further public irritation by crashing his helicopter during his stint ‘behind bars’.

A startup seeking to shore up trust in Iceland’s financial system — and in turn the global financial system — is the anti-money laundering startup Lucinity, which uses AI to help track and trace irregular banking activity.

Its quest to ‘make money good’ involves working with regulators and financial crime investigators; over time, according to Lucinity, its machine learning algorithms gradually get smarter as it learns from the detection capabilities of its users.

Launched in 2018, Lucinity’s founder and CEO Gudmundur Kristjansson emphasises ‘quiet strength’ and ‘empathetic innovation’ designed around people. Last July, that quiet strength showed quiet signs of funding success, with a $6.1M Series A led by Estonia’s Karma Ventures and Danish early stage investors byFounders.

Genki Instruments

Genki Instruments is a startup with a ring to it. Its first product - Wave - is a ring that lets you control sound with motion using intuitive hand gestures; musicians use the ring to easily shape sound, control effects, or send commands.

“Genki is about merging engineering that ‘just works’ with human-centered design,” said CEO Ólafur Bjarki Bogason. “We don't build technology just for the sake of it, but in response to issues our users have.”

Genki draws inspiration from Iceland’s vibrant music scene — the country has produced musicians like Björk and Sigur Rós — and its legacy of finding creative ways to solve problems.

“There is a national saying here, ‘þetta reddast’, which means ‘it will all work out in the end,’” said Bogason, interpreting it as an attitude of getting things done against the odds. “That positive outlook, combined with putting in the hard work, is one of the reasons we continue to build and ship products.”

The expanding team of ten operates with a flat organizational structure, where participation and sharing of ideas is encouraged. Just next week, the startup is unveiling a product for remote working.

Kara Connect

Before founding Kara Connect in 2015, Thorbjorg Helga Vigfusdottir was a politician confronted with the harsh realities of limited public access to healthcare and education. “I realised my work on the political and bureaucratic level wasn’t having as much impact as it needed to,” she wrote of her decision to step down from Reykjavik city council.

So teaming up with speech therapist Tinna Sigurðardóttir, she started a pilot project called Trappa that brings remote online support to children hundreds of miles away in the remote fishing community of Patreksfjörður. The project evolved into Kara with the arrival of co-founder and CTO Hilmar Eidsson. Together, they built a virtual office suite of privacy-focused videoconferencing, data storage, and automated invoicing for healthcare and education providers.

“No one becomes a therapist to do paperwork,” explains Vigfusdottir. The team has now grown to 12, propelled by roughly $3M in grants and seed funding from Iceland’s state-run New Business Venture Fund and Technology Development Fund, along with local VC backers like Crowberry Capital.

In a global context of Covid-19 lockdowns, online therapy or distant learning is as relevant for London or New York as they are for Patreksfjörður, so the Kara team has spent the last year eyeing international expansion.

“Kara is in a way without borders,” CMO Frida Jonsdottir told the Org. “The only thing needed is an internet connection, so we do envision looking outside of Iceland for talent to support that growth going forward.”

Florealis

Florealis takes the saying, “Nature is the best medicine,” to another level. Herbal medicine has long been dismissed as pseudo-science, but Florealis has been working to revive its reputation through clinical research into herbal remedies and by receiving certification from medical authorities in all the Nordic countries. So far, the team has launched nine products since its founding in 2013. Its registered products treat diseases like anxiety, sleep disorders, migraines, and arthritic pain.

The startup has raised a total of €5,25M including a funding round of €3,2M from the New Business Venture Fund in 2018 and a successful crowdfunding equity campaign with Funderbeam in 2019.

And the team has been putting that capital to work. Florealis has seen rapid growth and a steady increase in sales the last few months. To date, its medicines can be found in over 900 pharmacies in Iceland and Sweden.

The seven-person team emphasizes accountability, passion, courage and collaboration as essential to gaining market traction. “We need to be accountable to build up trust, our passion is to increase the quality of the life of our consumers by providing high quality natural solutions that are built up on scientific evidence to improve people's health,” said CEO Kolbrún Hrafnkelsdóttir. “We need to have courage to think big and innovative – to dare to discover and challenge ourselves.”

Sidekick

The personalised healthcare startup Sidekick was founded by two medical doctors — Saemundur "Sam" Oddsson and Tryggvi Thorgeirsson. Shocked by how 68% of all deaths are related to lifestyle-related illnesses, the two co-founders decided to explore ways to prevent and mitigate chronic illnesses.

That exploration led them to Iceland’s thriving gaming industry and applied artificial intelligence. Chief Product Officer Olafur Viggosson notes that Sidekick’s software, “Reads and rewards positive behavior and serves relevant content and programs, triggering a continuity of positive behavior.”

Patients earn rewards for managing their nutrition, exercise, sleep, stress and medication adherence. They also receive condition-specific education, and a connection to a community of health professionals and patients on a similar health journey.

Valuable data sets are collected throughout the journey – the firm claims to have collected over 50 million data points – providing a deep understanding of behavioral trends that could prove useful to future public health experts.

The company is a case study of outgrowing Icelandic confines. Though the country “has a solid track record of punching above its weight,” said Gulli Arnason, Chief Marketing & Communications Officer, he also said that expanding to Berlin made more strategic sense than staying put. Not only is the larger German market appealing for digital health innovations, Berlin would also offer “a deeper pool of specialised talent.”

Having closed its Series A funding at $20M last year from digital health funds like Wellington Partners and Asabys Partners, Sidekick will have deep pockets to bring healthier habits worldwide.

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