I’m in Reykjavik, Iceland, hosting an ArcticEvening event for the local startup scene tonight. I thought I’d do a little write up of the thoughts and discoveries regarding the startup scene up here. First of all, to put things into perspective, you need to understand the size of things we’re talking with. Iceland has a population of around 320 000 people and that’s scattered across the island. On the other hand, they’re a relatively wealthy bunch of people, despite the current economic crisis, with a GDP per capita a little over $40 000 USD for 2008. Talking about the econmic crisis, it is definitely the biggest subject in discussions these days. On my way to meet up with some local entrepreneurs last night, the cab driver said that he’s sure there will be something happening in the coming months. According to him, “regular people are tired of paying the mess of the large companies.” I can understand his rage completely.
Nevertheless, I talked with Gunnar and Brian from Clara as well as Viggo and Asgeir from Meniga last night regarding the local startup scene and how they see the situation here. The general mentality was that things are relatively well off, compared to the rest of the economy. The government has also taken some actions to create a better ecosystem for startups in Iceland. They’ve given investors some tax incentives regarding their exits in startups – something the rest of the Nordic region should implement very quickly as well.
For startups, the economic turmoil and crisis hasn’t been all that bad. Viggo and Asgeir used to work for Landsbanki last year, but resigned to start their own company Meniga this January. Since then, many of their ex-collegaues have felt the economic difficulties through layoffs and today banking isn’t seen much of an appealing industry anymore. Long gone are the days when Iceland had plans to become the banking centre of the world. I kid you not, this was the mentality when things were flying high.
After the crash, a lot of talent has been released back to the job market and this is of course to the advantage of startups. Before the crash they couldn’t compete with the salaries the banks were paying people, but now as there is a shortage for work, people are settling for less pay and startups are taking advantage of the situation. Furthermore, as companies are trying to avoid bankruptcies, startups find it easy to negotiate good deals on office space.
After a while I realised that Iceland isn’t so much different from the rest of the Nordics in terms of startups and the ecosystem, but there are some advantages for being a small country as well as challenges being physically farther away from other countries. For one, the government works a lot faster than in other countries based on what I heard from the four gentlemen. This has a clear advantage of getting good things done faster as there is less bureucracy. Also, being a small country which is very well educated, it serves as a perfect test bed for many companies. The people here are willing to take up new methods and services relatively easily so startups are finding it a great place to launch products.
However, being physically a long distance from other countries they find it harder to jump to new markets as none of the companies consider Iceland their main market. There’s only so much you can do with a little over 300 000 people market. Then there’s the other side of sharing ideas and getting them tweaked for the better. Being so isolated, it’s very hard to share ideas with other people on a cross border level – something that would definitely benefit the receiving country as well as Iceland. This of course is something that we at ArcticStartup wish to help in.
I’m anxiously looking forward to tonight, being able to meet the local startups and what they are up to. We will be posting interviews and coverage of the local startup scene here in Iceland in the coming days as I get home with the footage. There’s just too much going on to neglect it. If you haven’t yet read about the ArcticEvening Reykjavik, please do so – it will be a blast!
Before finishing, I’d like to thank Brian Suda a ton for helping us put together the event here in Iceland – he’s been an enormous help! A very big thank you!
Image by Stuck in Customs