Angel Investing in Iceland

You may not have heard much about Icelandic angel investors. One reason for this could be that they have not been written about in the international financial magazines or other media. However, there is a community of angel investors in Iceland and many entrepreneurs benefit from their investments in their startups. For the uninitiated: Angel investors are individuals who are willing to provide a portion of their liquid assets to support startups. They take a stake in the startups they invest in for the value of the investment made with the clear understanding that they will eventually return these shares by mutual agreement. This is a general agreement. Individual cases may deviate from this.

The scope for angel investments in Iceland

The Icelandic economy has some legacy issues to deal with after the global collapse of 2008. The Icelandic economy was one of the worst hit and has taken a long time to recover. There are small and medium-sized enterprises (SMEs) that are still looking for capital. Following the phenomenal successes achieved in many Nordic countries, especially Denmark, the number of start-ups in the country is also growing. Angel investors have fuelled the growth of startups in Denmark and angel investments in Iceland may follow the same pattern.

There are certain areas that young entrepreneurs in Iceland can focus on to start their business. If it is a product, then it must have a certain export potential. The reason for this is that domestic demand in Iceland is not very high due to the limited population.

Funding Startups by Foreign Investors

Angel investors in Iceland may also receive requests from start-ups of non-Icelandic citizens for angel investments in Iceland. They would have responded to the call to invest in the country through the various teams looking for such investments. If their business models are viable, there is nothing stopping the Icelandic angel investor from selecting these companies.

How Critical in Angel Investment for the Startups?

Start-ups are usually small businesses and are driven by entrepreneurs who may not have a strong financial background. They may have just come out of university or have been working in the industry for a few years. Their biggest asset is their knowledge and a good idea. In the early days of starting a business, they will need more money as they will not yet have any revenue. Starting a new business requires a lot of investment that they may not have. The regular financing channels, such as banks, require some kind of collateral for lending. This in turn may not be available with the founder. This is where angel investors come in.

Those who invest in angels in Iceland are usually associated with a successful business and have additional funds at their disposal. They understand the benefits and risks associated with the startup and have a series of conversations with the promoter and his team. The purpose of these discussions is to learn more about the project and its prospects and to find out how realistic the financial projections are. If they think the prospects are good, they will provide the funds. As already mentioned, they receive an equity stake in the startup in return. Depending on the amount of equity, the angel investor may be offered a seat on the company’s board. Many angel investors choose not to get involved in the day-to-day management of the company.

Another aspect of angel investing in Iceland is that many angels prefer to work in tandem. This way they can save time and effort. They will split the investment between themselves depending on how much they want to invest in a particular project and how much they can spare.

If you are planning on making investments in Iceland and need some local assistance, call Swapp Agency .